State suit alleges health insurers denied benefits
Attorney General Martha Coakley yesterday filed a revised complaint against a group of health insurance companies stating that the firms denied policyholders benefits required by law, disclosed confidential patient information, and used unfair and deceptive sales practices.
The lawsuit filed in Suffolk Superior Court builds on a complaint filed last October by Thomas F. Reilly, the former state attorney general. Additional investigation uncovered evidence that formed the basis of new charges, a spokeswoman for Coakley said.
Like the original complaint, the revised version names as defendants MEGA Life and Health Insurance, Mid-West National Life Insurance, and the parent company of the two firms, HealthMarkets Inc.
"MEGA and Mid-West routinely mislead people about the benefits in their health insurance policies," Coakley stated in a release. "These companies targeted individuals and small businesses looking for low-cost health insurance, but the coverage they provide is not what MEGA and Mid-West's advertising and sales agents make it out to be."
The new complaint states that the companies deny coverage for a slew of medical procedures and services required by state law, including maternity healthcare, screening for cervical cancer, contraception, infertility treatment, mammograms, and preventive care for children. It also alleges the companies illegally denied benefits for patients with preexisting conditions.
The complaint states that the companies marketed "substandard health insurance policies by misrepresenting benefits and limitations."
About 30,000 people in Massachusetts have coverage from MEGA or Mid-West National, according to the attorney general's office.
In a statement, a spokeswoman for HealthMarkets said the company "strongly disagrees with the allegations," and that it has been cooperating with the attorney general's office for three years. In addition, HealthMarkets said, it has worked with the state Division of Insurance to resolve inaccurate payments.
HealthMarkets also has put in a system "to assure that customers know what they are buying," said spokeswoman Donna Ledbetter. As part of the plan, the company calls customers to explain what their health insurance policy pays for and what is excluded, she said. Only 2 percent of customers cancel their policies after the follow-up call, Ledbetter said.
"This retention level shows that our agents are doing well to ensure that customers fully understand their benefits," she said.
A status conference on the case is scheduled for Sept. 5.
Jeffrey Krasner can be reached at krasner@globe.com. 