Health Plan Intermediaries Holdings, LLC to pay $2 million after allegedly misleading customers about health insurance coverage
News: 2021 Press Release
OAKLAND, Calif. — Insurance Commissioner Ricardo Lara today announced that Health Plan Intermediaries Holdings, LLC (HPIH) has agreed to pay $2 million to resolve allegations that HPIH and its third-party agents knowingly marketed and sold insurance policies that were being misrepresented as Affordable Care Act (ACA)-compliant to consumers, misleading consumers with limited coverage and large out-of-pocket costs. The Settlement also resolves allegations that HPIH illegally increased the cost of the coverage to policyholders to cover their broker fees, among other fees.
“Consumers looking to purchase health insurance expect they are getting coverage to meet their medical needs, not be sold a ‘bill of goods’,” said Commissioner Lara. “Misrepresenting health insurance coverage puts consumers’ physical, mental, and financial well-being at great risk.”
The Department alleges that HPIH, and HPIH agents with HPIH’s knowledge, misrepresented to consumers the nature of coverages or benefits provided by the policy and other services that it packaged and sold. The Department further alleges that HPIH knowingly misrepresented policies to consumers to create the impression that the policies purchased were either a robust ACA-compliant policy or were as comprehensive as an ACA-compliant policy.
According to the Department’s Order to Show Cause, one consumer was sold a policy represented to her as ACA-compliant and included coverage for hospitalization, when in fact she was sold a policy that included only limited medical benefits. When the consumer was later hospitalized, she incurred more than $26,000 in charges and received only $300 in policy benefits, leaving her personally responsible for the remainder of the bill.
Another consumer purchased what he believed to be a broad supplementary health insurance plan when in fact he was sold a limited insurance benefit with benefit caps of $250 a day and a surgery benefit of only $1,000. The consumer required surgery and incurred uncovered out-of- pocket medical expenses exceeding $85,000.
The Order further alleges that several other consumers signed up for coverage believing that they had an expansive network of physicians to choose from, prescription drug coverage, access to preventative care, and coverage for pre-existing conditions -- none of which were true -- leaving consumers with substantial uncovered out-of-pocket costs.
In addition to the $2 million settlement payment paid to the state’s General Fund to benefit consumers, taxpayers, and residents, HPIH also agreed to reform several of its business practices, including a change in its sales and marketing practices.
The company does not admit wrongdoing in this settlement.
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Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.