Deception in Insurance Mailers to Elderly Charged

A national consumers’ group has filed a complaint with the California attorney general and the state insurance commissioner charging 19 insurance companies or groups representing insurance firms with trying to sell extra health insurance to the elderly with a series of “deceptive” mailings that often bear official-sounding names and Washington, D.C., addresses.

In its complaint, Consumers Union, which also publishes Consumer Reports, claims that huge numbers of letters have gone out in California in recent months warning that Medicare cutbacks leave elderly people unprotected and urging them to buy supplementary health insurance policies. When they return response cards, Consumers Union said, they are solicited by insurance agents.

The letters sound “like a notice from your government, saying, ‘You better pay attention to this,’ ” said Carl Oshiro, an attorney for Consumers Union. “If you were a senior and received one of these things in the mail, you’d expect if you filled out this card, you’d get printed information from the government.

“That’s not what you get. What you get is an insurance agent at your doorstep,” he said.

In many cases, the complaint said, recipients of the letters are led to believe that groups interested only in senior citizens and their needs are recommending the insurance when, in fact, the groups are fronts for insurance sellers.

In some cases, to “create an official appearance, many of the mailers use Washington, D.C., addresses,” said the complaint, which added that representatives at the District of Columbia Council on Aging “have never heard of any of these organizations.”

According to Oshiro, “A lot of these organizations have Washington addresses that we think are bogus.”

A check by The Times with directory assistance in the capital on Tuesday showed that six of the organizations showing Washington addresses did not have telephone numbers listed.

Although some letters bear the small-print disclaimer, “not affiliated with any government agency” others do not, Oshiro said.

One group, the complaint says, the California Assn. for Concerned Senior Citizens, was “founded and controlled by an insurance agency whose primary business is the sale of Medicare supplement policies to seniors.”

Oshiro said the agency is Morelli Insurance of San Jose. A secretary there said Tuesday that “Mr. Morelli is out of town” and could not be reached for comment. She would not reveal Morelli’s first name.

Oshiro said duplicate, overlapping policies are often sold, “policies that don’t deliver what they promise to deliver.”

“We have come across people with 20 policies,” and some policies, Oshiro said, have a “coordination of benefits” provision, which means that only one policy at a time will pay, and the others will not cover any cost difference.

“Seniors are wasting millions of dollars each year on policies which do not meet their needs,” according to the complaint.

The complaint says the agencies violated “at least a dozen statutes, regulations and official guidelines” on consumer insurance standards. It asks state agencies to issue cease-and-desist orders against the attempted sales.

Preliminary Review

Spokesmen for the attorney general and the insurance commissioner said they would look into the situation. Everett Brookhart, consumer affairs chief for the Insurance Department, said the complaint will receive a preliminary review from the new insurance commissioner, Roxani Gillespie, before being turned over to the department’s investigations and fraud unit.

Named in the complaint were United American Insurance Co., Globe Life & Accident Insurance Co., Torchmark Corp., American Senior Citizens, Benefit Fulfillment Center, California Assn. for Concerned Senior Citizens, Consumer Advisory Service, Consumer Referral Service Center, Consumer Support Services and Health Insurance Referral Services.

Also, National Health Services, National Senior Advisory Center, Retired Persons Information Center, Senior Security Benefit Service, United Senior Citizens of America, United Seniors of America, Senior Citizens Marketing Group, U.S.A. Lead Systems and Morelli Insurance Agency.

In Dallas, Robert Link, senior vice president of United American Insurance, said he had not yet seen the complaint and “until I get the thing and read it, I can’t comment on it.”

The general counsel for Globe Life did not return a reporter’s call.