A Massachusetts court has ordered three UnitedHealth-owned insurers to pay over $165 million for engaging in widespread deceptive practices that misled thousands of consumers into purchasing supplemental health insurance they didn't need.
The ruling includes $50 million in restitution for consumers and $115 million in civil penalties, making it the largest penalty ever awarded under the Massachusetts Consumer Protection Act. The decision comes after the companies — HealthMarkets, the Chesapeake Life Insurance Company, and HealthMarkets Insurance Agency — were found liable in 2022 for violating both the state's consumer protection law and a 2009 consent judgment aimed at curbing deceptive practices.
The defendants were acquired by UnitedHealthcare in 2019. The deceptive practices occurred primarily between 2012 and 2016, before UnitedHealth purchased the companies.
The allegations date back to 2011 and were brought to court in 2020 by the Massachusetts Attorney General's Office. The lawsuit accused the Texas-based companies of aggressively marketing and selling supplemental health plans that failed to provide meaningful coverage, leaving consumers exposed to significant financial risks. Members were reportedly misled into believing they were purchasing comprehensive insurance plans, only to discover later that critical services, such as hospital visits, maternity care, and prescription drug coverage, were excluded. According to the court, the companies falsely advertised that their sales agents were independent and represented all insurers. Ultimately, the insurers were accused of deceiving more than 15,000 Massachusetts residents out of $43.5 million.
"We disagree with the Massachusetts court's latest ruling in the litigation involving the HealthMarkets companies," a spokesperson for UnitedHealthcare told Becker's. "The fundamental errors in this ruling compound those already made by the trial court earlier in this case and have resulted in a decision that is clearly unsupported by the evidence and contrary to established Massachusetts law. We will appeal this decision."
The complaint further alleged violations of a 2009 consent judgment, which had required the companies to reform their marketing and sales practices after similar allegations of consumer deception. In April 2022, the court ruled that the defendants violated both the Massachusetts Consumer Protection Act and the earlier consent judgment.
"For years, the defendants preyed on financially vulnerable individuals, deceiving them into buying products they didn’t need or couldn't afford," Massachusetts Attorney General Andrea Campbell said Jan. 6. "This order holds the companies accountable and will provide meaningful restitution to consumers across the Commonwealth."
The judge declined to award the full $368 million in restitution and penalties that the Attorney General's Office had requested, noting that the state had failed to provide sufficient evidence to show the extent of alleged harm caused by misstatements in the companies' advertising.
In addition to the financial penalties, the court has ordered the insurers to implement stricter compliance measures to prevent future violations, including enhanced oversight of marketing practices and clearer disclosures to ensure consumers fully understand the limitations of any insurance products they purchase.