Insurance brokerages, two execs face charges for insurance 'switch'

Insurance brokerages, two execs face charges for insurance ‘switch’ | Insurance Business America

Life & Health

Insurance brokerages, two execs face charges for insurance ‘switch’

Firms, agencies conspired in unlawful use of clients’ info – class action

Life & Health

By
Noel Sales Barcelona

Bain Capital Insurance Fund L.P., Bain Insurance’s Enhance Health LLC, Digital Media Solutions LLC, Benefitalign LLC, Net Health Affiliates Inc., and two executives related to these companies are now facing charges at the US District Court for the Southern District of Florida for their alleged involvement in an “unauthorized enrollment and switching of Affordable Care Act (ACA) market plans,” according to an AM Best report.

The report states that the original lawsuit was filed before the district court in April 2024, alleging the lead generation firms, agencies, and brokerages “conspired” to collect and misuse consumers’ personal identifiable information to either switch their ACA plan or begin a new enrollment without their consent. The amended complaint, filed on August 16, suggests these actions could be taken with just a policyholder’s name, date of birth, and ZIP code.

“The agents that originally enrolled the policies were also not informed of the changes being made. These agents had their commissions ‘basically stolen’, according to the complaint, which said the professionals had to spend countless hours and resources to restore their status as the agent of record on the policies,” the AM Best report stated.

A burgeoning, serious problem

The report added that this type of fraud is so prevalent that the Centers for Medicare and Medicaid Services released a statement acknowledging the problem. Federal lawmakers are also planning to create a law that will impose stiffer penalties for insurance agents and companies committing such fraud, the report stated.

The lawsuit also claims the defendants used unscrupulous lead generation practices, including ads that falsely promised direct cash subsidies to pay for everyday items such as groceries and rent.

“Leads generated from these “dirty ads” had a 35% conversion rate, much higher than the rate of conversion for ‘clean ads’,” noted the report, citing court documents.

Knowledge about the deceptive ads

The class action stated that one of the companies buying these leads, TrueCoverage, was aware they were generated using deceptive practices and developed scripts to help avoid talking about cash cards. The suit also alleges that Bain Insurance’s Enhance Health also purchased these leads and developed similar scripts to misguide consumers.

According to the lawsuit, Bain Insurance was aware of these misdeeds and ultimately supported the scheme. The complaint also alleged that the private investment firm’s executives sat on Enhance’s board, were regularly on-site at its offices, and controlled the hiring of its C-level executives.

Meanwhile, the accused remained mum about the allegations.

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