Minnesota’s attorney general has filed suit against two companies she says “are exploiting the lack of affordable health coverage” by “aggressively promoting” non-insurance products.

Lori Swanson

Consumer Health Benefits Association (CHBA), a Missouri non-profit corporation with a headquarters in Florida, and Home Health America LLC of Nevada, are the focus of a pair of lawsuits by Lori Swanson, seeking injunctive relief, restitution for consumers and civil penalties.

CBHA was sued by the Illinois Attorney General’s Office in 2005 and in 2007, reaching an agreement with the office not to represent that its plan was health insurance or commensurate to an insurance product, Swanson’s office said. In 2006, Home Health America’s owner entered a consent degree with Washington state, prohibiting the company from selling home health care contracts.

“Many people are struggling with skyrocketing health insurance premiums,” Swanson said in a statement. “Some companies are exploiting the lack of affordable health coverage by aggressively promoting risky, unregulated health coverage products that offer little or no financial protection if you get sick.”

The Minnesota lawsuit against CHBA alleges that the company violated the state’s consumer fraud and deceptive trade practices laws.

Swanson’s office claims the company targeted people looking for affordable health insurance, misleading them into paying an enrollment fee of $129.90 and a monthly fee of between $129.95 and $149.95 by misrepresenting that it offered health insurance or the “functional equivalent,” according to Swanson’s office.

The suit alleges that during sales calls, CHBA misrepresented its “New Choice Health Plan” as insurance or just like insurance, when it was a health discount plan, which does not provide insurance coverage, but offers discounts off the retail price charged by certain doctors and clinics. Such plans, Swanson said, are not licensed or regulated in Minnesota.

Other allegations against CHBA include obtaining marketing leads of citizens shopping for health insurance quotes on the Internet and aggressively telemarketing those citizens, in some cases pushing for quick sales by claiming current premiums were only available for a limited time or having a limited number of plans available for Minnesota customers.

Approximately 2,250 Minnesota citizens signed up with CHBA since 2003, with 94% of customers canceling their plans in the first year.

The lawsuit against Home Health America, and its owner, Michael Woodward, alleges violations of the state’s consumer fraud, deceptive trade practices, long-term care insurance, and home solicitation laws.

Swanson’s office said the company allegedly sold elderly Minnesota customers long-term and home care coverage for fees of up to $4,000, even though it was not licensed as an insurance company.

The suit claims that Home Health America sent elderly citizens mailings describing the high cost of home care and invited them to return a postcard to get more information. Those prospective clients were then called by Woodward, using the alias “Mike Woods,” who arranged meetings at the seniors’ homes and allegedly promised home care and other long-term care services for a lump sum payment of between $3,000 and $4,000.

In some cases, Home Health America refused to pay claims, and the attorney general’s office said it is not aware of any case did where it paid claims in excess of the citizen’s initial payment.