Insurance News

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September 21, 2010

Bogus health insurance companies ordered to shut down Missouri operations, pay $1 million in fines

Jefferson City, Mo. - Missouri Insurance Director John M. Huff has issued a cease and desist order and more than $1 million in fines in a massive crackdown against bogus health insurance plans being sold in Missouri. The order targets 13 companies and individuals Huff says defrauded Missouri consumers by selling them health discount plans designed to look like comprehensive medical insurance.
Earlier this year, the department demanded the companies and individuals appear at a hearing in Jefferson City. None of them appeared at the hearing.

"In a difficult economy and a time when health insurance is becoming more expensive, these companies took the money from Missouri consumers and ran," said Huff. "Consumers need to be on the lookout for fake health insurance, and should call our department to check these companies out."

Huff says the groups market their products largely through junk faxes, using phrases like "Control your health care costs," "Group health plan" and "dependent coverage." The department knows of at least 150 Missouri consumers who paid these companies for services.

In many cases, consumers found their coverage was less than what they were led to believe. In other cases, consumers were unable to even reach anyone at the company to cancel their contract or to get their medical bills covered.
Huff's cease and desist order demands the following:

• Affinity Group Benefits Association Inc. - $130,000 fine, cease and desist
• Smart Data Solutions LLC - $130,000 fine, cease and desist
• Christopher Ashiotes - $130,000 fine, cease and desist
• Richard Bachman - $130,000 fine, cease and desist
• James M. Doyle - $130,000 fine, cease and desist
• Obed Kirkpatrick - $130,000 fine, cease and desist
• Bart S. Posey Sr. - $130,000 fine, cease and desist
• Thomas J. Sullivan - $130,000 fine, cease and desist
• American Trade Association - cease and desist
• Americans for Affordable Healthcare Inc. - cease and desist
• Real Benefits Association - cease and desist
• Serve America Assurance Ltd. - cease and desist
• Spencer & Associates LLC - cease and desist

If the operators of these plans continue to violate Missouri law or fail to pay the fines, they could face criminal charges and prison time. Fines collected by the department go to the state school fund, benefiting public schools in Missouri.

State law distinguishes between health insurance and discount medical plans. Insurers must be licensed, and discount medical plan providers must register. Huff says consumers should determine whether a health plan or agent is authorized to do business in Missouri at insurance.mo.gov or by calling the Insurance Consumer Hotline at 1-800-726-7390.

About the Missouri Department of Insurance, Financial Institutions & Professional Registration

The Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP) is responsible for consumer protection through the regulation of financial industries and professionals. The department's seven divisions work to enforce state regulations both efficiently and effectively while encouraging a competitive environment for industries and professions to ensure consumers have access to quality products.

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