State Sues Unlicensed Health Insurer

Attorney General Spitzer and State Superintendent of Insurance Gregory V. Serio today filed a lawsuit against an Albany health plan for operating without a license.

The lawsuit alleges that the Millennium Business Association of America, Inc. (Millennium) and others who established, marketed and administered Millennium's health insurance plan, called Universal Value Care, were operating or aiding an unlicenced insurance business, engaging in deceptive business practices, and failing to demonstrate adequate reserves from which to pay promised benefits. The lawsuit was filed in Albany County Supreme Court.

Millennium has nearly 200 policyholders in New York, mostly on Long Island and in the New York City area. The company has a business address at 421 New Karner Road, Albany.

"With health care costs soaring, we need to be vigilant of companies that play fast and loose with the law by offering cut rate coverage that does not live up to its promises or the law," Attorney General Spitzer said. "Unfortunately, many vulnerable consumers will be tempted by the lure of lower premiums, only to find out that the coverage they were promised is not there when they are sick and need it most."

State Superintendent of Insurance Gregory Serio said: "The Insurance Department is committed to ensuring that New York's health insurance consumers are protected from unscrupulous entities operating without a license. Immediately upon receipt of information that Millennium had created a presence in New York State, the Department began an investigation into the company. We are pleased that with the assistance of Attorney General Spitzer we will be able to effectively prevent any more New York consumers from being led up the garden path by Millennium's promises."

Insurers such as Millennium are required to be licensed by the State Insurance Department. Insurers are also required to keep a certain level of reserve funds in case their claims exceed the amount of money they are generating from premiums at any given time.

The case began with consumer complaints to the United States Department of Labor's Employee Benefit Security Administration which, after an 18-month investigation, found that Millennium was writing health insurance policies without a New York license.

James Benages, Regional Director in Boston for the Labor Department's Employee Benefits Security Administration said, "Across the country, fraudulent or unlicensed insurers are taking advantage of unwitting consumers. This case shows that federal and state government can work together to protect consumers."

In a follow-up investigation by the New York State Insurance Department, Millennium failed to provide proof of adequate reserves or stop-loss coverage. Without sufficient reserves or stop-loss coverage, Millennium may be unable to pay for covered services, leaving consumers liable for health care bills.

Indeed, one policyholder reported being told by a Millennium employee that Millennium's policy is a plan for "healthy people." The same employee also admitted that the company did not always have enough money to pay claims as they were submitted.

The lawsuit further alleges that Millennium deceived and defrauded its policyholders by promising coverage in its plan, only to deny or delay reimbursement for the very services that were supposed to be covered when claims were filed. Millennium's policy guarantees a limit on yearly out-of-pocket expenses for policyholders. Yet, although one consumer was promised that his out-of-pocket expenses would not exceed $4,000, he ended up paying nearly double that amount in 2000.

The case is being handled by the Health Care Bureau's Albany Section Chief Troy Oechsner and Assistant Attorney General John Powell. Consumers may contact the Health Care Bureau's toll-free hotline at 1-800- 771-7755 (option #3 on the automated voice menu) or the Insurance Department's Consumer Services Bureau at 1-800-342-3736 to check if an insurer is licensed by the state.