False offers of cash subsidies used to 'capture' health insurance customers, lawsuit alleges

Consumers identified as lead plaintiffs include Conswallo Turner, 52, a Texas woman who said her agent was switched five times in December 2023 by an Enhance Health agent. Her health insurance plan was switched without her consent to one that did not include her son, according to the suit.

Larry Foreman, a Georgia man, was enrolled into a plan by a TrueCoverage agent who led him to believe he would receive a cash card and an insurance plan that cost him nothing, the lawsuit states. Instead, he received a bill from the IRS stating he owed $871 for a single month of coverage because the agent underreported Foreman’s and his wife’s income, according to the lawsuit.

The lead agent plaintiffs are WINN Insurance Agency LLC, a Florida-registered company with its principal place of business in South Carolina, and NavaQuote LLC, a Delaware company with its principal place of business in Georgia.

Marsha Broyer, owner of WINN Insurance, said she was removed as agent of record in at least 81 of her clients’ policies and replaced by agents with no relation to her. More than 20 of her clients were lost for good, the lawsuit states.

Broyer and the plaintiffs’ attorneys were able to identify the insurance agencies behind the switches by looking up agents’ names on altered accounts, Broyer said in an interview.

The lawsuit seeks an injunction to stop the operation, plus monetary damages for both plaintiffs classes, attorneys fees and court costs.

The lawsuit estimates that hundreds of thousands of consumers and tens of thousands of agents have been victimized by the alleged scheme.

Jason Kellogg, attorney with the Miami-based law firm that filed the lawsuit, Levine, Kellogg, Lehman, Schneider+ Grossman LLP, said in an interview Tuesday that his firm in 2019 successfully sued a Tampa-based company called Health Insurance Innovations, accusing it of selling short term indemnity plans that Hollywood-based Simple Health Plans sold as “ACA compliant” to customers found by similarly posting misleading ads on the internet.

Health Insurance Innovations settled the case, which did not name Simple Health Plans as a defendant, for $27.5 million and agreed to a settlement with the Federal Trade Commission to pay $100 million in refunds to customers. It did not admit any wrongdoing.

Simple Health Plans and its founder, Steven Dorfman, lost a separate FTC lawsuit seeking to permanently stop the company from selling health insurance plans. In February, Dorfman was found guilty of criminal mail fraud charges. His sentence is pending.

Kellogg said so many health insurance operations are based in Broward and Palm Beach counties because that’s where skilled call center workers and technology are located.

Switching plans and agents becoming common, study finds

Allegations in the lawsuit echo a report of a recent study by Kaiser Family Foundation that found consumers covered by the Affordable Care Act are being switched into new plans without permission, potentially leaving them unable to see their doctors or fill prescriptions.

“Unauthorized enrollment or plan-switching is emerging as a serious challenge for the ACA, also known as Obamacare,” states a report of the study on the KFF Health News website. “Brokers say the ease with which rogue agents can get into policyholder accounts in the 32 states served by the federal marketplace plays a major role in the problem.”

Licensed agents can access policyholders’ records through the federal exchange or its direct enrollment platforms armed only with the person’s name, date of birth and state, the report says.

It adds that federal regulators say they are aware of the increase in unauthorized switching and have taken steps to combat it. “It’s unclear, though, if these efforts will be enough,” the report says.

In addition to agents losing commissions, enrollees find themselves liable for tax penalties when they are signed up for coverage that includes premium tax credits despite being ineligible because they earn too much money or had employer-based insurance, according to the report.

The Centers for Medicare & Medicaid Services, which oversees the ACA marketplace, declined to tell KFF how many complaints it has received or what steps it has taken to remedy the problem, the reports says.

The issue seems confined to states such as Florida, which serve policyholders through the federal exchange, Broyer said in the interview. States that operate their own exchanges have added measures to make them more secure, such as two-factor authentication, she said.