The Minnesota Department of Commerce said Monday that it has fined a New York insurance company $100,000 for allegedly using deceptive advertising to sell at least 1,500 unapproved insurance plans to Minnesota consumers.

The National Union Fire Insurance Company has also been ordered to refund all Minnesota residents who purchased its “Essential Health” plans, which included an accident and sickness insurance policy and a discount medical component.

The policies were not approved by the Commerce Department and did not meet certain state requirements.

A departmental examination found that the National Union Fire Insurance Company may have led consumers to believe that the discount portion of their health plan was equivalent to health insurance or a major medical plan-which was not the case. The company is also said to have violated state law by accepting business from agents who were not licensed to sell insurance in Minnesota. Additionally, the company allegedly failed to review whether the policies sold to residents within the state were appropriate for them.

“Medical discount plans are not health insurance policies and shouldn't be marketed as such,” Manny Munson-Regala, deputy commissioner at the Minnesota Department of Commerce, said in a statement.

The National Union Fire Insurance Company has been ordered to ensure that its policies comply with Minnesota requirements, review all advertising and representations made by its accident and health division, and ensure that those who sell its policies are aware of the benefits and limitations of each product.

The action taken against the National Union Fire Insurance Company is part of a national effort by regulators to crack down on the fraudulent marketing of “medical discount plans” as health insurance. As of August, the Federal Trade Commission and law enforcers in 24 states had collectively filed 54 lawsuits and regulatory actions to stop those practices.

The Minnesota Department of Commerce is the state agency responsible for regulating the state's insurance industry. In fiscal year 2010, the department took 130 insurance-related actions and assessed $3.6 million in penalties.

-Christa Meland