Press Release: 2025-01-07

Press Release Superior Court Orders Health Insurance Companies To Pay Over $165 Million For Deceptive Sales Scheme That Cheated Massachusetts Consumers

Court Finds that Defendants Made Widespread Misrepresentations and Engaged in Intentionally Deceptive Conduct, including Tricking Consumers into Unknowingly Buying Supplemental Health Insurance and Targeting Vulnerable Consumers Who Could Least Afford The

FOR IMMEDIATE RELEASE:

1/06/2025

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Sabrina Zafar , Deputy Press Secretary

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Call Sabrina Zafar , Deputy Press Secretary at (617) 727-2543

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Email Sabrina Zafar , Deputy Press Secretary at Sabrina.Zafar2@mass.gov

BOSTON — Attorney General Andrea Joy Campbell announced today that her office has obtained a favorable order from Suffolk Superior Court against three UnitedHealth insurance companies, HealthMarkets, Inc. and its subsidiaries, The Chesapeake Life Insurance Company, and HealthMarkets Insurance Agency, Inc. f/k/a Insphere Insurance Solutions, Inc., requiring them to pay over $50 million in restitution for Massachusetts consumers and over $115 million in civil penalties to the Commonwealth for misleading consumers. Each of the defendants is owned by UnitedHealth Group.

The Court’s order is believed to impose the largest total of civil penalties in an action brought by the Attorney General’s Office under the Massachusetts Consumer Protection Act. Notably, in light of evidence that the defendants intentionally targeted “vulnerable consumers who could least afford their products,” the Court found that the companies’ deceptive conduct was “particularly egregious.”

The order follows a Suffolk Superior Court complaint filed by the AG’s Office in 2020 against these three defendants. The complaint alleged that the companies violated the state’s consumer protection law by misleading consumers into buying unnecessary health insurance products and also violated a prior consent judgment meant to protect consumers.

“For years, the defendants preyed on financially vulnerable individuals, deceiving them into buying products they didn’t need or couldn’t afford. This order holds the companies accountable and will provide meaningful restitution to consumers across the Commonwealth,” said AG Campbell.

The companies are based in Texas and have operated in Massachusetts and around the country.

In April 2022, the Superior Court found all three defendants liable for violating the prior consent judgment and the Massachusetts Consumer Protection Act. The Court found that the companies deceived consumers both about their sales agents and the insurance products they were selling; deceptively advertised claims that their sales agents were objective and that they represented all insurance carriers; and that the companies’ claims of objectivity were untrue and that the agents “did not, in fact, represent all health insurance licensed in Massachusetts or even all insurers that issued supplemental health insurance in Massachusetts.” The Court also found that the defendants’ sales agents deceptively passed off separate, supplemental health insurance policies (which provide less-comprehensive coverage than major medical insurance), such as specified disease insurance, as part of or included with major medical insurance in a variety of ways, including providing health insurance quotes that contained a single price, which combined the premiums for major medical insurance and the supplemental health insurance.

On December 31, 2024, the Court issued its Findings of Fact, Rulings of Law and Order for Judgment, following a trial on remedies. The Court found that the defendants engaged in widespread misrepresentations of supplemental health insurance that they sold in Massachusetts, including intentionally engaging in bundling of major medical and supplemental insurance to deceive consumers into unknowingly buying supplemental polices. Based on Defendants’ widespread misrepresentations, the Court ordered them to pay back over $50 million that consumers had paid for those policies. It also imposed over $115 million in civil penalties against the defendants for multiple different categories of violations, reflecting “the egregiousness of respective violations.”

The Court also directed further proceedings on an award to the Commonwealth of reasonable costs of investigation and attorney’s fees and further injunctive relief against the defendants.

This matter is being handled by Assistant Attorneys General Emiliano Mazlen and Michael Wong, Deputy Division Chief Ethan Marks, and Division Chief Sandra Wolitzky of the AG’s Health Care Division, along with State Trial Counsel James Sweeney, with assistance from Paralegals Gaëlle Bouaziz and Sandra Charalel and Mediation Unit Director Lisa Fenichel of the AG’s Health Care Division, and Anthony Crespi, Edward Cherubin and Division Chief Marlee Greer of the AG’s Civil Investigations Division.