Charging that Gold River, Calif.-based InsWeb Corp. engaged in "inappropriate and deceptive conduct," eHealthInsurance Services Inc. filed a lawsuit on Feb. 20 in U.S. District Court, Northern District of California, in San Jose, and terminated an Internet linking agreement between the two companies.The lawsuit contends that InsWeb was sending "a considerable number of illegitimate referrals" to a co-branded Web site that was built and maintained by eHealthInsurance, which is based in Sunnyvale, Calif. Those referrals were generated by a mass e-mail advertisement from an InsWeb partner, LifeMinders, entitled "Super Bowl Cheerleaders-Check 'em Out," according to a letter from eHealthInsurance General Counsel Bruce Telkamp that was sent on Feb. 14 to L. Eric Lowe, senior vice president and general counsel for InsWeb.
Recipients of the e-mail "were enticed to find pictures of the 'NFL's Hottest cheerleaders' by randomly selecting one of three football helmets," Telkamp's letter states. "Those who did not 'find' the helmet linking them to a Web site featuring cheerleaders were instead linked to the co-branded site," he adds.
The letter states that after eHealthInsurance asked InsWeb to terminate all traffic to the co-branded site originating from LifeMinders, LifeMinders sent out "at least two additional e-mail campaigns" that promoted eHealthInsurance's service, one of which was titled, "Sex School Is In Session."
Referral fees
The linking agreement required eHealthInsurance to pay InsWeb $3.90 for each of the first 1 million "bona fide" referrals that InsWeb guaranteed would be generated to the co-branded Web site during the first year of the pact. EHealthInsurance is seeking reimbursement "of payment amounts that InsWeb has improperly obtained," Telkamp writes.
"Moreover, given the abysmal and continually deteriorating rate at which visitors to the co-branded Web site from various InsWeb partners have been converted into customers, we believe this abuse extends beyond LifeMinders and is substantial," Telkamp writes.
The lawsuit charges that InsWeb has breached "the implied covenant of good faith and fair dealing," and the conduct has caused eHealthInsurance damages that will be proven at the trial. EHealthInsurance is also seeking undisclosed punitive damages "sufficient to punish InsWeb for its fraudulent behavior and to deter similar fraudulent behavior by InsWeb and others."
Executives from both companies declined to comment on the lawsuit.
InsWeb issued a statement that it would vigorously defend the suit against it and pursue all remedies.
