HCC Medical Insurance Services LLC, HCC Life Insurance Co. and Health Insurance Innovations Inc. are facing a multistate class-action fraud lawsuit alleging the companies refused to pay insurance benefits to a number of short-term insurance plan consumers.

The lawsuit, which was filed in an Indiana federal court Jan. 3, was brought by three individuals who allege that the companies refused to pay insurance benefits previously promised through measures such as post-claims underwriting.

The companies allegedly use short-term medical insurance plans that target "vulnerable buyers" and are not subject to certain protections outlined in the Affordable Care Act. The plaintiffs claim that the companies jointly developed, marketed, sold and administered HCC's short-term insurance plans in July 2013 through at least May 2017 in at least 45 states.

The lawsuit claims that the marketing and claims processing procedures allow for the delay, and eventual denial, of certain valid claims, creating short-term insurance products "worthless." The plaintiffs are seeking monetary and equitable compensation for the lawsuit, including damages and an order that would require the companies to stop the practices.

The practices have been previously scrutinized by state regulators, according to the lawsuit. Currently, there are at least 42 states involved in a multistate examination related to HCC's short-term medical insurance plans. The lawsuit also claims that Health Insurance Innovations has received at least two cease-and-desist letters from Michigan and Arkansas in 2014 and 2016, respectively. The letters were related to the short-term insurance plans sold through allegedly unlicensed or unqualified brokers.

HCC Medical Insurance Services and HCC Life Insurance are wholly owned subsidiaries of HCC Insurance Holdings Inc., which is ultimately owned by Tokio Marine Holdings Inc. Tokio Marine HCC is the marketing name used to describe the affiliated companies under HCC Insurance.

A spokesperson for Tokio Marine HCC could not be reached for comment. A Health Insurance Innovations spokesperson declined to comment on the lawsuit.