Published on July 30, 2010 at 1:15 AM
U.S. News & World Report: Regulators are accusing the Tennessee-based American Trade Association of bilking consumers out of $14 million by selling fake health insurance to 26,000 households in all 50 states. The scams happened "over a span of 16 months, according to court documents. More than a few of those dollars appear to have been spent on personal items such as cars, real estate, and loan payments, says Leslie Newman, Tennessee's insurance commissioner. At least 12 other states have taken action to stop the entities from operating."
Officials are warning that a slumping economy has made the lure of health insurance scams more attractive as "people desperate for protection are more likely to be baited by tantalizing offers through blast faxes, E-mails, or telemarketing calls. Indeed, bogus health plans are the biggest consumer insurance fraud to emerge from the recession, says James Quiggle, spokesperson for the Coalition Against Insurance Fraud, who cites a November survey his nonprofit conducted of 37 state fraud bureaus." Confusion about the new health law also is making consumers vulnerable as scammers try to tell people they must buy insurance now or face a fine, which isn't true (Lyon, 7/28).