This report originally appeared in the January 2010 issue of DOTmed Business News.
A class action lawsuit filed in federal District Court, District of Columbia, claims that the American Association of Retired People (AARP) marketed personal health insurance to persons over 50 which the organization claimed was "primary health coverage." The plaintiffs allege they depended on the AARP as a trusted source of information for seniors in considering the organization's Medical Advantage plans, which were touted as a bridge for seniors not yet eligible for Medicare.
The plaintiffs state that in contrast to the marketing claims, the policy was actually a fixed benefit indemnity insurance policy that only covered a small portion of health costs. Plaintiffs James and Allison Halpern of Austin, Texas, claim they cancelled their former comprehensive health insurance in favor of the AARP plan. Ms. Halpern was later diagnosed with breast cancer; according to the complaint, the company denied over $75,000 of expenses related to surgery and treatment. Due to the inadequacy of the plan, the couple says they were left facing financial ruin, which could have been avoided if the AARP had disclosed the limited nature of the plan.
The Halperns say the marketing materials of the Medical Advantage plans did not indicate the plan was fixed benefit indemnity coverage. The complaint states that legislators including Charles Grassley (R-IA) have denounced the marketing practices of the insurance, and consumer advocacy organizations including Consumer Reports have labeled this type of affordable policy with large gaps in coverage "junk insurance." The complaint accuses the AARP of violating consumer protection laws and unjust enrichment.
