$5-a-day Cinergy Health insurance piles up complaints
Aventura-based Cinergy Health is pulling insurance ads that some say promise a lot more than their policies actually offer.
BY BEATRICE E. GARCIA
TV ads touted Cinergy Health’s low-cost medical insurance for as little as $5 a day — the cost of a pack of cigarettes or a hamburger.
But the policies promoted by the Aventura company delivered far less coverage than the ads promised, say New York state insurance regulators, who ordered Cinergy to take the ads off the air in mid-August.
Florida may soon take action, as well. After an investigation, state insurance regulators also determined that the company that actually writes the policies, American Medical and Life Insurance, defrauded consumers with ads indicating that its limited-benefit health insurance plan offers comprehensive medical coverage. American Medical’s license to sell insurance in Florida could be revoked.
Although a Cinergy official declined to say how many policies had been sold, more than 50,000 people nationwide bought policies, according to a press release sent to South Florida media in June. Coverage will continue for consumers who purchased policies, said Steven Trattner, Cinergy’s chief marketing officer.
Although Cinergy’s website and ads portray it as an insurer providing medical policies, Cinergy is an insurance agent that sells policies but does not underwrite them. It acted as the marketing agent for New York-based American Medical, which was fined $700,000 by the New York Insurance Department for the misleading ads. It also was banned from selling any more of the limited-benefit medical plans in that state.
Two weeks ago, Cinergy severed its ties with American Medical and also stopped selling healthcare plans for another insurer — Guaranteed Trust Life Insurance — that was backed by American Medical, Trattner told The Miami Herald.
“We’re very conscious of our reputation,” he said.
Cinergy wasn’t aware that the ads it was running didn’t meet New York state insurance regulations until American Medical was fined last month, Trattner said. His company is “the victim as much as the policyholders.”
American Medical didn’t respond to several requests for comment from The Miami Herald.
In both New York and Florida, the insurer is ultimately responsible for its marketing plans, whether they are developed in-house or outsourced to a company like Cinergy Health. Ads for healthcare coverage have to be approved by insurance regulators in Florida and meet state requirements in New York State.
ABOUT THE PLAN
The insurance plan that Cinergy marketed provided far less than comprehensive coverage. For instance, it pays $500 for five doctor’s visits per year or $300 annually for diagnostic tests including a high-tech MRI — a test that costs $2,000 or more in most states.
The ads say most preexisting conditions are accepted, but the fine print noted a six-month waiting period for preexisting conditions.
The ads’ promises have led to dozens of postings by consumers on complaint sites such asRipoffReport.com and Complaints.com who say they were misled by American Medical and the ads Cinergy has been running.
The national Better Business Bureau website lists 147 complaints filed against Cinergy in the past 36 months. Out of the total, 124 people complained about Cinergy not performing according to its contract.
Florida’s Office of Insurance Regulation has ruled that Cinergy’s ads on American Medical’s behalf were misleading; a spokesman says it has not yet determined what action it will take against American Medical. Texas is also investigating.
New York state is broadening its investigation to include other insurance companies that offer limited medical benefits plans.
“We will not allow consumers to be twice victimized — first by paying for insurance that covers much less than they were told it would, then by having to pay thousands more for the healthcare that insurance did not cover,” said Kermitt J. Brooks, first deputy New York state insurance superintendent, via a press release.
This isn’t the first time Cinergy has caught the attention of Florida insurance regulators.
The company, formed in 2005, was licensed to sell discount medical plans, which aren’t health insurance policies. These programs charged monthly fees and offered members access to a network of services such as medical, dental and vision care at discounted rates. Consumers must pay for the medical care they received.
In 2006, regulators in Florida — one of the first states to set strict standards for discount medical plans — examined Cinergy’s practices and found that some of its ads for the discount medical plan promised savings of 20 percent to 60 percent. The actual savings were as little as 3 percent.
Regulators also found that Cinergy didn’t have written agreements with some of the provider groups to offer discounts for medical services. Its telemarketers used scripts and charged fees that weren’t approved by the Florida Office of Insurance Regulation. In some cases, it didn’t reimburse cancellation fees.
Last August, Cinergy agreed to pay a $7,500 fine for these violations.
Trattner said all of the problems highlighted during the market-conduct review were corrected by the time the review was completed more than two years earlier.
In May 2008, regulators suspended Cinergy’s license to sell the discount plans because its net worth fell below the level required to maintain the license.
Less than three months ago, Cinergy Health — which is registered in Florida and most other states as an insurance agency — billed itself as a one of the fastest growing providers of health insurance plans. It touted hiring a celebrity doctor — Dr. Erika Schwartz — as its new medical director in a slew of press releases.
Now, its operations have ground to nearly a halt.
Cinergy isn’t marketing any limited-benefit plans — which made up the bulk of its revenues, according to Trattner — and is selling only critical-illness insurance that pays up to $15,000 once a life-threatening illness such as cancer is diagnosed or a person suffers a heart attack. It is underwritten by Philadelphia-based National Union Fire Insurance.
Besides Aventura, Cinergy has offices in Sunrise and Sunny Isles Beach, employing 220 people. Trattner said that for now, the company won’t cut staff.
Trattner says Cinergy pulled all the ads it was running for American Medical’s limited-benefit plans in the past two weeks after New York state fined the insurer in mid-August. However, ads aired recently in some markets because they were locked into programming schedules.
Cinergy plans to modify its ads once it begins selling limited-benefit plans for another insurer.
Yet, Trattner said consumers “don’t enroll in an insurance plan because of a 60-second ad.” The limitations are disclosed on the ads, in fine print or well into infomercials the company has also run, he said.
“The problem is that people don’t understand what a limited-benefit plan is and how it differs from major medical coverage,” Trattner said. “However, a large majority of our members would be uninsured if it weren’t for Cinergy.”