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A group of consumers who bought term life insurance certificates from Cinergy that were issued by the National Congress of Employers (NCE) say they were victims of a scheme to profiteer from the certificates through a “sham” organization, a nationwide class action lawsuit alleges.
Plaintiff Cynthia Johnson filed the class action lawsuit against Cinergy Health, Inc., the National Congress of Employers, Inc. and Companion Life Insurance Company in a Florida federal court Friday, alleging violations of racketeering and corruption laws.
The claim says the Class was harmed by the purchase of the certificates because they “unknowingly became victims of a scheme by the Defendants to collectively profit from the deceptive sale, marketing, and unfair administration of the Certificates, as well as the deceptive sale of memberships in NCE.”
The scheme involved diverting premium dollars to pay membership fees to NCE, and exorbitant commissions to Cinergy, the class action alleges.
“Plaintiff and putative Class members’ membership in NCE was at worst a sham, and at best an association with an organization that wholly failed to live up to its obligations.”
The class action also says the consumers suffered damages when their life insurance certificates were terminated without warning or justification.
Johnson says she bought a Term Life Insurance Certificate from Cinergy underwritten by Companion Life and issued through NCE.
She says the life insurance purchased is known as association group life insurance. When legitimately sold, it is offered by associations to members who belong to the organization primarily for a reason other than to buy insurance.
“NCE is a sham organization that exists for the primary purpose of being the ‘front’ organization and vehicle through which Companion Life and Cinergy sold association group insurance,” the class action alleges.
“NCE was a ‘front’ in that it allowed Companion Life and Cinergy to sell the association group term life certificates throughout the country below the radar of regulatory scrutiny by virtue of the fact many states do not require sellers or ‘producers’ of association group insurance to be licensed agents.”
The class action adds that Cinergy was operated and controlled by a fraudster named Daniel Touizer, who pled guilty to mail and wire fraud and was sentenced to prison in Florida in 2018.
Johnson also alleges her coverage ended suddenly, without being transferred to another company, despite the fact she continued to pay her premiums.
The class action lawsuit is looking to represent anyone who purchased term life insurance certificates from Cinergy that were underwritten by Companion Life and issued through NCE or Companion Life.
Johnson is suing for Violation of the Racketeer Influenced and Corrupt Organizations Act, breach of contract and unjust enrichment. She’s seeking certification of the class, damages, fees, costs and a jury trial.
In 2012, Cinergy Health & Life was also hit with a federal class action lawsuit claiming it used “false and misleading infomercial advertisements” to push its medical coverage, despite receiving sanctions and fines from five states over the deceptive ads.
What do you think of the allegations in this class action lawsuit? Let us know in the comments!
Johnson is represented by J. Matthew Stephens, P. Michael Yancey, James M. Terrell and Courtney C. Gipson of Methvin, Terrell, Yancey, Stephens & Miller, P.C.
The Cinergy Life Insurance Class Action Lawsuit is Johnson et al., v. Cinergy et al., Case 0:21-cv-61228-XXXX, in the U.S. District Court for the Southern District of Florida.
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