AARP Sued Over Insurance Policies

The American Association of Retired Persons has long been held in great regard by many individuals. The organization membership maintained significant numbers for decades by focusing on special benefits and product offerings to all members, many times regardless of age. One of those special types of products has traditionally been insurance, including connecting members with Medicare Part D providers.

These types of offerings have commonly been associated with the organization for years without much problem. However, the health insurance mandate that came with the Affordable Care Act impacted the number of individuals interested in plans, even though they were also required to purchase a membership. And now, legal action has been taken against AARP and the various subset health insurance companies of UnitedHealth Group, Inc., claiming financial elder abuse, negligence, and illegal selling of the policies without a license.

The plaintiffs claim that AARP was actually promoting plans from UnitedHealth Group and UnitedHealthcare Insurance Company as superior and more economical than other similar products on the market, a claim that was later recognized as being deceptive. The ultimate claim is that both AARP and UnitedHealth had colluded in a agreement to allow AARP branding for the products with their recommendation in exchange for being paid a designated “royalty” for each new policy written. The plaintiffs claim this action is actually a commission, as opposed to a referral bonus or royalty, and is being done outside of the legal scope of licensing.

The case was originally filed in Los Angeles County Superior Court, but was transferred on Dec. 15, 2017 to the U.S. District Court for Central California. The case was denied at the district level, but the appeal to the 9th U.S. Circuit Court of Appeals resulted in a determination that the claim actually did have merit and should be heard because of the significant number of elderly people who may be involved. The three original plaintiffs also seek to include all other individuals in California who are over 65 years of age and purchased a policy based on the recommendation of AARP, which would make this a huge class action case that could also impact AARP insurance sales in other states as well following a federal court ruling.

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