Massachusetts Attorney General Thomas Reilly (D) on Monday filed a lawsuit against Texas-based HealthMarkets, which sells low-cost health insurance to small businesses and students in the state, accusing the company of deceptive marketing practices and improper denials of patient claims, the Boston Globe reports. HealthMarkets companies MEGA Life and Health Insurance and Mid-West Life Insurance offer monthly premiums of around $300 or less for family and individual plans but have higher out-of-pocket costs. Proponents of the plans say the greater cost-sharing prompts beneficiaries to be more selective consumers. The lawsuit alleges that the plans violated state law by inadequately disclosing coverage limitations, unfairly denying coverage and failing to cover mandated benefits such as contraception and treatments for pre-existing conditions, according to Alice Moore, chief of the attorney general's Public Protection Bureau. The suit seeks to stop the company's practices and mandate reimbursements to consumers. Under state law, the plans could be required to pay consumers triple damages. The company said that it has been contacted by the attorney general's office and has corrected "any errors discovered" in its claims. In addition, the company said it plans to contact consumers to make them aware of the details of their plans and has taken steps to improve agent training to prevent similar problems in the future. According to the trade publication Best's Insurance News, the company has been fined up to $78,000 by various states for violations. Earlier this month, Massachusetts Insurance Commissioner Julianne Bowler said MEGA Life should be considered a coverage option for families with annual incomes greater than 300% of the federal poverty level. On Monday, she said the Commonwealth Health Insurance Connector Authority could establish a screening process for companies to meet certain standards. However, health care advocates said they would oppose any move to include MEGA Life, Mid-West or other limited-coverage plans in the new Massachusetts law requiring residents to have health insurance (Rowland, Boston Globe, 10/24).

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