Mega Life, Midwest National Life & Health Markets Insurance Fine

Sorry - the fist post was cut off

Very old news and much biased - the settlement was in 2008 for 20 million

 As to the bias -
let's pick on one state - MD
look at the personal comp from BC/BS CareFirst, with 500 per year prescription, generic only

look at the fines against BC/BS and United for not paying claims - in one state, the fines for those two companies in one year are approaching the national fine of MEGA

let's look nationally
SEC settlements for united - 900 million settlement
BC/BS in California - canceling policies to avoid claims
Aetna, United, BC/BS all up for state and federal charges - seeking settlements for price fixing in NY, NJ, PA with millions in out of court settlements
Kaiser - transplant center in CA got them in hot water of millions

for all who think the article information is gospel - good luck - there is a personal vendetta that would leave me questioning the source

My bottom line - all insurance providers have issues, even medicare and federal programs do not pay claims and are filled with fraud and waste - do your homework and choose the lesser of evils that best fits your needs.

 Very old news and much biased - the settlement was in 2008 for 20 million

 As to the bias -
let's pick on one state - MD
look at the personal comp from BC/BS CareFirst, with 500 per year prescription, generic only
look at the fines against BC/BS and United for not paying claims - in one state, the fines for those two companies in one year are approaching the national fine of MEGA

let's look nationally
SEC settlements for united - 900 million settlement
BC?BS in California - canceling policies to avoid claims
Aetna, United, BC/BS all up for state and federal charges - seeking settlements for price fixing in NY, NJ, PA with millions in out of court settlements
Kaiser - transplant center in CA got them in hot water of millions

for all who think this information is gospel - good luck - there is a personal vendetta that would leave me questioning the source

My bottom line - all insurance providers have issues, even medicare and federal programs do not pay claims and are filled with fraud and waste - do your homework and choose the lesser of evils that best serves you

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Thank you for your comments John Arnold (Stevens?),

The last paragraph of your comments are excellent. As with all financial decisions (most especially Health Insurance) one must do their due diligence prior to purchase. As to this information being "old news" and "biased". I can only respond by saying that May 29th, 2008 (the date that the $20,000,000 fine was levied against Mega) is not old news. Secondly, Mega Life & Health and all of their multiple aliases (Health Markets etc.) have a long and sordid history of deceiving consumers into buying extremely limited coverage under the guise of official sounding associations such as the:
"National Association for the Self Employed" & the "Alliance for Affordable Services".

In addition, the $20,000,000 fine is only one of many, many lawsuits brought against this organization over the years. Furthermore, I can provide you with multiple documented cases of innocent consumers who have been swindled by Mega and their "agents" into buying their garbage and then subsequently being diagnosed with a major medical illness and left holding the majority of the medical bills (whilst also dealing with the pain and suffering brought upon them by the illness itself).

Such needless suffering could have been entirely avoided if they had dealt with a reputable broker. Since any reputable broker with a shed of conscience would not recommend any Mega product to any one. But that's just the point with Mega & Midwest. They deliberately recruit new "agents" from outside the insurance arena because they know full well that any agent or broker with even a minute level of experience would steer clear of their organization based on their sordid reputation alone. Not to mention the aforementioned recent regulatory fine. In fact, I know of no other insurance organization that has misled the American consumer longer or more brazenly, than Mega & their sister company Midwest National Life.

The insurance industry as a whole is rife with fraud (the lawsuits you mention in your comments are a testament to this). As such, the primary obligation for any insurance broker is to protect their clients against such fraud. Whilst Mega is now offering plans that offer 100% coverage after the deductible has been satisfied. These plans still have gaping coverage holes in them that are not found on the majority of other major medical health insurance plans.

For example, many of their plans still have the typical Mega coverage gaps such as policies that state they cover the insured to $2,000,000 but actually only provide $100,000 per illness, or, policy declarations that use deceitful descriptions such as "100% coverage for organ transplants (up to $250,000 only). Or an outpatient prescription drug card that offers a $15 co pay for Generic medications and 50% coverage for Formulary drugs but then stops covering all outpatient prescriptions at $1,500 annually. This is to name just a few.

