Feds shut down Florida network selling ‘ruinous’ health insurance plans

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Published November 6 2018
Updated November 6 2018

WASHINGTON — Federal authorities have shut down a network of Florida companies that they say used aggressive, deceptive tactics to sell skimpy health insurance products that skirt requirements of the Affordable Care Act and left tens of thousands of people around the country with unpaid medical bills.

"There is good cause to believe" that the Florida companies have sold shoddy coverage by falsely claiming that such policies were comprehensive health insurance or qualified health plans under the Affordable Care Act, Judge Darrin P. Gayles of the U.S. District Court in Miami said in a temporary restraining order issued last week at the request of the Federal Trade Commission.

Telemarketers lured consumers through websites offering Trumpcare and Obamacare, using logos of well-known insurers to make the coverage appear credible, the trade commission said.

The commission filed a lawsuit against Simple Health Plans and its chief executive, Steven J. Dorfman, and five other entities in a "common enterprise," saying they had misled consumers to believe they were buying comprehensive insurance that would cover pre-existing medical conditions, prescription drugs, doctors’ services and hospital care.

Among the products offered through Simple Health and its websites were "short term" health insurance plans like those promoted by President Donald Trump as an alternative to the Affordable Care Act.

Gayles froze the assets of Simple Health and its affiliates and appointed a receiver to take control of the companies. He said the companies appeared to have made "false and misleading statements," marketing "limited benefit plans" and membership in medical discount programs as if they were major medical coverage. He will hold a hearing next week on whether to extend his order by issuing an injunction.

The trade commission said the financial consequences of the misrepresentations "have been ruinous for consumers, many of whom do not realize" the limits of the coverage until they incur substantial medical expenses.

The commission described Dorfman as "the architect of this scam."

Ryan D. O’Quinn, a lawyer for Dorfman, said Monday that his client "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."

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