AARP Is Sued Over Insurance Premiums Charged to Its Members
By David Glovin
January 21, 2009
Jan. 21 (Bloomberg) -- AARP, the largest U.S. membership organization for people 50 and over, was accused in a lawsuit of breaching its duty to members who enroll in group-endorsed health care plans.
The group collects hundreds of millions of dollars annually from insurers who pay for AARP's endorsement of their policies, according to a complaint filed in federal court in New York. Because of the group's "relentless appetite for royalty revenues," AARP permits insurers to make excessive increases in the insurance premiums charged to its members, the suit says.
"By 2007, the royalties from AARP-endorsed health care providers generated 60 percent of the revenue of AARP," according to the complaint. "AARP received nearly $500 million in royalties."
The suit, by AARP member Lucille Roussin, who lives in New York, seeks unspecified damages and asks to be designated as a class action, or group, lawsuit on behalf of others.
A spokeswoman for Washington-based AARP, which was formerly called the American Association of Retired Persons, didn't immediately return a call. The not-for-profit group has a membership of 38 million people who are 50 or older, according to the complaint.
The case is Roussin v. AARP, 09-cv-586, U.S. District Court, Southern District of New York (Manhattan).
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