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Levetown & Jenkins, LLP Announces Investigation of Mega Life and Health Insurance Company and Mid-West National Life Insurance Company of Tennessee
Levetown & Jenkins, LLP is conducting an investigation into violations state unfair competition and false advertising laws by Mega Life and Health Insurance Company (“Mega”) and Mid-West National Life Insurance Company of Tennessee (“Mid-West”), their parent company, HealthMarkets, Inc. (“HealthMarkets”), and their two controlling shareholders, Blackstone Group, L.P. and Goldman Sachs Group, Inc. Mega and Mid-West are alleged to have engaged in a massive scheme to defraud consumers through the sale of “junk insurance” – insurance products that are represented to be comprehensive but include exclusions and limitations that are obscured from consumers and result in inadequate coverage.
The firm’s investigation concerns the scheme perpetrated by Mega, Mid-West and HealthMarkets, which is alleged to involve training insurance agents to use of deceptive techniques to market insurance. Mega and Mid-West insurance agents purportedly were instructed and incentivized to induce consumers to purchase insurance policies by any means necessary, including misrepresenting and concealing important information about basic terms of the coverage being offered. Moreover, in 2006, HealthMarkets was acquired by Blackstone and Goldman in an $850 million transaction. The firm is investigating whether Blackstone and Goldman knew or should have known that HealthMarkets was engaged in a fraudulent scheme to sell junk insurance products and whether they allowed the scheme to continue.
Importantly, the Los Angeles City Attorney’s Office recently announced an enforcement action against Mega, Mid-West and HealthMarkets. According to the City Attorney’s Complaint, HealthMarkets reported revenue from the sale of its health insurance products of $1.1 billion in 2009 alone, and so far this year has paid special dividends to Blackstone and Goldman totaling $90 million....