California company fined $50,000 over Medicare marketing in Minnesota

The state Commerce Department said it has issued a $50,000 civil penalty plus a cease-and-desist order to a California company in connection with letters to Minnesotans about Medicare health insurance options that it said were misleading.

Commerce said Tuesday that a company called eHealthInsurance Services Inc. purchased the domain name "Medicare.com" and mailed more than 600,000 letters that used the website address and offered services for picking a new insurance plan.

Last year, about 300,000 people across the state were forced to shop for new coverage with the elimination of Medicare Cost health plans, which provided government benefits via private insurers.

"Respondent mailed misleading correspondence regarding the discontinuation of Medicare Cost plans to Minnesota consumers that reference the federal Medicare program on the envelope and in the correspondence," Commerce said in a consent order dated March 26.

The company "failed to include a sufficiently prominent statement that respondent is not in any manner connected with the government, Medicare, or Medicaid on every page referencing the federal Medicare or Medicaid programs, and that it is for insurance or intended to obtain insurance prospects," the order states.

In a written statement, a representatives for eHealthInsurance Services said that while the company disagrees with Commerce's position, "We're happy to make changes to satisfy its concerns." A company official signed the settlement agreement, which Commerce released on Tuesday.

The Medicare shopping season for 2019 coverage featured the elimination of Cost plans across 66 counties in Minnesota, forcing a choice between original Medicare and newer Medicare Advantage health plans. In October, Commerce issued a general warning to consumers not be fooled by deceptive advertising in the midst of the change.

Commerce said it was alerted to the mailings by several consumers including a woman in Bemidji who received letter addressed to her father, who died several years ago.

"I was very pleased to learn that the department was able to stop these nefarious attempts to solicit business," said the consumer, Jesica Conrad, in a news release.

On Tuesday, Commerce said eHealthInsurance Services has been ordered to pay a civil penalty of $50,000 to the state and stop conduct that violates state rules. Commerce also ordered eHealthInsurance Services to identify the specific insurer or insurers that will issue coverage or reference that it sells coverage offered by a variety of Medicare insurance companies.

The state also called on the company to edit its website to "include a sufficiently prominent statement that it is connected to eHealth and that eHealth is an insurance agency," the news release states.

The company eHealthInsurance Services is part of a publicly traded company called eHealth Inc., which operates private online health insurance exchanges. In 2018, the company posted $251.4 million in revenue, up 32% from the previous year, with Medicare serving as a large driver of the growth.

Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck