Insured? Not Really

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A growing number of Americans are being scammed by fly-by-night insurance companies, and many times the victims don't find out they've been had until they need insurance the most, reports CBS News Correspondent Bobbi Harley.

Richard Baer never thought he'd be rich, nor did the sixty-year-old small business owner think he'd be in debt, big debt, owing more than $50,000 in medical bills.

"My life has definitely changed ... this has been a tough year" said Baer, whose insurance company, Indiana-based T.R.G., should have covered his bills but instead it sold him a bogus insurance policy.

"This is one of the biggest insurance swindles of the last 10 years," said James Quiggle of the Coalition Against Insurance Fraud. "These phony plans are operating in all fifty states, leaving untold thousands, possibly hundreds of thousands of innocent business owners and consumers bilked out of insurance premiums and have been sold insurance that doesn't exist."

The scheme mainly targets the self-employed, who have a hard time finding affordable health insurance. The unlicensed companies offer cheaper rates than the well-known big ones; they even pay some of the initial bills.

The Piantadosis had been paying insurance premiums to Employers Mutual for six months before Albert found out he needed a liver transplant. That's when he also learned his policy was worthless.

"I couldn't comprehend the thought that my husband was taken off a transplant list when he was so seriously ill because of an insurance company," said Joan Piantadosi.

Lucky for him another company covered his life-saving operation, but not before he had racked up more than half a million dollars in bills he's now responsible for.

"That's unbelievable, unbelievable that one person can do that to another person ... to exploit people like that," said Albert Piantadosi.

It's not just affecting patients. Doctors and hospitals are also left in a financial lurch. The situation in Florida is so bad the state has launched an ad campaign warning people to make sure their insurance company is licensed. But state and federal authorities often don't discover the scam until it's too late.

"It's very frustrating, but there's really nothing we can do," said Florida Insurance Commissioner Tom Gallagher. "We find out about it in many cases when the victims find out about it ... and that's when the claims stop being paid."

No one knows that better than Richard Baer, who's now facing bankruptcy.

"It's been a nightmare," said Baer. "Many days I didn't want to go to the mailbox to get my mail."

Because often Baer would find bills inside that he knows he can't pay.