A Hollywood-based health insurance marketer, Simple Health Plans LLC, and its top brass have been slammed with a massive $195 million judgment for peddling deceptive "sham" policies to over 400,000 consumers. In a resounding victory for the Federal Trade Commission, a federal judge ruled against the company for violating its Telemarketing Sales Rule, as reported by the South Florida Sun Sentinel on X.
FTC secures $195 million judgment against Hollywood-based company over ‘sham’ health insurance https://t.co/2ouHESU0dO
— South Florida Sun Sentinel (@SunSentinel) February 12, 2024
The Illinois federal court didn't buy the defendants' innocence act, handing down guilty verdicts to CEO Steven J. Dorfman and executive VP John A. Sand on multiple charges of mail and wire fraud conspiracy. They raked in over $190 million between 2012 and 2018, selling what amounted to insurance in name only, hooking consumers with false promises while leaving them high and dry when they needed coverage the most. The trick, selling eight-ball policies that barely covered a hospital vending machine snack, let alone serious medical expenses.
"We are pleased the court recognized this blatant bait and switch and ordered the company and its CEO to turn over the money they bilked from consumers," Samuel Levine, the FTC's Bureau of Consumer Protection Director, praised the action in a prepared statement obtained by the South Florida Sun Sentinel. Per the FTC's intentions, the recovered assets frozen amid the legal showdown will funnel right back to the defrauded customers.
The saga unfolded with salespeople luring unsuspecting folks under the guise of ACA-compliant plans but what they got was the insurance equivalent of a chocolate teapot. Representatives, under strict orders, painted rosy pictures of comprehensive coverage that included everything but the kitchen sink, from prescription drugs to emergency hospital care. Simple Health baited customers with lead generation sites bedazzled with logos of trusted insurers like Blue Cross Blue Shield, without an ounce of actual affiliation. All the while, Dorfman orchestrated this chorus of deceit, right down to spawning fake reviews out of burner phones to polish their tarnished BBB profile, as unveiled by the court's ruling.
The fallout from this scheme has dug into Dorf's own lux life - his blinged-out assets, from a Range Rover to a Rolls-Royce, are now in the hands of a court-appointed receiver. The flashiness extended to a cancelled lease of a 2012 Lamborghini Aventador, once flaunted at Dorfman's big buck wedding bash, as per court documents the Sun Sentinel quoted. While the future of the swindled $195 million remains hazy, a pot of nearly $29 million has been clinked together to start repaying the victims of this insurance sham.
Benefytt Technologies, the outfit behind the junk plans hawked by Simple Health, coughed up a separate $100 million mea culpa without admitting a shred of guilt. That, combined with other hefty settlements, left the plan provider gasping for financial air and seeking bankruptcy cover. Meanwhile, the well-known celebrities they enlisted to market their wares over cable channels, including Joe Namath and William Shatner. The legal dominos continue to topple, with Simple Health's former Chief Compliance Officer Candida Girouard already having thrown in the towel with a guilty plea and a court date set for the spring.
