N.H. weighs probe into health insurer

A Texas-based low-cost health insurer, under fire from the Massachusetts attorney general’s office, is now being scrutinized by the New Hampshire Insurance Department.

Massachusetts Attorney General Thomas F. Reilly filed suit Oct. 23 in Suffolk County Superior Court, alleging that the firm, MEGA Life and Health Insurance Co. and an affiliated company, Mid-West Life Insurance Co. of Tennessee, used deceptive marketing practices, did not adequately explain the limited scope of its coverage and improperly denied medical claims.

In the wake of the Massachusetts lawsuit, New Hampshire Deputy Insurance Commissioner Alex Feldvebel told NHBR Daily, his department was “evaluating MEGA Life to see if we want to initiate” an investigation in the Granite State.

“Their business is growing in New Hampshire, and we do have some concerns,” Feldvebel said.

Mid-West does not do business in New Hampshire.

Both MEGA Life and Mid-West Life are owned by HealthMarkets, which sells limited-coverage insurance plans nationwide.

At least 30,000 Massachusetts residents have MEGA Life and Mid-West policies.

According to court documents, the Massachusetts suit seeks an injunction to stop the companies’ allegedly “unfair and deceptive practices” and to force them to make payments to policyholders.

According to the suit, MEGA Life and Mid-West broke a Massachusetts law that requires all health insurers in that state to cover certain outpatient contraceptive services.

Additionally, the suit says, MEGA Life and Mid-West allegedly wrote policies excluding coverage for pre-existing conditions beyond six months. Massachusetts law prohibits insurers “at all relevant times” from extending such a period beyond six months from the effective date of coverage.

If found guilty in Massachusetts, the insurers could be required to pay $5,000 in civil penalties for each violation.

Feldvebel said MEGA Life has about 3,000 policyholders in New Hampshire, and about 20 complaints have been filed against it between January 2005 and June 2006. Of those, 12 were resolved in favor of the consumer.

MEGA Life has been under the scrutiny of New Hampshire’s Insurance Department for some time, said Feldvebel. The department initiated an exam in 2002 regarding complaints in the small group market similar to the issues named in the Massachusetts complaint.

He said the 2002 exam was folded into a larger ongoing, multi-state investigation led by the state of Washington.

“The danger with limited-coverage, low-premium plans is consumers might find the coverage is very different from what they were expecting,” said Feldvebel. “It might not be such a good deal.”

He also said that unscrupulous insurers sometimes will exclude conditions after claims related to those conditions are filed.

“We are getting more of these types of complaints and we’re looking into that practice,” he said.

Feldvebel added that if New Hampshire decides to move forward with a new investigation of MEGA Life, it would be separate from the multi-state exam.

According to the state insurance department Web site, MEGA Life is one of just 10 insurers licensed to provide individual health plans in New Hampshire. — CINDY KIBBE

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