@CrgButcher,
I can't comment on the legality of this statement, but yes, something sounds very wrong. I'm not a supporter of Obamacare, but I'm very sure that has nothing to do with whatever is going. Probably miscommunication, maybe something wrong in the company itself.
I'm assuming this is normal health coverage. There are various special purpose policies being sold that may have such a provision. There are some strange policies being sold as hospital insurance, which promise to pay a set amount for each day in the hospital. I'm hoping your son wasn't roped into one of these deals.