As a matter of fact, reduction in coverage for organ transplants is one of the easiest ways to determine if a company has designed a garbage product. Reducing the coverage amount for organ transplants is the easiest way for an insurance carrier to avoid paying a sizeable claim. This is so, because when disease strikes the human body it almost always strikes an organ first. This being the case, if a carrier such as Mega covers only $250,000 for an organ transplant (which by the way is grossly insufficient coverage) then they will never have to pay a significant claim. Even though they state that their policy "covers
each insured to $5,000,000.

Furthermore, even if $250,000 was enough to cover an organ transplant (which it most certainly is not) the patient would have to start regular doses of 'anti-rejection" (immunosuppresant) medications immediately thereafter in order for the body to accept the new organ. With the Mega prescription card capping the coverage at $1,500 per year, the insured won't even be able to pay for one month's worth of immunosuppresants. Since a rejection can occur at any time (even long after the new organ has been surgically implanted) this could lead to catastrophic out of pocket costs to yet another innocent
consumer. Great examples of such extremely limited plan designs can be seen by renting the movie "John Q. Public" starring Denzel Washington. Whilst the story itself is fictional. There are 45 minutes of "bonus footage" on the DVD that highlight multiple true stories of real people who were insured with carriers that offered a $5,000,000 lifetime benefit but had no coverage for organ transplants.

It is these kinds of deliberate coverage gaps that put the consumer directly in harms way and it is the prime directive of any broker to steer their clients away from such garbage and in the direction of a solid major medical policy without such deliberate benefit exclusions.

Whilst United Health Care, Blue Cross Blue Shield, Aetna & Kaiser Permanente have had their battles in the court systems (as other carriers have) you will not find such coverage gaps on their products, and you would be hard pressed to find such gaps on the majority of quality Health Insurance policies.

The Stuart Law Firm was rated one of the top 10 law firms in California and they have an entire division that handles fraud cases from Mega & Midwest from across the country. This is a testament to how systemic the problems are with this organization. In fact, each and every week I receive multiple calls from around the country regarding Mega & Midwest policy holders facing hundreds of thousands of dollars in unnecessary Medical Bills. 

And here's the primary difference. These policy holders call me not because Mega or Midwest are refusing to pay their claims. Instead, the very design of their policies protect THEM against paying the claim in the first place. I challenge anyone to provide me a policy from Blue Cross Blue Shield, Aetna, Kaiser Permanente or United Healthcare that has the following coverage caps inherent to many Mega & Midwest "Schedule Plans":

ER = $1,000 max benefit
Lab = $2,000 per day max benefit
Doctor visits = $75 max benefit
Prescriptions = $1,000 max benefit
Chemo = $2,000 per day max benefit
Deductibles = per-occurrence (unless PPO Plus or Signature - almost never sold)
No outpatient charges count towards the plan deductible. You have a separate deductible
for lab and ER. All out of pocket expenses involving lab, ER and doctor visits don't count
towards the deductible.

Mega Chemotherapy Benefit (additional cost) $7500
Other company included in plan up to $5,000,000
Mega air ambulance benefit (additional cost) $3500
Other company included in plan up to $5,000,000
Mega accident coverage up to $50,000 max $500/day
Other company included in plan up to $5,000,000
Mega family deductible $2,500 per confinement period.
Other company family deductible $2,500 per year

The following is a transcript of an interview with California insurance attorney , Bob Scott, conducted on March 28, 2007. Mr. Scott has over thirty years of experience as a trial attorney in California, specializing in all aspects of bad faith insurance litigation, including life, health and accident insurance and all attempted insurance policy rescission's or cancellations. Mr. Scott has represented a diverse range of clients, from individuals victimized by insurance companies to large banks and industrial companies. In this interview, Mr. Scott discusses the practices of MEGA Life and Health Insurance Company and the laws that govern insurance company behavior and the practice of bad faith denial of claims.
Free Advice: I’m speaking with Bob Scott, an attorney in Southern California, who has done extensive work representing plaintiffs against insurance companies who have wrongfully denied their claims. We’re going to talk about MEGA Life and Health Insurance Company today.

