AARP, UnitedHealth Hit with Class Action Claiming PA Senior Citizens Were ‘Fooled’ into Paying Inflated Insurance Costs

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Two Pennsylvania consumers have filed a proposed class action lawsuit with the hope of recouping millions of dollars they allege senior citizens were fooled into paying for artificially inflated Medicare supplemental health insurance charges. Echoing a case filed in Florida back in February, the lawsuit claims the defendants—AARP, Inc.; AARP Services Inc; AARP Insurance Plan; UnitedHealth Group, Inc.; and UnitedHealthcare Insurance Company—used these surreptitiously obtained funds to illegally pay insurance commissions to an unlicensed entity.

The complaint states that despite AARP’s status as a non-profit, it brings in “substantial income” through its business partnerships like those with co-defendant UnitedHealth. Together, the lawsuit alleges, the defendants have effectuated a scheme whereby AARP, as a de facto agent of UnitedHealth, helps “market, solicit and sell or renew” AARP Medigap policies and administers the Medigap program on behalf of UnitedHealth in exchange for a $4.95 percent commission kickback from each new policy or renewal.

The existence of a payment, which the defendants call a “royalty,” passing from UnitedHealth to AARP is no secret, the suit continues. What the defendants’ allegedly hide from view is that the royalty is, in truth, a percentage of a premium commission charged to unsuspecting seniors and disabled individuals that’s added to the insurance premiums they pay to UnitedHealth. The case alleges that at the end of the day, the defendants’ conduct violates Pennsylvania insurance law, as AARP is not licensed in the state as an insurance agent.