State Corporations Commissioner Gary S. Mendoza filed suit Tuesday to shut down two companies that allegedly sold unlicensed health insurance to about 1,200 low-income Latinos in the Los Angeles area.
In Spanish-language television, radio and print advertising, the coverage was falsely billed as "new medical insurance for the whole family," according to a Corporations Department statement. The companies also used face-to-face sales pitches that often were misleading or false, spokeswoman Lindsey C. Kozberg charged.
The companies, Salud y Familia Assn. Inc. of Los Angeles and Unicard Corp. of Fresno, allegedly worked together to market cut-rate coverage on a credit card payment system.
Customers paid an annual fee of $299--raised to $399 on Jan. 1--to obtain the Unicard credit card, which supposedly gained them access to a network of more than 20,000 doctors and dentists and 54,000 pharmacies in the United States and Mexico, the department said. Flyers and brochures promised card holders discounts of 20% on physicians' services and 40% off prescription drugs and dental work.
Sales agents allegedly offered even better deals in person, sometimes falsely promising discounts of 80%, Kozberg said.
Some health care providers did accept the credit cards and provide discounts, but in many cases, the cards were not accepted or it was difficult to get appointments with doctors who were supposedly part of the network, she said. In some cases, consumers ran up medical charges on their credit cards, only to discover when the bill arrived that they were not receiving the expected discount, Kozberg added. Card holders were also charged interest on their unpaid balances.
Salud y Familia Assn., incorporated in June, 1992, is a successor to Salud y Familia Inc., which the Corporations Department shut down in May, 1991, the spokeswoman said. At that time, she said, company owner Eduardo Cuomo signed a promise not to sell health coverage without a license or make false advertising claims.
Cuomo, interviewed by telephone Tuesday, denied breaking his promise. He said the firm "is a completely different program" than its predecessor. He said the company is strictly a subcontractor of marketing services to Unicard.
As to whether Unicard is licensed to sell health insurance, Cuomo said: "I don't know. They're supposed to have everything."
Unicard officials could not be reached for comment Tuesday.
Mendoza, upon filing his lawsuit in Los Angeles County Superior Court on Tuesday, obtained a restraining order barring Salud y Familia and Unicard from continuing to operate. A receiver was also appointed to oversee the companies and attempt to obtain financial restitution for customers.
Eduardo and Maria Gabriela Cuomo, owners and operators of Salud y Familia, and Elwyn, Dennis and Virginia Leatherman, owners and operators of Unicard, are accused of multiple violations of state laws governing medical plans.