California on Wednesday sued what the state’s attorney general called a sham health insurance company operating as a “health care sharing ministry” — one the state claims illegally denied members benefits while retaining as much as 84% of their payments.
The lawsuit names The Aliera Companies and the Moses family, which founded Sharity Ministries Inc. Sharity, formerly known as Trinity Healthshare Inc., is a nonprofit corporation.
But the state says Aliera is a for-profit corporation that collected hundreds of millions of dollars in premiums from thousands of Californians and others around the U.S. through unauthorized health plans and insurance sold through Sharity/Trinity.
Instead of paying members’ health care costs, the state alleges the company routinely denied claims and spent just 16 cents of every dollar in premiums on health care expenses.
“It’s particularly egregious when bad actors operating in the health care marketplace take advantage of families, when they take their money but provide essentially worthless coverage,” Attorney General Rob Bonta said in announcing the lawsuit.
“This left countless families crushed — not just by illness and the weight of medical emergencies, but by the burden of insurmountable medical debt.”
Before California’s lawsuit, 14 states and Washington, D.C., had taken actions against the Atlanta, Georgia-based company.
They include the California Department of Insurance, which issued a cease-and-desist order in 2020 to stop Aliera from selling new plans in the state. But the state contends that the company kept operating for existing California members until Sharity entered bankruptcy last year.
Aliera did not respond to telephone and email requests for comment Wednesday.
But in a statement on its website responding to previous allegations, the company said it “is a holding and management company and is neither an insurance company nor a Health Care Sharing Ministry (“HCSM”); however, through multiple wholly owned subsidiaries … we do provide services to HCSM clients.”
Aliera and Sharity were among such “sharing” plans called out last summer by “Last Week Tonight with John Oliver.”
California’s lawsuit alleges that Aliera never met the the legal definition of a health care sharing ministry, which among other things required them to be a nonprofit in existence since December 31, 1999.
Members were told their monthly payments would go to help others with their health care costs. But the state says that the company and Moses family retained as much as 84% of premiums.
By contrast, traditional companies authorized under the 2010 federal Affordable Care Act 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’s program spend an average of 87% of premiums on health care.
Bonta in April had issued a more general consumer alert about such “sharing” companies.
He said that, unlike Covered California plans, such health care sharing ministries are not required to cover preexisting conditions or guarantee coverage for medical costs or services such as birth control, prescriptions and mental health care.
The issue arose after the passage of the Affordable Care Act in 2010.
Such health care sharing ministries were permitted to let consumers pool their money with others who share their religious beliefs, with the goal of assisting each other through medical emergencies.
They were exempted from many of the new federal coverage requirements, and some companies began marketing the sharing plans as a cheaper alternative to the new Obamacare compliant health insurance.
Enrollment in such sharing programs has since grown from about 100,000 members in 2010 to 1.5 million members in 2020. California has the nation’s second-highest membership, with about 69,000 members, according to the lawsuit.
Bonta and Lee said many of the firms may be operating illegally because they don’t meet the requirements for a health care ministry exception.