A Massachusetts court has slapped three UnitedHealth Group affiliates with a $165 million penalty for deceptive sales practices, marking one of the largest fines ever issued under the state's consumer protection laws.
AM Best reported that HealthMarkets Inc., along with its subsidiaries Chesapeake Life Insurance Co. and HealthMarkets Insurance Agency Inc., will pay $50 million in restitution to residents and more than $115 million in civil penalties to the state after being found guilty of misleading consumers into purchasing unnecessary health insurance products.
The case dates back to 2020, when Suffolk Superior Court filed a complaint against the companies, alleging violations of consumer protection laws. The attorney general’s office accused the companies of misleading consumers into purchasing unnecessary health insurance products. In particular, the court found that the companies violated a 2022 consent judgment by continuing deceptive sales practices.
One key finding was that the companies misrepresented their agents as being objective, claiming they represented all insurance carriers. The sales agents also falsely marketed supplemental health insurance policies, suggesting they were included with or part of major medical insurance.
In some cases, consumers were given quotes combining the costs of both major medical and supplemental policies, further clouding the true cost of the plans.
The court noted that these deceptive practices were especially harmful to vulnerable consumers, who were often financially strained and could not afford the products.
“For years, the defendants preyed on financially vulnerable individuals, deceiving them into buying products they didn’t need or couldn’t afford,” Attorney General Andrea Joy Campbell said in a statement to AM Best. “This order holds the companies accountable and will provide meaningful restitution to consumers across the Commonwealth.”
She added that the ruling would ensure accountability and provide restitution to affected consumers across the state.
The penalty includes not only the $165 million fine but also additional fees for investigation and legal costs. Further actions could include additional court orders to prevent similar deceptive practices in the future.
UnitedHealth Group, which owns HealthMarkets, expressed its disagreement with the ruling and announced plans to appeal.
“The fundamental errors in this ruling compound those already made by the trial court earlier in this case and have resulted in a decision that is clearly unsupported by the evidence and contrary to established Massachusetts law,” the company said in an emailed statement to AM Best.
UnitedHealth was thrust into the spotlight last month following the tragic death of its CEO, Brian Thompson. Thompson was fatally shot in what has since been identified as a targeted attack. A five-day manhunt led to the arrest of Luigi Mangione, who was indicted on first-degree murder charges in connection with the incident.
What do you think about this ruling? Share your thoughts in the comments.