Randy: Can you tell me who is MEGA Life and Health Insurance Company?
Bob Scott: MEGA Life and Health Insurance Company is an insurance company that sells health insurance in 47 states. They sell a lot of policies here in California, as well. MEGA Life’s sister company, Midwest National Life Insurance Company of Tennessee, also sells policies in 47 states, including California. They are owned by an insurance holding company called Health Market, a Texas entity that used to be called UICI and was a Texas holding company on the New York Stock Exchange. In the last year, UICI was sold to a private equity company, and is no longer a public company. They continue to hold and own MEGA, as well as Midwest, but have changed their name to Health Markets.
Free Advice: How are they selling their health insurance product?
Bob Scott: Primarily, they sell through a group of agents who sell the policies and memberships through two organizations: one called NASE, (National Association of Self-Employed) and another called Alliance for Affordable Services. The agents advise insurance consumers that if they join either the NASE or the Alliance for Affordable Services, they are joining large groups of insurance consumers and can obtain group-like
insurance at group-like premiums. They never advise the potential insureds that these so called not-for-profit entities are actually controlled by health markets and their subsidiaries, MEGA and Mid-Life, Midwest.
Free Advice: Is it legal to sell health insurance this way?
Bob Scott: It is legal. However, in California and several other states, a group like this
cannot be set up for the sole purpose of selling insurance, and we take the position that
these organizations were set up specifically to sell insurance, which is illegal.
Free Advice: Is this considered insurance fraud?
Bob Scott: In our opinion, yes.
Free Advice: Is there anything else we should know about MEGA Life?
Bob Scott: MEGA Life and their sister company, Midwest, continue to sell these products after settling a multi-million dollar class action settlement whereby they were ordered to advise of the inner relationships between the holding company, these groups, and the insurance companies, so that people would really understand that these groups are not really independent, that they don’t necessarily have the consumers’ best interests at heart, and that the insurance companies are pulling off a fraud on these insurance
consumers.
Free Advice: Are they continuing to market this way after that settlement?
Bob Scott: Yes, they are. They continue to market the same way. They’ve changed some of their advertising materials and presentation materials, but even the new materials attempt to mislead the public.
Free Advice: Do the insurers wrongfully deny claims for those insured under the
associations you’ve mentioned?
Bob Scott: In our opinion, yes. They continue to fraudulently market these policies as
major medical policies, but they have limited schedules that limit payments, for instance,
for a hospital stay or physician’s visit. I have clients who have thousands and thousands of dollars of medical bills and cases in which these companies are paying a small percentage of the medical bills. They claim to have paid all that is owed under the policies as written, but the people who have purchased these policies were misled to believe they had true major medical insurance coverage and would be protected.
Free Advice: How long has this been going on for?
Bob Scott: I’ve been doing these cases for several years. These associations were set up in the 1980s, so this has been going on for a long time.
Free Advice: How do I know if I have a bad faith insurance claim against MEGA Life?
Bob Scott: It involves a lot of research. You would have to contact an attorney to review these claims, the policies, and the advertising information, as well as the dates of application, to determine if you really have a case.
Free Advice: Would I base my case on the date of my application or the date when my
claims were denied?
Bob Scott: It depends on the cause of action. Some of the fraud causes of action would start at the time of purchase, or at the time of application. However, a bad faith cause of action in a complaint would run from the date of the denial.
Free Advice: What is the California Department of Insurance doing about these types of
claims?
Bob Scott: I don’t think they’re doing too much. I know that they opened an investigation, but I haven’t seen too many changes in the way that these companies are doing business here in California. There have been some changes in the departments since the elections. We have a new Insurance Commissioner, so I’m hoping that the Department of Insurance will continue their investigations and properly protect California insurance consumers.
Free Advice: How do I know if I’m buying one of these policies? If I have bought one of these policies, what do I do?
Bob Scott: If you bought one of these policies, it will feature the name of MEGA or the name of Midwest on the policy face sheet.
Free Advice: What are my remedies if I’ve been sold such a policy?
Bob Scott: It depends on whether claims have been made and whether you have been defrauded. You must have been a member of the class that has settled, which includes policies purchased between August 1, 1998, and May 14, 2004. However, I would recommend you let an attorney make that determination."

