California sues ‘sharing department’ health insurance scheme

California sued on Wednesday what the state attorney general called a bogus health insurance company operating as a “shared health care department” – state claims state illegally denied benefits to members while keeping up to 84% of their payments.

The lawsuit names The Aliera Companies and the Moses family, who founded Sharity Ministries Inc. Sharity, formerly known as Trinity Healthshare Inc., is a non-profit corporation.

But the state says Aliara is a for-profit company that has raised hundreds of millions of dollars in premiums from thousands of Californians and others in the United States through unauthorized health plans and insurance. sold via Sharity / Trinity.

Instead of paying members’ health care costs, the state alleges the company has consistently denied claims and spent just 16 cents of every dollar in premiums for health care expenses.

“This is especially glaring when bad players operating in the health care market take advantage of families, when they take their money but offer essentially worthless coverage,” Attorney General Rob Bonta said announcing the lawsuit.

“It has left countless families crushed – not just by disease and the burden of medical emergencies, but by the burden of insurmountable medical debt.”

Before The California Trial, 14 states and Washington, DC, had taken action against the Atlanta, Georgia-based company.

These include the California Department of Insurance, which issued a cease-and-desist order in 2020 to prevent Aliera from selling new plans in the state. But the state maintains the company continued to operate for existing California members until Sharity went bankrupt last year.

Aliera did not respond to requests for comment by phone and email on Wednesday.

But in a statement on its website in response to previous allegations, the company said it “is a holding and management company and is neither an insurance company nor a shared health care ministry (‘HCSM’); However, through several wholly owned subsidiaries … we provide services to HCSM clients.

Aliera and Sharity were part of these “sharing” plans called last summer by “Last Week Tonight with John Oliver.”

California lawsuit alleges Aliara never met the legal definition of a shared health care department, which, among other things, required them to be a nonprofit organization since December 31, 1999 .

Members were told that their monthly payments would be used to help others with their health care costs. But the state says the company and the Moses family kept up to 84% of the premiums.

In contrast, traditional businesses licensed under the Federal Affordable Care Act 2010 are required to spend at least 80% of their premiums on medical care.

Covered California executive director Peter Lee said plans included in the state program spend on average 87% of premiums on health care.

Bonta had published a more general notice in April consumer alert about these “sharing” businesses.

He said that, unlike Covered California plans, these shared health care departments are not required to cover pre-existing conditions or guarantee coverage for medical bills or services such as birth control, prescriptions and prescriptions. mental health care.

The question arose after the Affordable Care Act was passed in 2010.

These shared health care ministries have been authorized to allow consumers to pool their money with others who share their religious beliefs, with the aim of helping each other in the event of a medical emergency.

They’ve been exempted from many of the new federal coverage requirements, and some companies have started marketing sharing plans as a cheaper alternative to the new Obamacare-compliant health insurance.

The number of registrations for such sharing programs has since grown from around 100,000 members in 2010 to 1.5 million members in 2020. California has the second highest membership in the country, with approximately 69,000 members. , according to the lawsuit.

Bonta and Lee said many companies may be operating illegally because they do not meet the requirements for a Department of Health exception.