Health Insurance Innovations: A Closer Look at Call Centers; On 3 of 5 Calls, Third Party Call Centers for HII Made False and Misleading Statements About LifeShield Insurance Policies

Published on Jan 23, 2018

Company Update 

In our continuing investigation into whether Health Insurance Innovations (HII) sales representatives have misled potential customers, The Capitol Forum placed a series of calls over the past two weeks to numbers associated with HII-contracted insurance producers. In three of the five calls we placed, our reporters were given incorrect information that would have left a customer, should they have moved forward with the offered policy, without insurance coverage for catastrophic medical needs.  

The numbers called, 888-733-1484 and 888-733-1483, are associated with Mark Palterovich, an HII-contracted insurance producer. A prior Capitol Forum article explored Palterovich’s alleged involvement in a mortgage scheme, in which defendants siphoned about $300,000 of equity from the plaintiffs’ home. The numbers are also associated with other brokers and call centers with whom HII has relationships. 

We spoke with agents on five calls. In each call, as part of our effort, we told the call center that we had pre-existing bipolar disorder that we were either treated for or diagnosed within the past five years.  Pre-existing bipolar disorder should have disqualified the caller from coverage underwritten by LifeShield National Insurance Co., according to HII’s training materials and its online sales website 

In three out of the five calls, however, our reporter was offered short-term LifeShield policies. One agent even assured the reporter that any treatment in connection with our purported bipolar disorder would also be covered by LifeShield. In one instance in which we were persistent with eligibility questions, the call was transferred to a supervisor, who was clear about the shopper’s ineligibility due to pre-existing bipolar disorder. The representations suggest that recent compliance efforts reportedly undertaken by HII over its external distribution channel—a channel for which HII can be held liable—may not go far enough.  

HII did not respond to our requests for comment, and Mark Palterovich did not provide a comment. David Brooks, the President of LifeShield National Insurance Co., wrote in an email to The Capitol Forum that this was the first he had heard of failures by brokers to give prospective customers accurate information and that LifeShield treats any misrepresentation seriously.  

Brooks stated that he was reviewing with his staff the issues we had raised in our email requesting comment, and would need some time to investigate the matter further. LifeShield recently began marketing a new product, Brooks said, and he was concerned that the new product may be the cause of confusion by agents. Additionally, Brooks said that agents are required to disclose limitations and discuss pre-existing condition issues.  

A Closer Look at Other Potential Legal and Regulatory Risk 

As we have previously reported, state regulators and private lawyers have indicated that HII can be held liable for misrepresentations made by third-party, contracted call centers. The denial of insurance coverage based on declinable conditions was recently raised in a class action lawsuit filed in the Southern District of Indiana against HCC Medical Insurance Service and HCC Life Insurance Company, and HII, on January 3, 2018. 

That complaint alleges that the defendants violate the law by employing an undisclosed and illegal five-year look-back. Through this look-back, the complaint alleges, the defendants extend  their pre-existing exclusion beyond the contracted six, twelve or twenty-four month period to locate a pre-existing condition upon which to deny a valid claim,  find a medical condition that would have made the policyholder ineligible for insurance in the first place, and delay claims to the point of constructive denial.  

The plaintiffs are seeking a judge’s approval to make the civil RICO case a multi-state class action. The proposed class would consist of individuals who purchased an HCC short-term health insurance policy in a covered state, used HII as a broker, or were billed by Agile Health Insurance. These individuals had at least one claim denied, either formally or constructively, or had their policy rescinded. For this RICO claim, the plaintiffs are seeking three times their actual damages, which include out-of-pocket payments for medical coverage that plaintiffs claim should have been, but was not covered, injunctive relief, and attorneys’ fees.