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Ohio residents warned about insurance scam

COLUMBUS – State insurance leaders have issued a "cease and desist order" against Employers Mutual LLC of Nevada, and advised Ohio residents to take caution.

Thursday, January 03, 2002

COLUMBUS – State insurance leaders have issued a "cease and desist order" against Employers Mutual LLC of Nevada, and advised Ohio residents to take caution.

The insurance company is not licensed to do business in the state, but the Ohio Department of Insurance Fraud Unit has recently developed evidence that as many as several hundred Ohioans may believe they are insured by the company, the department warned this weekend.

As many as 230 of approximately 29,000 Employers Mutual insureds are in Ohio, most likely enrolled in an employer group plan.

Ohio consumers should contact the Ohio Department of Insurance Fraud Hotline at 1-800-686-1527 if they have had dealings with Employers Mutual.

Groups that may have coverage with the company may include: the American Association of Agriculture; American Coalition of Consumers; Association of Automotive Dealers and Mechanics; Association of Educators; Association of Barristers and Legal Aids; Association of Cosmetologists; Association of Health Care Workers; Association of Manufacturers and Wholesalers; Association of Real Estate Agents; Association of Retail Sellers; Columbia Health Network Inc.; Communication Trade Workers Association; Construction Trade Workers Association; Culinary Food Services Workers Association; National Alliance of Hospitality and Innkeepers; National Association of Independent Truckers; National Association of Transportation Workers and Western Health Network.

The department’s cease and desist order applies only to Employers Mutual. The department is not alleging that any of the associations have done anything wrong, officials said.

These organizations may have or may have had coverage with Employers Mutual, which could place individual insurance consumers at risk.

Employers Mutual also faces a temporary restraining order from the U.S. Department of Labor, and cease and desist orders in at least four other states.

Department of Insurance director J. Lee Covington II cautioned consumers, employers and association officers to ask their agents whether the health coverage they are purchasing is fully insured by licensed insurers.

"Insurance consumers should be careful, ask thoughtful questions and do their homework to protect themselves from being victimized," Covington said.

Consumers should be wary of so-called "union plans" sold by an agent, health coverage that seems unusually cheap, health coverage that is issued with only a few questions about the applicant’s health condition, or plan material that refers only to a "stop-loss" insurer.

A typical fraudulent health insurance scam attempts to recruit as many local insurance agents as possible to market the coverage without seeking approval of the product or rates from the Department of Insurance.

Agents are told that it is regulated by federal law not state law when, in fact, it is illegal, Covington said.

The coverage is typically offered regardless of the applicant’s health condition and at lower rates with better benefits than can be found from licensed insurers, he said.

The scam seeks to collect a large amount of premium as rapidly as possible. While claims may be paid initially, the insurer will soon begin to delay payment and offer excuses for failure to pay, Covington said.

Unsuspecting consumers who thought they were covered for the medical needs are often left responsible for huge medical bills; and employers may be held liable for the medical bills of their employees, he said.

The Ohio Department of Insurance can tell you if an agent or agency is licensed to transact business in the state of Ohio.

You can find this information on the department Web site at http://www.ohioinsurance.gov/ or by calling the consumer hotline at 1-800-686-1526.

<I> Some information in this story was submitted by Ohio’s Department of Insurance.