- Tampa, Florida-based Health Insurance Innovations is being sued by two policyholders over "misleading" sales of health insurance that left them with tens of thousands of dollars in medical bills.
- The complaint seeking class action status alleges Health Insurance Innovations marketed and sold consumers health insurance plans falsely presented as comprehensive medical coverage adhering to protections enacted under the Affordable Care Act.
- Though HII has yet to legally respond to the suit, the insurer told Healthcare Dive the allegations have "no merit" and that it plans to "vigorously defend" itself in court.
Short-term health plans were originally designed to serve as stop-gap, safety-net coverage for three months while consumers transitioned to long-term, robust coverage mandated by federal law. The trimmed-down coverage isn't required to cover the 10 essential benefits of the ACA, including behavioral health, substance use treatment and maternity care.
But Trump administration expanded the plans last year in a controversial move critics called a continued sabotage of the Affordable Care Act. Now, they can last 12 months and be renewed for three years.
Critics and advocacy groups are taking the administration expansion to court. Plaintiffs including the National Alliance on Mental Illness, the American Psychiatric Association and the Association for Community Affiliated Plans argue short-term insurance causes dips in ACA market enrollment, an allegation backed by research.
And four states — California, Massachusetts, New York and New Jersey — have essentially banned the plans, while others have taken steps to tamp down on the sale of such products, according to the Commonwealth Fund.
Health Insurance Innovations is one of the 12 companies currently under investigation by the House Committee on Energy and Commerce for their work in pushing the plans to consumers. The inquiry, launched in March and spearheaded by Chairman Frank Pallone Jr., D-N.J., is looking at what the plans cover along with their business practices, advertising strategies and popularity with consumers.
"What's going on is that a lot of companies, bad actors, are taking advantage of the fact that there are looser regulations, less oversight, to make money," Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University, told Healthcare Dive.
Hollywood, Florida-based Simple Health Plans was shut down by a federal judge in November for misleading consumers. That judge said consumers were sold 'worthless' health insurance, which led in some cases to exorbitant bills for services the consumers thought were covered.
Simple Health was HII's top revenue generator before its dissolution.
In the current case, plaintiffs allege HII defrauded consumers by developing the plans, distributing them, loaning Simple Health millions of dollars to fund its operations, training its agents, approving the fraudulent sales script, collecting monthly premiums from defrauded consumers and more — causing Simple Health to become HII's "largest and most profitable distributor" of short-term plans.
In a statement, HII attempted to distance itself from Simple Health, saying "Simple Health violated the trust of its consumers, its regulators and us." HII, which saw a reported $351 million in sales last year, purports no knowledge of Simple Health's duplicitous advertising practices.
However the plaintiffs' representative Jason Doss is skeptical of that argument, telling Healthcare Dive: "If they claim no knowledge, I find that very hard to believe."
Plaintiffs Elizabeth Berlin and Christopher Mitchell both fell into the HII plans' coverage gap when they needed healthcare that was not provided for in their limited indemnity insurance. Limited indemnity plans pay a flat fee per total charges of a service.
Berlin, an Ohio resident, paid $240 a month in premiums. She said she went in for knee replacement surgery, and got hit with surprise bills in excess of $48,000 — more than her annual salary. She claims a salesperson had previously told her the majority of the surgery's costs would be covered when she purchased her plan in 2016.
Mitchell paid $207 a month for his plan for two years before he was diagnosed with an aggressive form of breast cancer. Days before he was to receive surgery, the hospital informed him he wasn't covered under his HII plan. He received bills exceeding $40,000.
"There are a lot of scams out there," Corlette said. "If the price seems too good to be true, it probably is."
Correction: The story has been clarified to reflect the difference between limited indemnity plans and short-term insurance.