MEGA Life and Health insurance pays $2.5 million settlement
MEGA Life and Health Insurance Co., part of North Richland Hills-based HealthMarkets, paid $2.5 million to settle charges by Rhode Island regulators that the company violated state laws with its policies aimed at small employers.
It's the latest in a string of fines and settlements with state authorities over the marketing and underwriting of HealthMarkets insurance plans. Since 2008, the company and its subsidiaries have paid more than $40 million to settle complaints with more than 30 states, most involving cases brought several years earlier.
The Rhode Island settlement stems from an examination of MEGA policies written after Oct. 1, 2004. The state's Office of the Health Insurance Commissioner said MEGA used improper underwriting standards, such as declining to write policies when state law required that a small employer be offered a plan, overcharging on policies and imposing excessive fees.
In a statement, HealthMarkets said Thursday that "MEGA Life and Health Insurance Co. voluntarily discontinued marketing health insurance products in the state of Rhode Island in 2007" and cooperated with regulators "to resolve issues during the market conduct examination that commenced in 2006. The Company is pleased to have this matter finally brought to a conclusion and will fully comply with all aspects of the settlement agreement."
The agreement calls for MEGA to return $2.3 million to about 5,500 small businesses in the state. It will also pay the state a penalty of $225,000 and suspend writing health insurance in Rhode Island for three years.
HealthMarkets also faces a Los Angeles lawsuit brought by the city a year ago that alleges that its subsidiaries sold coverage that was marketed as comprehensive but which included "hidden and obscure exclusions and limitations." The suit names HealthMarkets and its owners, Blackstone Group and Goldman Sachs Group, which acquired the company in 2006 for $850 million.
John Franklin, a spokesman for Los Angeles' city attorney, said Thursday that the case remains in litigation.
-- Jim Fuquay