Wednesday, July 7, 2010

Health insurance scammers overlook the low hanging fruit

The Insurance Journal reports:

Bob Harper thought he'd found a better health-insurance deal. The Oklahoma man bought coverage from an outfit called American Trade Association (ATA). The price seemed affordable, and he thought he'd save decent money while maintaining a solid healthcare safety net.

Harper's heart then went bad. His strength fading, he urgently needed a pacemaker. But he discovered too late that ATA was fake. Trying to find legitimate health protection he was having trouble convincing insurers to cover him because of his pre-existing condition.

A Colorado man was gravely hurt in a hit-and-run accident. His hospital bills soared to $43,000 before he died. His so-called health plan, the National Trade Business Alliance, paid out just $250, the insurance department says.

More victims like these are showing up as fake health plans operate widely around the United States over the last two and a half years, exploiting people's anxiety over finding affordable coverage amid rising premiums, mounting layoffs and general financial distress in a downturned economy.

These guys are missing their prime target demographic. Instead of defrauding people one at a time, they could defraud entire groups of people by just going into the ERISA insurance business. The Insurance Journal goes on to report:

Bogus health plans can take blindingly diverse and complex forms, often deliberately to camouflage their illicit operations from regulators. But basically, most promise full-benefit coverage yet deliver lesser products such as:

Fake coverage that's a worthless piece of paper

(emphasis added). Heck, that’s the working definition of an ERISA “insurance” policy right there! And they could do it with immunity from legal liability for fraud.

Get with it, guys!

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