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MEGA Life to Pay Restitution, Record Fine
April 3, 2008
Augusta, Maine: The Maine Bureau of Insurance and the Maine Attorney General have resolved concerns about MEGA Life and Health Insurance Company?s (MEGA Life) flawed method of determining premiums for individual health insurance policies, including payment of a $1,000,000 fine against the company. The $1,000,000 represents a civil penalty of $250,000 for the years 2004, 2005, 2006, and 2007, which represents the time that MEGA Life wrote individual health policies in Maine. MEGA Life is also required to refund $4.6 million in overpaid premiums, plus interest, to consumers.
?This is one of the largest fines and consumer restitution agreed to in Maine,? stated Maine Insurance Superintendent Mila Kofman. ?The Bureau has a ?zero? tolerance policy for those choosing to skirt the law.?
?Based on the evidence, MEGA Life?s rates were determined to be excessive under Maine law,? added Attorney General Steve Rowe. ?Instead of bringing their rates down as required by law, MEGA Life continued to charge inflated rates. This practice resulted in Maine policyholders being over charged for years. This settlement will return the overcharge plus interest to the policyholder.?
MEGA Life has 30 days from the date of the decision to notify the Bureau of Insurance of the method it will use to allocate the restitution to specific policyholders. The settlement involves approximately 9,830 policies issued from January 1, 2004 through December 31, 2007. Thousands of people in Maine are affected.
Eric Cioppa, Deputy Superintendent of Insurance was the hearing officer in this case. Judith Shaw, Deputy Superintendent of Insurance prosecuted the case and negotiated the settlement agreement on behalf of Bureau of Insurance staff.
The Bureau of Insurance is part of the Department of Professional and Financial Regulation which encourages sound ethical business practices through regulation of insurers, financial institutions, creditors, investment providers, and numerous professions and occupations for the purpose of protecting the citizens of Maine. Consumers can reach the Bureau through its web site at MaineInsuranceReg.org; by calling 800-300-5000 in state; or by writing to Bureau of Insurance, 34 State House Station, Augusta ME 04333.
April, 4, 2008 David Lougrhan