Feds Shut Down ‘Sham’ Health Insurance Companies
by Bill Moak, Consumer Watch
Health care has become a big issue for many Americans over the past few years. As the costs of health care continue to rise, families without health insurance are looking for ways to afford those costs. That can make them vulnerable to companies that take their money without providing needed services.
This week, the Federal Trade Commission requested that a federal judge shut down a Florida-based operation that it accused of collecting more than $100 million “by preying on Americans in search of health insurance, selling these consumers worthless plans that left tens of thousands of people uninsured.”
In a news release, the FTC accused Simple Health Plans of “misleading customers into thinking they were buying comprehensive health insurance” but instead provided little in exchange for the $500-per- month cost. Many customers found themselves holding the bag for thousands in unreimbursed medical costs.
“Many consumers were misled into thinking they had purchased comprehensive health insurance, but when they needed to rely on that insurance, they learned they had none of the promised benefits,” said Andrew Smith, the director of the FTC’s Bureau of Consumer Protection. “The plans defendants were selling are not health insurance and they aren’t a substitute for health insurance. Get the details in writing and take your time before signing up for any of these plans.”
According to the FTC’s complaint, the defendants lured consumers through a “network of deceptive lead generation websites that claimed to provide information about comprehensive health insurance.” In addition, the companies “falsely held themselves out as experts on and providers of government-sponsored health insurance policies, such as those offered under Medicare and the Affordable Care Act. In many cases, the sites also misleadingly featured the logos of the AARP or well-known insurance carriers, such as Blue Cross Blue Shield plans, when in fact the defendants were not affiliated with such entities.”
On one website, called www.trumpcarequotes.com, the company allegedly claimed to offer “Health Insurance for Smart People” from “the Nation’s Leading Carriers” at “Low Affordable Premiums” with “Prescription Drug Coverage.” Another Simple Health website, www.simplemedicareplans.com, promoted “Medicare Health Plans for Your Needs and Budget.” When customers inquired, though, they were directed to telemarketers who promised a comprehensive plan with no copays or deductibles.
In addition, many customers were allegedly misled to believe the coverage met the requirement for coverage under the Affordable Care Act, when in fact they weren’t covered and were then subject to the financial penalties for not having health insurance.
The company’s owner, Steven J. Dorfman, who was named as a defendant in the suit, responded through his attorneys that the charges were without merit. “Mr. Dorfman vigorously denies the allegations of misconduct made by the Federal Trade Commission, and he looks forward to having an opportunity to defend himself in the appropriate forum,” his attorney told a Florida newspaper.
If you’re shopping for health insurance, the site Verywellhealth’s Tricia Torrey offers some red flags to avoid. Here are a few:
Companies with aggressive salespeople. “Don’t purchase insurance from any company that phones, faxes, or emails ‘good deals,’” Torrey advises, or puts pressure on you to rush your decision-making.
Says “We’re licensed by ERISA (Employee Retirement Income Security Act).” That’s a federal law, but states are the ones who license insurance companies, not the federal government.
Companies whose prices seem too good to be true. They probably are; it’s unlikely that any company’s prices are a lot lower than those of their competitors.
To check licensing on an individual or company operating in Mississippi, visit the Mississippi Insurance Department at https://www.mid.ms.gov/licensing-search/individual-entity-search.aspx or call 1-800-562-2957.
Call Diversified Brokerage Ltd. at 845-291-1289 to manage your company’s business needs including employee benefit consulting, self-insured plan management, medical savings accounts, fully insured commercial health, dental & vision plans. Click here to contact us.