N.Y. Sues Unlicensed Health Insurer

Attorney General Eliot Spitzer and New York State Superintendent of Insurance Gregory Serio filed a lawsuit against an Albany health plan for reportedly 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 unlicensed 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.

“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,” 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.”

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 reportedly writing health insurance policies without a New York license.

In a follow-up investigation by the New York State Insurance Department, Millennium reportedly 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.

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 reportedly ended up paying nearly double that amount in 2000.