The Federal Trade Commission has secured a $195 million judgement against Florida-based insurer Simple Health following allegations that it sold "sham" coverage to consumers.
The plan as well as its CEO Steven J. Dorfman will need to come up with the funds.
The health plans did not actually give customers the coverage or benefits they were promised, the FTC said in an announcement, and "effectively left consumers uninsured." This left them on the hook for medical expenses, the agency said.
The FTC initially filed a complaint against Simple Health in 2018, charging that the insurer was misleading potential enrollees with its marketing, which promoted comprehensive health coverage including prescriptions, primary care, specialty care, inpatient services, emergency care, surgery, lab testing and treatment for preexisting conditions.
Members instead enrolled in "what was actually a medical discount program or extremely limited benefit program," the FTC said, paying as much as $500 per month for insurance that left them with thousands of dollars worth of medical bills or that made it impossible to secure needed care.
“Simple Health preyed on consumers by selling them bogus health care insurance that cost them thousands of dollars for ‘benefits’ that in fact left consumers unprotected,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in the release. “We are pleased the court recognized this blatant bait and switch and ordered the company and its CEO to turn over the money they bilked from consumers.”
The motion for summary judgement was granted in federal district court for the Southern District of Florida. The court found that both the company and Dorfman violated the FTC Act as well as the FTC's Telemarketing Sales Rule.
Simple Health's assets have been frozen since November 2018, and the court ordered that they be liquidated with the funds turned over to the FTC. The agency said it plans to deploy the money to refund customers.
Beyond the financial penalty, the defendants are barred from collecting money for any of the Simple Health plans they sold in the past and must destroy any personal information they retain on members, the FTC said.
Candida Girouard, the company's chief compliance officer, agreed to settle with the FTC in February 2021, according to the announcement.
"As part of that settlement, Girouard is banned from marketing, promoting or selling any healthcare-related products, from making misrepresentations in connection with the sale of any good or service, and from violating the FTC’s Telemarketing Sales Rule," the FTC said.