John, if this is not a testament to a systemic problem within this organization I don't know what else could be. Regarding my comments being "biased", I am most certainly biased against  this organization and any other that deliberately exposes innocent consumers to catastrophic out of pocket expenses.

I am an ex-mega agent and can tell you first hand that the plans are not competitive.  Agents are told to put the blinders on and not to worry about what the competition offers.  In my state I can offer a $5,000 deductible unlimited plan for the same price as the Cover First $5,000 deductible plan that only covers up to $40,000 on a scheduled basis.  Who in their right mind would choose the cover first in that situation?  UNIFORMED BUYERS! which are Healthmarket's bread and butter.  People need to do their research and not get talked into a plan that is limited, when they can get a much better plan for the same price.  The company also tricks new agents by not explaining the fact that they are loaned their advances at %12 annually and charged stupid little fees on top of that!  Does anyone know of any agent that has worked for another insurance company and then come to Healthmarkets?  I sure don't.

Excellent point Bob. Thank you for your insightful and informed comments and expertise.

Another self serving article meant to limit the authors competition.  I currently have Blue Cross Blue Shieled and pay $1,500.00 per month for coverage. This company never pays for anything in full so on top of already mortgage type premiums I have to pay for a portion of the bill out of pocket. I wish I could get Health Markets plan so I could at least know where my money is and not give it to over priced plans so people like the author can make his huge commission, or does he work for free?

Lets look at the lawsuits against all the large insuresrs.  How many people with the authors policies have to raise money as there insurer will let them or their kids die before paying a penny more.  You can find negative comments about any insurance carrier, but to wirte an article as "watch dog" only for your own benefit is unforgiveable.

I don't understand how this article is self-serving? The guy is a broker, he can sell a variety of health plans, so what does he care about which one you buy. He is just pointing out that there is severe coverage limitations with this plan and that people should know what they are buying before they sign on the dotted line thinking that everything will be covered. So to say that he is trying to limit his competition in this instance is just plain stupid.

If you have Blue Cross and Blue Sheild and you are getting corn-holed with high premiums, maybe you should get a new agent or maybe you should have done your own due diligence before you purchased the plan.

I was a former health insurance agent for period of time inbetween jobs and Mr. Tucker's other article, regarding the 10 Questions you should ask your insurance agent is spot on.

If consumers would take the time to actually research their health insurance purchase, like they would a car or a wide-screen TV, there would be less cry babying.

Its a free country, so you can always switch to Health Markets and buy a Mega plan. Let me know how that works out for you.

Mr. Unger,

I am very sorry that you see my article as "self serving". This was most certainly not my intent. Instead my intent has always been to protect the consumer against unscrupulous insurance carriers like Mega Life & Health & Midwest National Life. Whilst you correctly mention that other carriers such as Blue Cross Blue Shield have had their days in court. You will be very hard pressed to find ANY other carrier that offers policies with coverage caps and exclusions that are as severe as those provided by Mega Life & Health & Midwest National Life. The recent $20,000,000 fine levied against this organization is a testament to the pain and suffering they have brought upon the American consumer for decades.

This may be the first time you have come across one of my articles. As such, you may not be familiar with my 15 year career in the Health Insurance industry. However, I have hundreds of clients who have chosen to do business with me consistently for many years due to the fact that my primary goal has always been to act as an advocate for the insured and not the insurance carrier. This had led to strong business relationships that I am sincerely grateful for.
In fact, this is one of many articles I have written that are designed to protect and inform the consumer so that they can make empowered purchasing decisions. Many other such articles you can read on my Blog here: http://www.sbisvcs.com/healthinsuranceblog.htm

In fact, the service I provide (which is FREE of cost to ANY one whom I help to insure) empowers consumers to help them delineate between a quality policy and a poor policy BEFORE they make a Health Insurance purchase. My services do not end there. AFTER policy purchase I continue to act as an advocate for all of my insured clients by helping them through the appeals process which often arises after their insurer attempts to deny their claims or pay them at a lower percentage than they should. The vast majority of the time, their claims are then summarily paid correctly. This is a very valuable service and I provide it to ALL of my insured clients at no cost to them. This, I have always felt, is how ALL agents/brokers should service their client's needs.

