Cinergy Health Group Term Life Insurance Scheme Class Action

This class action concerns association term life insurance certificates bought from Cinergy Health, Inc. (which does business as Cinergy Health & Life Insurance Agency). The certificates were underwritten by Companion Life Insurance Company and issued through Companion or the National Congress of Employers, Inc. (NCE). The complaint alleges deception in the sale and marketing of the certificates, their unfair administration, and their termination without justification.

Association group life insurance is normally offered by groups to their members. In this case, the group is NCE. But the complaint alleges that NCE is a sham, a “front” group that allowed Cinergy to sell group insurance “below the radar of regulatory scrutiny by virtue of the fact that many states do not require sellers or ‘producers’ of association group insurance to be licensed agents…”

To offer this kind of insurance legitimately, a group has to operate for a primary purpose other than offering insurance. NCE, the complaint says, had no other purpose. Cinergy was thus able to get unlicensed people to sell the insurance and to “routinely disregard[] 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.”

Cinergy was under the control of Daniel Touizer, who pled guilty to mail and wire fraud in 2018. The complaint alleges that the purpose of these scams was to defraud people who invested in his companies between 2010 and 2017.

According to the complaint, Touizer’s purpose in operating Cinergy was to collect commissions from deceptive and fraudulent sales of insurance and use that money to pay for his mail and wire fraud schemes. The complaint claims he “directed the sale of Term Life Insurance Certificates through false and deceptive means, including false advertising and deceptive communications that were sent to prospective purchasers of the Certificates.”

Customers who bought the group term life policies, like the plaintiff in this case, Cynthia Johnson, were told that their insurance “was guaranteed to remain in force for as long as [they] paid their monthly premiums (unless the Policy between NCE and Companion Life Insurance Company was terminated.”

Johnson paid her premiums, but was eventually told her coverage would end. The complaint alleges, “Based on what she was told, [Johnson] understood that the coverage was being transferred to another company.” But no such transfer took place; Johnson’s coverage was simply terminated, without any explanation of the cancellation or any further notice to her.

A class and a subclass have been defined for this action:

• The NCE Class is all persons who own or owned a certificate of insurance bought from Cinergy Health & Life that was underwritten by Companion Life Insurance and available only to individuals Cinergy characterized as members of NCE.
• The Wrongful Termination Subclass is all persons in the above class whose policies were terminated without notice or without being given the right to buy comparable individual coverage.

Article Type: Lawsuit
Topic: Insurance
Tags: Breach of Contract, Insurance, Life Insurance, RICO laws