NY Fines Health Insurer For 'Misleading' TV Ads
MICHAEL GORMLEY, Associated Press Writer - Aug 12,
2009
Why Not to Buy a Limited Medical
Plan, especially from Cinergy Health
A health insurer whose TV commercials promised "peace of mind"
for just $5 a day must stop running the national ads and pay a
fine of $700,000 after New York officials accused it of leaving
patients only with huge hospital bills.
The American Medical and Life Insurance Co., advertising
through an intermediary called Cinergy, marketed health
insurance as a lower cost option for the uninsured and
underinsured. It was pitched as costing just $5 a day, or the
cost of a hamburger or pack of cigarettes.
In one ad, the narrator said the insurance is available
"regardless of any pre-existing conditions," while the print on
the screen stated "most pre-existing conditions accepted" and
the fine print stated there is a six-month waiting period.
Acting Insurance Superintendent Kermitt J. Brooks said
Wednesday that the cases uncovered in New York's two-year
investigation included a Rochester woman who had $419 a month
charged to her credit card for the insurance, only to have the
company cover just $1,164 of her $28,000 hospitalization. A
36-year-old New Yorker who had a stroke found his policy
covered just $250, leaving him with a bill for $29,917.
In both cases, the company paid off the balances after the
state intervened.
"Many New Yorkers are desperate for affordable health
insurance," said Gov. David Paterson. "Unfortunately, some
businesses are taking advantage of that need to sell limited
health insurance in ways that mislead consumers into believing
they are getting full coverage. "
As part of a settlement announced Wednesday, the state
Insurance Department forced the company to agree to halt the
nationwide ads. American Medical and Life Insurance Co. is
based in New York City and sells policies in 38 states and the
District of Columbia. The company sold about 12,000 policies in
New York, about 5,000 of which have lapsed, and about 38,000
nationwide.
The state is also prohibiting the company from selling its
partial coverage policies in New York, in part because state
officials said the company failed to fully disclose the extent
of coverage or use licensed agents as required.
A company spokesman didn't immediately respond to a request for
comment.
A second unidentified company has agreed to suspend sales of
its nationally marketed policies while the state investigates
its practices.
The American Medical and Life ad concludes: "Five dollars a day
helps you buy peace of mind ... so don't wait another
day."
Source: http://wcbstv.com/local/paterson.fines.health.2.1125575.html
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