Online health insurance agency ordered to stop false advertising

OLYMPIA, Wash. — Insurance Commissioner Mike Kreidler has ordered a California insurance agency to stop using a deceptive, misleading market survey, that falsely identifies Spokane as the most expensive city in America for family health insurance.

The purported marketing survey by eHealthInsurance Services, Inc., of Gold River, Calif., served as the basis for a news report that appeared last month in Parade Magazine, an insert that is distributed with Sunday newspapers across America. Similar reports also ran in regional publications, Web-based magazines and newspapers.

“The simple fact of the matter is that it’s not true,” Kreidler said. “And for the company to make the claim in a so-called survey that it created in part ‘to be used as a reference when making relocation decisions’ is especially reprehensible and damaging.”

Kreidler said that the online agency’s use of the survey, entitled “The Most Affordable Cities for Children’s & Family Health Insurance,” amounts to unfair and deceptive practices in violation of Washington insurance laws.

The marketing survey states that the information presented was based on an examination of 5,000 health insurance plans from 140 health insurance companies in the 100 most populous cities in America. What it actually represents, however – as acknowledged in much smaller type on the last page of the advertisement – is the pricing for products available through eHealthInsurance only.

Additionally, Kreidler noted that his office had notified the company that at least some of the rates being used were out of date and thus inaccurate.

The Parade Magazine article resulted in Kreidler’s office receiving a flurry of calls from consumers, newspaper reporters and others expressing complaints and concerns over the inaccurate portrayal of Spokane’s family health insurance market.

In addition to ordering the company to stop using the advertisement in the form that was published on July 19, 2006, Kreidler also ordered the company to stop granting permission for others to republish the information. He also prohibited the company from publishing any rates on its Web site that are not verified to be current and correct.

Penalties for violation of the order range from monetary fines to suspension and revocation of the company’s license to sell and market insurance in Washington.

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