TV, INTERNET HEALTH PLAN SALES AGENT FINED $500,000

Cinergy misleadingly offered health coverage for “little more than $5 per day”

Cinergy Health Inc., a Florida-based insurance agent that advertised low cost health insurance plans on late night television, the Internet and through telemarketers, has been fined $500,000 for violations including misleading consumers into believing they were buying comprehensive health insurance, New York Insurance Superintendent James J. Wrynn announced today.

Instead, buyers received limited benefit health insurance plans also known as “mini-meds,” which normally provide substantially less than comprehensive hospital/medical coverage. When injury or illness occurred and consumers filed claims, many found that their claims were not covered, and they were left with large unpaid medical bills.

Cinergy and its sublicensee, Steven Trattner, settled with the Department, agreeing to the fine and to comply with a code of conduct setting strict standards for any future sales of limited medical benefit plans in New York.

“Having good health insurance can literally be a matter of life and death,” Wrynn said. “We will not allow unscrupulous marketing practices that prey on New Yorkers and their need for affordable health insurance. Medical bills are the leading cause of personal bankruptcy filings and consumers rightly want insurance protection from such expenses. But in seeking that protection, they should not be exposed to the type of misleading practices Cinergy demonstrated.”

Cinergy and Trattner agreed that among other violations of the Insurance Law, they had:

• Used television commercials, advertisements and other marketing materials, that:

  1. Failed to fairly and accurately disclose the limitations in the coverage;
  2. Created the false impression in some individuals that the coverage was a substitute for major medical or other comprehensive health insurance coverage;
  3. Did not adequately disclose the policy limits and exclusions for pre-existing conditions; and
  4. Failed to prominently indicate the name and principal office location of the insurer underwriting the coverage, instead creating the incorrect impression that the coverage was being offered by “Cinergy Health.”

• Operated call centers where agents gave inaccurate or misleading information to the public about the nature and cost of coverage and who was providing that coverage;
• Tacked on additional charges to monthly premiums for various non-insurance benefits without disclosing the amount of such charges;
• Collected unauthorized fees from consumers;
• Failed to provide consumers who applied for insurance with required written disclosures regarding the limited nature of the medical coverage provided under the health plans; and
• Used unlicensed agents to sell insurance.

“These are egregious violations of the Insurance Law and of consumer rights,” Wrynn said. “To protect consumers in the future, Cinergy will have to follow a strict set of marketing standards that we have imposed.”

Under the standards imposed by the Department stipulation, Cinergy must:

• Ensure all its advertising is accurate and approved by both legal counsel and the health insurer backing its product;
• Charge for and collect only the health insurance premium;
• Bill separately and clearly for any other services provided;
• Sell group health insurance only to qualified groups and their members and not to associations formed or maintained primarily for the purpose of obtaining insurance;
• Sell group health insurance only to existing members of qualified groups and associations and not act on behalf of such groups and associations in enrolling new members;
• Make sure all its staff is properly licensed;
• Use approved application forms that provide all required warnings regarding limitations in coverage;
• Train its telemarketers to offer complete and correct information about coverage; and
• Provide insureds with either a copy of the insurance policy or an approved certificate of insurance containing a detailed description of the coverage.

Cinergy must also report detailed information on its New York sales of group health insurance to the Department every 90 days, and must take any additional steps necessary to prevent a reoccurrence of its previous violations.

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