The Truth behind Cinergy Health and the Big Insurance Swindle Original article by Scott C Hailey - August 2nd, 2011 - reprinted with kind permission, Jersey City Herald

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“It’s almost too good to be true!” I thought as the commercial reeled before my eyes. It was November 2008 and I had just moved into a gritty little apartment in New York City’s Midtown West -Hell’s Kitchen- from a small town in Pennsylvania in order to pursue my journalistic dreams.

The commercial in question was for a Cinergy Health “Real Insurance” plan (“NOT a medical discount plan”) for just five bucks a day. “Five bucks!” it enthused…”That’s less than a burger or a packet of smokes!”

I didn’t stop to think of the demographic that they intended to reach by giving that last statement. I was 27 years of age but still a bit naive if I’m honest, having just moved to the big city after receiving a commission to write for a well known food magazine. Citizen Kane I was not. Like so many fellow countrymen, I leaped at this great opportunity without a second thought.

The beginning of the Cinergy Health Downfall

Fast forward to summer of 2009 and Cinergy Health was in a whole world of trouble. Scores of cheated people had come forward to complain as what they had all thought were genuine offers turned out to be quite the opposite, with many -including myself- losing a considerable amount of money to what turned out to be one of the most dishonest, legislation-snubbing insurance companies in recent history.

So what happened? Well many people signed up to this and other policies offered by Cinergy Health, an intermediary of The American Medical and Life Insurance Co. (AMLI). In hindsight I know that limited benefit medical plans and health discount plans are often not what they say on the tin, but it seems I’m not the only one that was duped here. As time went by, more and more complaints started to roll in by people who had signed up to a Cinergy Health plan and when it came to the crunch, little -if any- of their treatment was covered.

My Own Personal Issue with Cinergy Health Insurance

Around the time this happened, I was knocked off my bike whilst en route to my head office, where I routinely traveled every Friday at noon. It was my fault, and nothing to do with the other driver. Of course I had been dutifully paying my insurance premium to Cinergy Health on a monthly basis having succumbed to their “five-dollar-farce” (It was actually a considerably higher amount that was charged to my credit card once I had taken my paramed exam and realized that the $5.00 would get me only $100.00 a day’s worth of cover and was given the hard-sell on another option…)

So here I was, stuck in Hospital with several chipped and twisted vertebrae and severe concussion, awaiting surgery when I find out that I’m only covered for just over $1,500.00 of my $8,670.00 bill, the reason they cited was that I only had partial cover for such an accident. As it turned out, this was nothing:

  • One woman who was paying almost $500.00 a month for insurance services was rewarded with just $2,000.00 towards her $30,000.00 hospitalization bill
  • A young man from upstate New York who had a pulmonary embolism ended up with $300.00 towards his $28,000.00 medical costs
  • A senior citizen from Hackensack, NJ who desperately needed hip replacement surgery was awarded a mere $150.00 towards this expensive and highly necessary operation…

The list went on and on, with many cases coming to light of people not getting any cover at all due to the conniving nature of these so-called “real insurance” policies.
Eventually the state of New York had no choice but to intervene and the Cinergy Health Company was called to question. A fine was issued for $700,000.00 which was duly paid as well as a great deal of compensation to individuals that is said to dwarf this amount. But where did it all go wrong for Cinergy Health?

Sometime before the end of the last decade, state and federal authorities starting to look closer into what were being passed off as legitimate offers by reputable companies, after receiving a series of complaints by ordinary folks who, like me, had been blinkered into buying half-assed insurance.

One name in particular was springing up several more times than most: you guessed it; our gold old friends down in the Sunshine State, Cinergy Health.

The Reasons behind Cinergy Health’s Demise

I didn’t know it at the time, but medical costs bankrupt more people than any other expense. Cinergy just decided to perpetuate -and embellish- this statistic whilst lining their own (already considerably sized) pockets.

Eventually their number was up. Shorty after the hearing, The American Medical and Life Insurance Co. publicly declared that Cinergy Health accepted before an insurance superintendant that they had committed several violations, including:

  • It didn’t justly and precisely divulge the boundaries of its coverage
  • Cinergy falsely suggested to many potential customers that the policies were alternative to actual comprehensive plans and health cover
  • Failed to properly divulge the limitations of its pre-existing condition policy
    Created a false impression as to who was underwriting the policy by suggesting that the plans were presented by Cinergy Health
  • Used customer care services that were either incompetent or purposely gave false information with regards to the type of services on offer and who was issuing the policies
  • Added extra rates to customer’s regular premiums for services outside the field of insurance whilst failing to give adequate reason for doing so
  • Took fees from customers with their prior authorization
  • It didn’t provide written confirmation of the policy guidelines that would have made customers aware of the limited nature of the plans on offer
  • It had agents selling policies without a proper license

What Next for Cinergy Health Insurance?

It’s frightening that a highly regarded organization can deceive its customers and ignore the law without retribution for such a long period of time: an organization associated with the once well respected American Medical and Life Insurance Company no less.*

*AMLI may have been highly regarded by its customers, but not the rating authorities. AM BestCo downgraded it to a B rated company under review with negative implications some time ago. It has never regained its status, thanks largely to questionable risk management and punitive action from the Insurance Dept. for the State of New York.

It has since been widely acknowledged that doing business with AMLI is akin to throwing dice at a craps table. From an investor’s point of view, AMLI has about as much appeal as Greece does to the Germans in the current European climate.

We can only wonder at how many other companies are taking equal liberties, such as flaunting the requirement to employ licensed agents for example. It beggars belief that such a fundamental part of the process can be ignored. It is as arrogant as it is pig-headed and other providers should take this as a firm warning that the public will assert their rights; they will take on a case and if there is any likelihood that there has been any kind of manipulation of a policy’s guidelines with the intention of telling a half truth or a ‘small-print’ type disclaimer, then it is the insurance provider, not the policyholder that stands to lose out in the long-run.

Cinergy Health’s initial fine of up to $700,000.00 is a drop in the ocean; nothing more than a slap on the wrist as far as their total net asset value is concerned, but think of the loss in future revenue and the compensation they had to (and continue to) pay in order to save face. The public trust will be a lot more difficult to restore than previous financial losses Cinergy has faced (such as during the last recession). In turn this will have a devastating effect on Cinergy Health’s future. Even if it is bailed out by its affiliates, The American Medical and Life Insurance Co., I predict an uphill struggle for the foreseeable future that even a drop in premiums, complete rebranding and a shrewd marketing strategy would fail to level.

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