A lawsuit has been filed against Nationwide Life Insurance Co. for the insurer’s selling of fixed-payment health plans that allegedly violated minimum standards in the state of Washington and which had not been authorized by the state. In the case, filed in U.S. District Court, three individuals asked that the case be made a class action covering 465 others in Washington who bought Nationwide health plans through employers between April 16, 2003, and August 27, 2008. The Plaintiffs are seeking damages of up to $10,000 for each violation of Washington’s Consumer Protection Act, plus refund of premiums, payment of previously denied claims, and legal costs.
If class action status is approved and the complaint is upheld, consumer protection violations alone could exceed $4.6 million – $10,000 per insured – and other damages could boost the total to more than $7 million. Consumer groups have been critical of fixed-payment or fixed-indemnity plans. Unlike plans which pay a percentage of medical expenses or cap the expenses a consumer must pay, fixed-payment plans set maximum payments for each service or expense that typically are far below what is charged by doctors, clinics, hospitals and other healthcare providers.
Such plans weren’t allowed in Washington before July 22, 2007, and are now permitted only with full disclosure to consumers and – as has long been required for all insurance policies in Washington – by companies with a certificate of authorization to provide that type of coverage. Since such plans fall outside laws on portability of coverage, a person who seeks comprehensive coverage after being on a fixed-indemnity plan may have to undergo a medical examination and could be disqualified for pre-existing conditions.
The case is based largely on findings by the state insurance commissioner’s office, which began investigating the case of one of the Plaintiffs more than a year ago and allegedly uncovered information on other plan holders. I understand that Nationwide could be fined an unspecified amount for selling health plans in the state without a certificate of authorization until last August and for selling fixed-indemnity plans before they were allowed in July 2007.
Source: Associated Press
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