HealthMarkets Inc. and its majority owners, Goldman Sachs and Blackstone Group were names in a lawsuit filed last week by the Los Angeles City Attorney's office for fraudulent business practices, including selling policies with hidden exclusions. The lawsuit alleges that HealthMarkets sold "junk insurance" to California customers. HealthMarkets operates in 41 states and has been fined nearly $40 million dollars by various state regulators for deceptive business practices.
In 2008, Iowa participated in a multi-state settlement with HealthMarkets involving problems with insufficient consumer disclosure, failure to adequately train insurance agents and deficient claims and complaint handling procedures. HealhMarkets operated in Iowa as Mega Life and Health Insurance Co.