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Defrauding the Sick and Elderly with Phony Health “Insurance”

October 6, 2009

The Minnesota Attorney General charged two companies, Nevada-based Home Health America and Consumer Health Benefits Association of Florida, for schemes involving selling phony “discount” health care programs disguised as health and/or long-term insurance plans. Both companies have previously been banned from and/or cited for regulatory violations in other states for similar misconduct.

In its scheme, Home Health America’s CEO Michael Woodward (who was previously accused of fraudulent practices and banned from selling policies in Washington and Oregon) sent elderly Minnesotans marketing letters about the company’s long-term care and home care coverage. Woodward then visited respondents in their homes, posing as company salesman “Mike Woods” to sell bogus policies for a one-time fee of up to $4,000. After taking payment from the seniors, payouts for benefits were either refused or cut-off as the payouts approached the initial payment amount. According to the Minnesota Attorney General, its investigation could not find a single case in which Woodward paid claims in excess of the initial payment.

Consumer Health Benefits Association (CHBA) used high-pressure telemarketing campaigns to induce consumers into buying what was purported to be low-cost insurance. Customers would pay $259 upfront and agree to monthly payments of between $129 and $149, but the “benefits’ package they would receive in the mail was characterized by one former insurance agent as “complete garbage.” According to the Attorney General, the promised health care plan was “At best, a so-called health discount plan.” Even that judgment appears generous, as the plan listed doctors in its network who had never heard of the company and who did not offer the promised “discounts.”

CHBA was previously sued in 2005 and 2007 by the Illinois Attorney General’s Office, for fraudulently marketing its products as health insurance. The company was also cited for regulatory violations in Florida, which found that the company’s telemarketers failed to inform buyers of the proper terms and conditions of their “policies,” and told buyers that the initial fee was non-refundable, in violation of state code. Indeed, more than 40% of CHBA enrollees cancelled their policies in the first month, and 94% cancelled within a year. has compiled a long list of customer complaints about CHBA.

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