AARP, UnitedHealth Class Action Claims Illegal Insurance Practices

A class action recently removed to federal court claims AARP and UnitedHealth have been violating California state insurance and elder abuse laws.

Originally filed in November in a Los Angeles County court, this AARP Medigap insurance class action lawsuit alleges AARP and UnitedHealth entered into an illegal arrangement by which AARP would sell AARP-branded supplemental health insurance policies originated by UnitedHealth, in exchange for payments from UnitedHealth.

Plaintiffs Simon Levay, Judith Miller and Lionel Brown, all residents of Los Angeles County and over the age of 65, allege the arrangement between AARP and UnitedHealth lures senior citizens like themselves into paying more than they should have to pay for supplemental insurance.

They claim the use of nonprofit AARP’s brand to sell a for-profit insurance policy violates the California Insurance Code.

According to this AARP class action lawsuit, AARP markets and sells UnitedHealth supplemental health insurance policies branded under the AARP name. The plans are available only to AARP members.

Plaintiffs say AARP administers the policies once sold, collecting premiums and remitting them to UnitedHealth. In exchange, UnitedHealth allegedly pays AARP a 4.95 percent “royalty” on each new policy sold and each existing policy renewed.

The plaintiffs claim UnitedHealth uses this arrangement to charge a higher price for insurance than it would be able to otherwise. It allows UnitedHealth to use the highly-trusted and nonprofit AARP brand to sell for-profit insurance at a higher premium than other companies charge for similar policies, the plaintiffs say.

Under the alleged scheme, senior citizens who want to buy the only AARP-branded health insurance that UnitedHealth offers are induced to join AARP, paying the attendant membership fees. The AARP insurance policy they get provides them less coverage at a higher price than other companies charge, according to the plaintiffs.

The plaintiffs say AARP and UnitedHealth have violated provisions of the California Insurance Code that forbid insurance advertisements from using branding associated with a nonprofit institution, which might mislead the public. Plaintiffs claim the defendants have breached their statutory duty of “honesty, good faith and fair dealing” owed to prospective insureds of age 65 or older.

The AARP class action lawsuit also raises claims for negligence, financial elder abuse, and violations of the California Business & Professions Code.

The three plaintiffs seek to represent all persons in California who are 65 years old or older and who have either purchased, renewed, or been offered an AARP-branded insurance policy.

The plaintiffs seek temporary and permanent injunctions barring AARP and UnitedHealth from continuing to engage in the practices complained of here. They seek an award of damages, including treble damages under applicable state law, and orders of restitution and disgorgement restoring money that was received due to the defendants’ allegedly unlawful practices.

Counsel for the plaintiffs are Arash Homampour and Danielle Lincors of The Homampour Law Firm PC, and Alan Schimmel and Michael Parks of Schimmel & Parks APLC.

The AARP UnitedHealth Unlawful Insurance Practices Class Action Lawsuit is Levay, et al. v. AARP Inc., et al., Case No. 2:17-cv-09041, in the U.S. District Court for the Central District of California.

Join an AARP Medigap Class Action Lawsuit Investigation

If you purchased Medigap insurance through AARP, you may be eligible to join this AARP Medigap insurance overcharge class action lawsuit investigation.

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