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AARP says its relationship with members not one of “trust or confidence”

A judge in Washington, DC recently dismissed a class action lawsuit against the AARP brought by seniors who felt the organization was not acting in their best interests. However, the arguments that AARP made to obtain that dismissal will likely shock its members.

AARP has been in and out of the courtroom for years defending their controversial arrangement with the nation’s largest health insurance corporation, UnitedHealth. These class action lawsuits have been brought by Medicare patients who say they were deceived into paying undisclosed commissions when they enrolled in AARP-branded supplemental health insurance plans.

One of these lawsuits, Krukas v. AARP alleged:

“AARP and UnitedHealth, together and through their respective subsidiaries, have orchestrated an elaborate scheme where AARP, as the de facto agent of UnitedHealth, helps market, solicit, and sell or renew AARP Medigap policies and generally administers the AARP Medigap program for UnitedHealth… AARP received ‘a 4.95% commission from every policy sold or renewed,’ id., which ‘constitutes an illegal kickback,’… AARP collects an illegal commission, acts as an unlicensed insurance agent, and materially misrepresents information about the 4.95% charge, all of which constitute violations of the CPPA and common law.”

The members suing AARP argued that a supposed seniors’ advocacy organization has a responsibility to look out for their best interests. AARP, apparently, feels differently.

Lawyers for AARP responded that there is no requirement for the AARP to “act with the interests of [members] in mind.” The members who purchased the coverage also argued that AARP has a “mission to serve as ‘an unbiased advocate’ for seniors.” AARP’s response? “Neither of these theories passes muster.”

AARP attorneys further argued that “The relationship between a member and a membership organization is not one of ‘trust or confidence’ that creates a fiduciary duty” and that membership “does not ‘transcend an ordinary business’ relationship.”

Why would AARP make these damaging admissions in court? The answer is simple: to protect their gravy train.

The tax-exempt AARP was paid nearly $939 million in corporate royalties in 2018; much of this from a single corporation—UnitedHealth Group (UHG), the nation’s largest health insurance company.

Between 2010-2017, AARP was paid approximately $4.189 billion from UHG alone, stemming from AARP-branded healthcare policies administered by UHG and its wholly own Pharmacy Benefit Manager (PBM) company, OptumRx.

AARP often acts in the best interests of their corporate sponsors at the expense of seniors. They opposed Medicare reforms that would apply large discounts on drugsdirectly to patient’s bills at their local pharmacies. Instead, health insurers and PBMs (like UnitedHealth and OptumRX) currently keep these discounts for themselves.

Millions of seniors who have purchased a membership in AARP would likely be surprised to learn the organization views their trust as a commodity to be exploited.  They deserve better.