American Medical and Life Insurance — the company behind those totally non-sketchy Cinergy cards we wrote about last month — was fined $700,000 August 13 for “misleading sales practices” by the New York Sate Insurance Department. The company also entered into an agreement with the Department to discontinue all limited medical benefit group policies in New York and to pull its nationwide television commercial, which was its main marketing tool, according to a NY Insurance Department press release. (We apologize for the delay, but the Department just shared it with us today).
The disciplinary actions followed an Insurance Department investigation that, according to the release, uncovered the following:
— The company sold thousands of policies via unlicensed agents employed by telemarketing firms in New York and Florida
— Sold many policies through the National Congress of Employers, “which the department determined violated New York law because the association was not formed and maintained for a primary purpose other than selling insurance.”
— Marketed through “an intermediary called Cinergy Health that, in
violation of New York Insurance Law, created the misleading impression
that the limited benefit plan offered major medical or comprehensive
coverage.”
The investigation also found that sales were conducted over the
phone or online, “circumventing specific disclosures that are required
by New York Law. The mandatory disclosures are either not provided, are
not prominently displayed, or are lost during the sales pitch and are
thus ineffective.
The release also contains a few of the complaints received by the
Insurance Department, and our favorite one is from a poor 36-year-old
sap who suffered a stroke and had to pay nearly $30,000 out of pocket
because American Medical only paid $250 toward his bills.
American Medical Executive VP Bob Ostrander is on vacation and
couldn’t be reached. (It’s extremely difficult to actually contact
anyone at the company, probably because they’re always too busy
laughing their asses off over the amount of money they’re raking in).
We also e-mailed our favorite New York flack, Ronn Torossian, for word on how this will impact Cinergy’s bottom line. We’ll let you know if we hear anything.
This article appears in Aug 20-26, 2009.
