Hollywood, Florida-based Simple Health Plans has been shut down by a federal judge due to allegations from the Federal Trade Commission that the company was selling junk insurance under the guise of providing comprehensive coverage to patients.
According to an announcement from the FTC, Simple Health Plans and its subsidiaries collected more than $100 million through deceptive marketing and sales practices that left many people stuck with thousands in unpaid medical costs.
While the company portrayed its coverage as comprehensive, customers reported paying as much as $500 a month for extremely limited benefit programs that “effectively left consumers uninsured,” according to the FTC.
The federal court order is only temporary, but the FTC is seeking to permanently shut down the company’s operations and return money to customers.
The federal complaint filed by the FTC alleged that the company used aggressive outbound telemarketing techniques and deceptive sales practices, including featuring the logos of well known carriers who were unaffiliated with the company, in order to sell their products.
Simple Health Plans also operated a network of websites that deceptively claimed to offer quality health insurance but served to direct customers to telemarketers selling the same sham coverage, the FTC alleges
While the company characterized their plans as a PPO with wide ranging coverage, the FTC found that the maximum benefit a customer could realize from the plan was $3,200 per person, per year and only in the case of hospitalization for 30 days.
Simple Health Plans has a history of misbehavior in the industry, including allegations that the company was selling insurance by fraudulently posing as agents of Blue Cross Blue Shield. Additionally, Simple Health Plans CEO Steven Dorfman has been cited by multiple regulatory bodies for selling insurance without a license.
“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,” FTC Bureau of Consumer Protection Director Andrew Smith 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.”
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