The California Department of Insurance recommended Friday that six insurance agents, including four in Orange County, have their licenses revoked because of their connection with two companies accused of marketing deceptive home-care companion contracts to senior citizens.
Under the contracts, Vanguard Assisted Care Inc. of Lake Forest and Retired Home Owner Assn. Inc. of Simi Valley provided companions to take care of seniors in their homes for a flat fee of $5,900 to $8,000, plus annual fees of $400 to $600, as an alternative to nursing homes, which can cost as much as $4,000 a month.
The state agency said contracts were marketed deceptively to 600 senior citizens in Southern California, and that the service provided was more like maid service than in-home medical care.
“These contracts were marketed in such a way to prey on the fears of senior citizens who do not want to move into a nursing home, should some disability affect them,” Insurance Commissioner John Garamendi said. “Unfortunately, these glorified maid contracts were compared to long-term care policies and nursing-home policies that provide skilled care.”
The agents named are Stanley Norman of Lake Forest; his son, Jeffrey Norman of Aliso Viejo; Barbara Bufty, formerly of Fountain Valley; Gary Cuccia of San Clemente; his brother, Stephen Cuccia of Menifee; and Jim Cravens of Beaumont.
The agents said the contracts were not insurance policies, according to Garamendi, but the state ruled that the six agents were, in effect, selling insurance.
The agents say they simply provided non-medical custodial care to compete with nursing homes at a lower cost.
“This is the most ridiculous situation that anyone could ever see,” Jeffrey Norman said. “It’s a joke. We provided a better service and better quality of life, and we’re getting penalized for it. The Department of Insurance is trying to protect big insurance companies at the expense of consumers.”
Cravens also denied the allegations.
“My name is coming out in the papers, and I’ve never been in front of a judge on this,” he said. “We were just trying to give an alternative to these rising home-care costs that the insurance companies aren’t covering.”
Bufty, reached at her home in Huntington Beach, said she believes the plans were the best alternative to nursing homes that seniors could get. She said she was unsure why Vanguard filed for bankruptcy but said the state’s actions may have helped cause the collapse.
“My mother is 83 and unable to care for herself,” she said. “If this plan were available to her, it would have saved my family a lot of money.”
The other agents could not be reached Friday for comment.
In February, state officials filed a lawsuit against Retired Home Owner Assn. The company has since sought bankruptcy court protection, leaving its contract holders with apparently worthless agreements, the Department of Insurance said.
Vanguard also was ordered to cease its marketing. But Jeffrey Norman, who said he disassociated himself from Retired Home Owner Assn. before becoming president of Vanguard, said it is still providing non-medical custodial care to its 39 contract holders.
The accusations against the six agents will be heard in an administrative hearing, when it will be determined whether their insurance licenses should be suspended or revoked.