Cinergy, National Congress of Employers, Companion Life Facing Class Action Over Sale of Association Group Life Insurance

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Cinergy Health & Life, the National Congress of Employers (NCE) and Companion Life Insurance Company have deceived unsuspecting term life insurance certificate buyers, a proposed class action alleges. 

According to the 29-page complaint, the parties have engaged in a “scheme” whereby they’ve reaped a profit from the “deceptive sale, marketing, and unfair administration” of the certificates in addition to engaging in the “deceptive sale” of memberships to the NCE. The suit alleges the defendants’ improprieties include diverting proposed class members’ premium dollars to pay membership fees to the NCE and exorbitant commissions to Cinergy. 

As the lawsuit tells it, certificate buyers’ membership to the NCE was “at worst a sham, and at best an association with an organization that wholly failed to live up to its obligations.” The plaintiff and proposed class members, defined at the bottom of this post, suffered harm when their term life insurance certificates were terminated “without justification” and in breach of their contractual terms, the complaint claims.

Per the case, the plaintiff, a Wellsville, Pennsylvania resident, bought a term life insurance certificate, known as association group life insurance, from Cinergy that was underwritten by Companion Life and issued by or through the NCE and/or Companion Life. When such a certificate is sold legitimately, it is offered by “true groups or associations to their members” who belong to the organization “primarily for some reason other than to buy insurance,” the lawsuit says.

According to the suit, however, the NCE is “a sham organization” that exists primarily to act as the “front” group and vehicle through which Companion Life and Cinergy sell association group insurance. The NCE, acting as the “front” group, the case alleges, allowed its co-defendants to sell association group term life certificates nationwide “below the radar of regulatory scrutiny” due to the fact that many states do not require sellers or producers of such insurance to be licensed agents. From the complaint:

“To be true group insurance, the association to whom the master policy was issued could not operate for the primary purpose of selling or having the insurance. NCE existed primarily, if not exclusively, for the purpose of selling and having insurance. Without regulatory scrutiny of the unlicensed individuals Cinergy employed to sell the product, and without maintaining an insurance license itself, Cinergy routinely disregarded insurance regulations that prohibited the use of false and misleading sales tactics, and unfair conduct in the administration of the policies or certificates being sold.” 

The suit goes on to allege Cinergy has been operated at all times by Daniel Touizer, who in 2018 pled guilty to mail and wire fraud and was sentenced to prison in Florida, the lawsuit says. According to the complaint, Touizer’s criminal conviction revealed he was operating Cinergy for the primary purpose of collecting ill-gotten commissions from the “deceptive and fraudulent sale of insurance” before using that money to “finance his mail and wire fraud scheme that bilked tens of millions from investors.” 

With regard to the plaintiff and proposed class members, Touizer, the case says, directed the sale of term life insurance certificates through “false and deceptive means,” including false advertising and deceptive communications sent to prospective certificate buyers. Per the suit, the Life Insurance Plan Member Handbook that accompanied the certificates, a uniform and standardized document, makes no mention of the NCE yet nonetheless states that “[t]o become insured, eligible members must make application to Companion Life,” among other statements related to an undefined and non-identified “Association.” From the complaint: 

“Plaintiff never received any documentation or other materials from or about NCE associating her with NCE, other than the Handbook issued by Cinergy. No contact information for NCE was provided, nor was any explanation or description of membership benefits given beyond the availability of purchasing the Certificate as referenced in the Handbook.” 

Although the plaintiff regularly made premium payments, the woman was notified that coverage under her certificate would end, the suit goes on to say. Based on what she was told, the plaintiff understood that her coverage was being transferred to another company, yet in reality, the woman’s life insurance was terminated in contravention to the terms of her policy and without notice or the option to buy an individual policy from Companion Life at comparable rates and coverage. 

The lawsuit looks to represent all persons who own, or previously owned, a certificate of insurance purchased from Cinergy Health & Life that was underwritten by Companion Life Insurance Company and available only to individuals Cinergy characterized as members of the National Congress of Employers, Inc.  

The case also proposes to cover a “subclass” of all persons who own, or previously own, a certificate of insurance purchased from Cinergy that was underwritten by Companion and available only to those Cinergy characterized as members of the NEC and whose policy was terminated without notice or without being given the right to purchase comparable individual coverage. 

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