WA Office of Insurance Commissioner Press Release
Kreidler Targets Illegal Health Plans - Seeks Legislation to Increase Penalties
Olympia, Wash. — The Office of the Insurance Commissioner (OIC) is launching an education campaign to warn consumers of the perils of illegal health insurance plans and urge them to "verify before you buy." The agency is seeking legislation to increase both the civil and criminal penalties for the unauthorized sale of insurance or health coverage. House Bill 1676 and Senate Bill 5641 were introduced this week.
"Today's tight health insurance market is ripe for scam artists, and I understand how tempting the promises of cheap insurance can be," said Insurance Commissioner Mike Kreidler. "I can't emphasize enough the old adage, 'if it sounds too good to be true, it probably is.'"
People who buy into illegal health plans may find themselves with mounting medical bills and no real insurance benefits to pay the bills. Employers who sign up for these illegal plans may be liable for their employees' medical bills. Anyone shopping for health insurance should contact the Office of Insurance Commissioner at 1-800-562-6900 to ensure that a plan is legitimate and that the insurance agent is licensed.
"Verify before you buy, especially if you don't recognize the name of the health plan or if you suspect the plan may not be legitimate," he said. "To the marketers of these illegal plans, I issue this warning: If you sell in Washington you will be prosecuted."
Health insurance scams are surfacing throughout the country, and while the problem is worse in many other states, Kreidler wants to avoid an influx here.
Under the commissioner-request legislation, a person transacting insurance or health coverage without authorization would be subject to a Class B felony and a civil fine up to $25,000 per violation.
A typical illegal health plan attempts to recruit as many local insurance agents as possible to market the plan and seeks to collect a large amount of premiums as quickly as possible. Consumers are falsely told that the plan is an "ERISA plan" governed by federal law or a "union plan" exempt from state law.
While these illegal plans may initially pay some claims, often they delay payment or refuse to pay altogether, and suddenly they vanish. There is no recourse for the consumer through state insurance laws when a company is not licensed.
Some 10,000 people throughout the country - including in Washington - bought phony insurance in 2001 from Employers Mutual. Left with no recourse, they are now suing to collect more than $50 million in unpaid claims that mounted up in the span of a single year.
"Unfortunately, by the time we hear from consumers who bought illegal health insurance it's too late," Kreidler said. "That's why it's critical that we educate consumers before they purchase these fraudulent plans and find themselves not only without coverage, but with huge medical bills they can't afford."
Olympia, Wash. — The Office of the Insurance Commissioner (OIC) is launching an education campaign to warn consumers of the perils of illegal health insurance plans and urge them to "verify before you buy." The agency is seeking legislation to increase both the civil and criminal penalties for the unauthorized sale of insurance or health coverage. House Bill 1676 and Senate Bill 5641 were introduced this week.
"Today's tight health insurance market is ripe for scam artists, and I understand how tempting the promises of cheap insurance can be," said Insurance Commissioner Mike Kreidler. "I can't emphasize enough the old adage, 'if it sounds too good to be true, it probably is.'"
People who buy into illegal health plans may find themselves with mounting medical bills and no real insurance benefits to pay the bills. Employers who sign up for these illegal plans may be liable for their employees' medical bills. Anyone shopping for health insurance should contact the Office of Insurance Commissioner at 1-800-562-6900 to ensure that a plan is legitimate and that the insurance agent is licensed.
"Verify before you buy, especially if you don't recognize the name of the health plan or if you suspect the plan may not be legitimate," he said. "To the marketers of these illegal plans, I issue this warning: If you sell in Washington you will be prosecuted."
Health insurance scams are surfacing throughout the country, and while the problem is worse in many other states, Kreidler wants to avoid an influx here.
Under the commissioner-request legislation, a person transacting insurance or health coverage without authorization would be subject to a Class B felony and a civil fine up to $25,000 per violation.
A typical illegal health plan attempts to recruit as many local insurance agents as possible to market the plan and seeks to collect a large amount of premiums as quickly as possible. Consumers are falsely told that the plan is an "ERISA plan" governed by federal law or a "union plan" exempt from state law.
While these illegal plans may initially pay some claims, often they delay payment or refuse to pay altogether, and suddenly they vanish. There is no recourse for the consumer through state insurance laws when a company is not licensed.
Some 10,000 people throughout the country - including in Washington - bought phony insurance in 2001 from Employers Mutual. Left with no recourse, they are now suing to collect more than $50 million in unpaid claims that mounted up in the span of a single year.
"Unfortunately, by the time we hear from consumers who bought illegal health insurance it's too late," Kreidler said. "That's why it's critical that we educate consumers before they purchase these fraudulent plans and find themselves not only without coverage, but with huge medical bills they can't afford."
posted by Kirby P at 9:37 AM
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