ST. PAUL, Minn. (Legal Newsline) - Two lawsuits have been filed by Minnesota's attorney general against companies that allegedly scammed Minnesota citizens struggling with the high cost of health care.

The citizens were allegedly led to believe that they were purchasing health coverage at an affordable price. In actuality, what the citizens purchased were non-insurance products with limited benefits.

"Many people are struggling with skyrocketing health insurance premiums. Some companies are exploiting the lack of affordable health coverage by aggressively promoting risky, unregulated health coverage products that offer little or no financial protection if you get sick," Attorney General Lori Swanson said in a statement.

The companies -- Consumer Health Benefits Association, a non-profit corporation based in Missouri with its principal place of business in Florida, and Home Health America, LLC of Nevada -- seek out citizens in need of affordable coverage.

The lawsuits against the companies as well as Home Health America owner Michael Woodward seek injunctive relief, restitution for consumers and civil penalties. The owner of both companies has, in the past, had actions taken against them for similar conduct by other states.

Consumer Health Benefits Association is alleged to have targeted people in need of affordable health insurance by misleading them into paying a $129.90 enrollment fee as well as a monthly fee of $129.95 to $149.95.

The company misrepresented that it offered health insurance or a similar equivalent. Its "New Choice Health Plan" was misrepresented as insurance that would cover 80-percent of medical expense and required only minimum co-pays for doctor and hospital visits. The company also alleged that a vast network of doctors and hospitals provided coverage.

The plan, in actuality, does not provide insurance coverage or cover claims but purport to offer retail price discounts off of charges by certain doctors and clinics.

Health discount plans like Consumer Health Benefits Association, which are not licensed or regulated by the state, cannot legally assume the legal obligation for paying claims.

The company, which charged citizens a combined enrollment fee and monthly fee during the initial sales calls after obtaining a consumer's bank account information, only sent written materials of the plan after signing up the consumer. Within the first year of signing up, 94-percent of consumers canceled the plan.

The lawsuit alleges that Consumer Health Benefits Association violated the state's consumer fraud and deceptive trade practices laws. Previously, the company was sued by the Illinois attorney general's office in 2005. It agreed in a 2007 settlement not to represent that is plan was health insurance or commensurate to health insurance.

Health America is alleged to have sent elderly Minnesotans mailings that describe the high cost of home care and invited them to return a postcard for more information. Those who returned the postcard were called by defendant Michael Woodward under the pseudonym "Mike Woods."

Woodward requested to meet the seniors in their homes and, when doing so, told the consumer how home care and other long term care would be provided through Health America for a lump sum payment of between $3,000 and $4,000.

Woodward informed some senior citizens that the payment would cover one year of home care services. Others were told that the lump sum did not have any limited term.

Following their payments, the seniors would receive letters informing them that their program had been upgraded to include medical services including 24 hour nursing care and assisted living care.

The attorney general's office is not aware of any case where Health America paid claims in excess of the citizen's initial payment.

The lawsuit against Health America and Woodward alleges violations of the State's consumer fraud, deceptive trade practices, long-term care insurance and home solicitation laws.

Woodward had previously entered into a consent decree in 2006 with the state of Washington for a similar scheme. Woodward was prohibited under that consent decree from selling home health care contracts in Washington.