When Dennis Huffstutler found health insurance for his family through a professional trade group... he thought he'd found a bargain, "It sounded like a great opportunity."
But soon after signing up he ran into trouble, "Our doctors were telling us that claims were not being paid." Lisa Huffstutler says. Turns out, they fell victim to a con game that's got federal and state officials steaming. Unlicensed companies are pocketing premiums but skip paying most claims. It's devastating to consumers like Dennis and Lisa who faced more than $25 thousand in medical bills--with a baby on the way.
With names that sound legit, like "Employers Mutual" and "American Benefits Plan"...investigators say these companies are having a field day selling phony insurance. Sold through trade groups and associations--some real, some fake Mr. Billy Hibbs Jr. of Hibbs Hallmark & Company of Tyler says hundreds of thousands of consumers and small businesses have been taken because their lured by price. "When someone come along with a product and says that they say this is gonna say you $200 dollars a month," Hibbs says. "People anntenas go up and they listen."
And the U.S. Department of Labor says this type of coverage con is on the rise across the country. Insurance regulators in more than a dozen states have also issued a flood of cease and desist orders in the last several years alone. Mike Pickens, V.P. Of The National Association of Insurance Commissioners says, "Our primary concern is that insurance consumers will be left without any coverage at all. This can be a financial disaster."
So, how can you make sure your insurance plan is legit? Experts say make sure the company is licensed in Texas and that the claims are being paid. For consumers like the the Huffstutlers...now facing huge debts and no insurance, they hope no one else gets burned.
A tragic twist to all this is that consumers who fall victim to these scams have little recourse. Since the companies are unlicensed to begin with, recouping any losses is almost impossible without actually suing a company directly.