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(NECN: Peter Howe, Boston) - It was sold as cancer, hospital and surgical insurance to aging World War II and Korean War veterans, supposedly endorsed by the American Legion - but Massachusetts Attorney General Martha Coakley said Tuesday it was a scam that sucked in more than 1,000 Bay State veterans.
"We found in this investigation several misrepresentations, first that it was somehow affiliated with the government," Coakley said, as she released a court settlement under which Life Insurance of North America, a subsidiary of giant Cigna, agreed to refund everything Bay State vets had paid in premiums for the insurance – up to $650,000 total – plus $1 million in penalty payments that will go to the state and be used to investigate and publicize other scams targeting veterans.
Coakley said she is confident that everyone who paid LINA for the coverage will get their money back.
"We believe that it is more than enough to cover both the premiums that people paid - we believe under false circumstances - and in the event there were any other damages … an amount that we believe at this time will fully compensate people who were misled by the misrepresentations in the advertising by Life Insurance of North America," said Coakley.
In some cases, Coakley said, the policies paid out as little as 10 to 30 percent of what they collected in fees as benefits to policyholders,
LINA spokesman Phil Mann said in an email: "Life Insurance Company of North America (LINA) has reached a settlement with the Massachusetts Attorney General's Office regarding hospital indemnity and cancer care insurance available through the Legionnaire's Insurance Trust. While the company agreed to pay a fine to avoid costly and time-consuming litigation, the settlement recognizes LINA's good-faith belief that it did not represent or market these products as 'health care insurance.' The settlement also recognizes LINA's actions in voluntarily discontinuing a previous billing practice well prior to receiving notice of the Attorney General’s investigation. The company has further agreed to voluntarily terminate this coverage for the small number of affected certificate holders in Massachusetts, as well as to re-examine earlier claims for potential additional benefits in accordance with the terms of our settlement."
As best as state officials could tell, the American Legion was apparently as much of a victim in the situation as the 1,000-plus vets, having apparently made its mailing list available to LINA but never actually endorsing the product, as direct-mail solicitations sent to vets indicated.
Massachusetts Secretary of Veterans Affairs Coleman Nee said scammers all too often target vets, including eighty-something-aged vets of WWII.
"For people who were so strong when they were soldiers and sailors and airmen and Marines, and really true warriors, at this stage of their life, they tend to get vulnerable," Nee said. "It gets confusing, the system, and they're looking for someone to help them get through and navigate."
Nee said two websites he encourages veterans and their family members to check out when considering products and services are MassVetsAdvisor and on the state’s website.
With videographer David Jacobs.