FTC accuses Florida agency of selling $100M in fraudulent insurance plans

A federal judge has temporarily shut down Florida-based company Simple Health Plans after the Federal Trade Commission accused the agency of collecting more than $100 million in fraudulent insurance payments and leaving its enrollees with thousands of dollars in medical debt.

Simple Health’s services were suspended at the request of the FTC, according to a statement, and will remain on hold until the case is resolved. Complaints have been filed against the company, its owner, Steven J. Dorfman, and five other entities related to the parent corporation.

FTC officials said Simple Health posed as an insurance agency, misleading customers into thinking they were buying “comprehensive health insurance that would cover pre-existing medical conditions, prescription drugs, primary and specialty care treatment, inpatient and emergency hospital care, surgical procedures and medical and laboratory testing.” Instead, through reportedly fraudulent sites like www.trumpcarequotes.com and www.simplemedicareplans.com, telemarketers posing as insurance agents offered consumers “PPO plans” that were actually medical discount programs or extremely limited benefit programs.

As a result, enrollees who were paying up to $500 per month for those plans were met with resistance when they tried to actually use their insurance.

“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,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said in a statement. “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.”

Smith said Simple Health collected consumers through a network of lead generation websites that boasted false claims and partnerships, often using well-known logos like those of the AARP or Blue Cross Blue Shield to leverage credibility. To enroll in a plan, customers paid what they believed to be a one-time enrollment fee of between $60 and $175, and monthly premiums ran from $40 to $500.

According to the FTC, customers were also often led to believe their plans would come without any copays or deductibles.

In reality, the typical Simple Health plan provides no coverage for prescription drugs or pre-existing conditions, caps physician visits at three per year and covers a maximum of $100 per day of hospitalization. Using those numbers, the maximum benefit a patient could incur from the plan is $3,200, and that’s only if they were hospitalized for 30 days over the course of the year.

The defendants have been charged with violating the FTC Act and the FTC’s Telemarketing Sales Rule. A preliminary injunction hearing is slated for Nov. 14.