AARP, UnitedHealth Sued Over Alleged Illegal Insurance Scheme

Holders of Medicare supplement policies offered by UnitedHealth Group Inc. are suing the health care provider and AARP Inc., accusing them of orchestrating an “elaborate scheme” to mislead seniors and charge them for illegal insurance commissions.

For years, AARP has acted as UnitedHealth’s de facto agent by marketing and soliciting the so-called Medigap plans and taking a 4.95% cut on the resulting contributions, according to the proposed class action filed Monday in California federal court.

And the cost of paying those commissions—referred to as royalties received for the use of AARP’s name on UnitedHealth programs—has been passed on to policyholders ...