MEGA Ordered To Refund $4.6M in Premiums and Pay Record $1M Fine

MEGA Life and Health Insurance Company has been ordered to refund $4.6 million in overpaid health insurance premiums to Maine consumers – plus an additional $1 million in civil penalties for four years of calculating those premiums using flawed methods.

More trouble for MEGA Life

MEGA Life’s latest troubles originate in Maine where the Maine Bureau of Insurance and the state’s Attorney General announced that they have fined MEGA Life and Health Insurance Company $1 million in civil penalties and have ordered the company to reimburse policyholders $4.6 million in overpaid premiums, plus interest. The $1 million fine represents $250,000 per year for each year from 2004 to 2007.

According to a press release from the state of Maine (www.maine.gov/), MEGA Life has 30 days to notify Maine’s Bureau of Insurance about how and when it will make those payments. It is estimated that over 9,800 policies are affected by action. Consumers can contact Maine’s Bureau of Insurance at 1-800-300-5000 or contact them at 34 State House Station in Augusta, Maine 04333.

MEGA ignored Maine law

Maine’s Attorney General, Steve Rowe, was quoted as saying, “Based on the evidence, MEGA Life’s rates were determined to be excessive under Maine law. Instead of bringing their rates down as required by law, MEGA Life continued to charge inflated rates. This practice resulted in Maine policyholders being over charged for years. This settlement will return the overcharge plus interest to the policyholder.”

MEGA’s practices not limited to Maine

The company’s practices aren’t limited to Maine and encompass other insurance practices as well. MEGA Life, along with its parent and sister companies, HealthMarkets, Mid-West National Life and Chesapeake Life insurance companies, recently scored very low on a multi-state insurance examination by the National Association of Insurance Commissioners, 35 states and the District of Columbia and will likely face large fines based on many areas of deficiencies.

The multi-state investigation into the company’s practices recently showed that their operations were deficient in five major areas including:

  • Handling of policyholder complaints and grievances
  • Oversight, communication, monitoring and training of agents
  • Processing and handling of claims made by policyholders
  • Adherence to a compliance plan
  • Disclosure of relationships with membership associations and affiliated companies to consumers and policyholders

Source: Washington State Insurance Commissioner (www.insurance.wa.gov/)

If MEGA Life has not acted in good faith and dealt with you fairly, contact an attorney whose practice focuses in bad faith insurance practices to discuss your situation. Consultations are free, without obligation and strictly confidential. To contact a qualified attorney, please click here.

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