MEGA Life and Health Insurance Company (MEGA) is in the news – again. This time, the company has preliminarily agreed to stop certain of its practices in the state of Massachusetts that are meant to deceive consumers.

The agreement

The agreement between the Massachusetts Attorney General’s Office and MEGA, Mid-West National Life Insurance Company and their parent company, HealthMarkets, Inc., stems from a complaint filed against them in August of 2007 in which the Attorney General, Martha Coakley, sought an injunction against the companies for their allegedly deceptive insurance practices.

Coakley’s office reported that the parties reached an agreement in lieu of holding a preliminary injunction hearing and that the companies agreed to:

• Comply with Massachusetts mandated coverage and benefits law;
• Comply with Massachusetts law relating to pre-existing condition exclusions and waiting periods;
• Refrain from disclosing consumers’ personal health information and to comply with its own privacy notices, as well as federal and state law;
• Refrain from certain deceptive advertising and marketing practices;
• Refrain from requiring association group membership in connection with the sale of health insurance to small employer groups of six or more.

Original lawsuit not resolved

While the agreement prohibits the companies from certain acts, Coakley’s office reported that it does not resolve the lawsuit filed this summer which generally alleges unfair and deceptive trade practice and seeks penalties against the companies, restitution to consumers and other injunctive relief. Her office has amended its complaint and alleges that the insurance companies:

• Violated Massachusetts law by misrepresenting the provisions of their policies;
• Failed to cover health benefits and services required by Massachusetts law;
• Disclosed personal health information about insured consumers to third parties;
• Imposed illegal restrictions on coverage of pre-existing conditions.

Nationwide investigations ongoing

MEGA has had countless lawsuits filed against it by individuals, groups and state insurance commissioners. In October 2007, the company was fined $500,000 by Delaware’s Insurance Commissioner for steering customers into individual health insurance policies, failing to provide state-required coverages, engaging in deceptive and improper marketing, mishandling consumer complaints and failing to institute adequate management controls. Seven states have issued fines against the carrier and over 30 other states are currently investigating the company’s practices.

If you’ve experienced deceptive insurance practices of any kind, it’s possible that your insurance company has acted in bad faith. If would like to speak with an attorney whose practice focuses in this area, please click here.