$150M lawsuit targets misleading ACA insurance policies
Consumers say they were led to believe they were buying comprehensive coverage but instead received limited benefit indemnity plans.
A federal court in Fort Lauderdale certified a nationwide class-action lawsuit seeking damages of about $150 million against two health insurance technology companies based in Tampa.
Attorney Jason Kellogg of Levine Kellogg Lehman Schneider & Grossman in Miami represents the class members, along with Jason Doss of The Doss Firm in Atlanta. They said this litigation shows the potential pitfalls presented for people signing up for health care on the Affordable Care Act marketplace.
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The lawsuit was filed just days after President Joe Biden issued an executive order to expand access and reopen HealthCare.gov for a special three-month enrollment period starting in less than two weeks.
While the lawsuit does not target the ACA marketplace, it illustrates a legal problem that people signing up for coverage might encounter.
“This was a scheme that targeted those consumers by online ads and uniform sales scripts,” Kellogg said. “This case shows that not all health insurance products are major medical insurance, and that scammers can take advantage of folks who are looking for comprehensive health insurance.”
Plaintiffs include Elizabeth Belin, who said she searched for Affordable Care Act compliant health care when she stumbled upon a website operated by Simple Health.
Belin claimed she then spoke with an agent she alleged was reading from a script that led her to purchase an insurance product that was described to her as being “comprehensive” medical insurance.
Another plaintiff, Christopher Mitchell, experienced a similar incident because his employer did not offer health insurance benefits. Both Belin and Mitchell say that instead of comprehensive coverage, they were sold limited benefit indemnity plans and medical discount plans.
Plaintiffs allege in court documents that the insurance agents were allocated “extremely generous commissions” for the sales.
Belin said she paid an enrollment fee of $155 and a monthly premium of nearly $240. However, Belin argued she was damaged financially because the insurance product left her on the hook for more than $48,000 in medical and hospital bills following knee replacement surgery.
Mitchell said in court filings that he paid a $155 enrollment fee and a monthly premium of more than $205. But his pleadings allege he found himself owing more than $40,000 after surgery for an aggressive form of cancer that was not covered by the insurance product.
“This is not just a scam against them, but hundreds of thousands of other victims,” Kellogg said. “Thanks to this ruling we will be able to move forward in seeking justice on behalf of those victimized.”
The dispute in the case involves Tampa-based companies, Benefytt Technologies Inc., formerly known as Health Insurance Innovations, and Health Plan Intermediaries Holdings LLC, both accused of aiding and abetting fraud perpetrated by two companies.
U.S. District Court Judge Raag Singhal, who sits in the Southern District of Florida, has certified a class of more than 200,000 members.
Read the federal court order:
Kellogg and Doss said they will seek more than $150 million in damages under the federal Racketeer Influenced and Corrupt Organizations Act at a trial scheduled to commence in July.
The proposed classes include one for consumers who purchased the medical plans through Simple Health and a separate class for Nationwide Health. There are also two subclasses for medical expenses and tax penalties.
Garry William O’Donnell, a partner at Greenspoon Marder in Boca Raton representing the defendants, did not respond to a request seeking comment on the litigation.
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