Two companies have agreed to a $1.3 million settlement after they were accused of selling “sham” health insurance plans, the California Department of Justice said.
According to the CA DOJ, Sedera, Inc. and Sedera Medical Cost Sharing Community, LLC (SMC) billed customers monthly in exchange for the payment of medical services, a plan which they advertised as a “non-insurance” medical cost-sharing product.
The agency determined that these products qualified as “health plans” under California law but failed to comply with a number of regulations such as providing coverage for preventative care.
“Sedera and SMC were able to sell their sham health insurance plans at lower costs precisely because those plans were a sham and failed to comply with state law. For example, they did not offer Californians the essential health benefits they were entitled to,” Attorney General Bonta said.
Over 2,000 Californians purchased these plans from the two companies.
SMC, “falsely purported to be a non-profit” but sold the health plans through its for-profit administrative vendor, Sedera Inc, the CA DOJ said.
As part of the settlement, the companies are banned from operating health plans in California and must pay $1.3 million, $800,000 of which will be returned to customers.