Regarding your assertion: "How many people with the authors policies have to raise money as there insurer will let them or their kids die before paying a penny more?" I can only respond by telling you that I have hundreds of clients who have been with me for over a decade. If such a statement were true, this would most certainly not be the case. In fact, this is how one of my clients decided to express himself after he was diagnosed with Leukemia the day after his wedding day. Since that diagnosis his health insurance carrier has paid out just under $600,000 to save his life. He needed many chemotherapy treatments, many expensive visits with a medical dosimetrist and his stem cells needed to be harvested.

He writes: 

"Dear Mr. Tucker:

I would like to take this time to extend my deepest appreciation and gratitude to yourself and all at Fortis Insurance who have helped me in the past 7 months. For a long period of time, I, like a majority of people, did not have health insurance, which deterred me from going to a doctor. Then, myself and some of my other employees signed up for health insurance policies through Small Business Insurance Services.

I began feeling tired and run-down, but wrote it off as stress from my up-coming wedding. Feeling confidant enough with my insurance, I decided to go to the doctor and ease my mind. It was a blessing I did because I was diagnosed with Leukemia on July 13, the day before my wedding. The day after my wedding, 2 days after being diagnosed, I was admitted to the hospital to start a rigorous treatment of chemotherapy, which resulted in a stay that lasted over a month. I since have gone back for several more week-long chemotherapy treatments and finally to have my stem cells harvested. Throughout this whole process, I have had nothing but help and cooperation from Fortis.

This has been a very trying time for me and my family and without the help of Fortis Insurance Company, I would be in financial ruins. I cannot thank you enough for all you have done."

This is one of many letters I have received throughout the years from clients whom I have acted as an advocate for. Many other clients have chosen to comment on the services I provide on the "About Us" page of my web site here: http://www.sbisvcs.com/AboutUs.htm
It should be noted also that contrary to popular belief, purchasing your Health Insurance through a knowledgeable and reputable broker costs you nothing more than if you purchased your Health Insurance directly from the insurance company itself. This being the case, no one should purchase Health Insurance without a Broker/Agent. Doing so, will protect you against Health Insurance fraud and against purchasing policies with severe limitations.

One of the best tools against this can be found by reading another article I wrote some time ago entitled "Ten Questions You Should Ask Your Agent BEFORE You Buy A Policy".
In fact, "msj" refers to this article in his comment above (thank you MSJ!)
It can be read here on my website here:
http://www.sbisvcs.com/ten_question_methodology.htm 

Regarding purchasing "Health Insurance" from Health Markets. I strongly caution you against doing so. Whilst the "Health Markets" marketing organization now offers coverage through other reputable Health Insurance carriers. They STILL offer coverage through Mega Life & Health and Midwest National Life. In fact, the National Association for the Self Employed (NASE) STILL recommends both companies! This being the case, I would advise you to visit the Stuart Law Firms web site here: http://www.stuartlaw.us/rippedoffbymega.jsp BEFORE considering such a move. Better yet, why don't you give them a call @ (310) 854 0812. I am quite sure that they would be MORE than happy to discuss this with you directly.

P.S. The aforementioned client has been in full remission for 7 years now and he and his wife have had two children since! His business has also grown tremendously and he now provides employment to many new and well paid employees. None of which would have occured without the help of his insurance company.

Mr. Unger,

You are mistaken if you feel that I have "competition". As a broker, I have no competition. I am not captive to any company. This being the case, the recommendations I make are based on what is best for the insured. So your point regarding writing about "my competition" is moot.

OK, I think if would have use software from Insurance Technology companies like I.D.I.T - which my link is more than detailing about, than the insurance industry could have many more great days like that :)

Because I can't see the name of the company ("Rarely"?! is it a pseudonym?) I can't know if they are using IDIT's services.... but I guess not.

Insurance coverage managed the right way could save bunch of money you know.