IID Files Action to Stop Florida Businesses Using Deceptive Health Insurance Sales in Iowa

DES MOINES, Iowa, Sept. 10 -- The Iowa Department of Commerce's Insurance Division issued the following news release:

Iowa Insurance Commissioner Nick Gerhart today announced that his office is taking administrative action against businesses that are based in Florida and have used the implementation of the Affordable Care Act to sell limited health benefit plans.

The Iowa Insurance Division has brought an enforcement action against 4 individuals and 5 different associated businesses. The individuals include Marc Sporn, 52, of Delray Beach, Florida and his two adult children, Dylan Sporn, 25, of Boca Raton, Florida and Bryana Sporn, 27, of San Francisco, California. Marc Sporn managed one of the insurance agencies, Starr Insurance Group, Inc. His participation in the business of insurance is unlawful because he has been convicted of wire and bank fraud, having served more than three years in federal prison for his crimes.

The fourth individual is Donald Pinansky, 62, of Pompano Beach, Florida, who has served as Dylan Sporn's administrative assistant in Dylan Sporn's agencies. Mr. Pinansky's participation in the business of insurance is also unlawful, as he was convicted of conspiracy to commit wire fraud, sentenced to prison and ordered to pay $6.5 million in victim restitution for his involvement in a multistate boiler room enterprise.

Two other business entities owned and managed by the Sporns that are named in the cease and desist action are Consolidated USA Insurance, Inc., which is licensed to sell insurance in 35 states, and Amerco Group, Inc.XChange Benefits, LLC and Selected Market Insurance Group, LLC are alleged to have contracted with insurance companies to arrange for producers, such as the Sporns, to sell the insurance, but were not licensed in Iowa as third party administrators as required by law.

The Insurance Division has alleged that these businesses participated in a campaign of radio and television ads throughout the United States and in Iowa, which encouraged consumers with pre-existing conditions and needing health insurance to call toll-free numbers. The Division has alleged that when consumers would call, salespersons would misrepresent the benefits, advantages, conditions and limitations of the insurance plans being offered. The salespersons were often not licensed as insurance producers in Iowa.

The deceptions included representations that the offered insurance plans were comprehensive major medical plans and the plans qualified with "Obamacare." Consumers were told that the plans were preferred provider organization plans covering a full range of medical procedures. The benefits were also falsely represented as copays. Consumers were told that the insurance plans covered doctors' visits and the most the consumer would pay is $50. The insurance plans sold by the call center representatives were actually fixed indemnity insurance policies that would pay a limited benefit, leaving much of the financial risk for medical care with the consumer.

"While these plans have a place in the market, the plans are usually designed to supplement health coverage," said Commissioner Gerhart. "Last year we issued a bulletin advising companies to take responsibility for the proper marketing of these products. As enrollment begins this fall, we expect insurance companies writing fixed indemnity plans to improve their performance."

"Consumers need to be educated on the purchase of health insurance. Consumers should consider seeking advice from a trusted local insurance agent. Consumers should be extremely wary of giving bank account or credit card information over the telephone to sellers without first seeing and carefully reviewing a written description of the proposed health insurance coverage," Gerhart said.

The first step in protecting yourself from insurance fraud is to research the agent and company you are considering. Always stop before giving personal information to a telephone salesperson and call the Iowa Insurance Department at 877-955-1212 or visit the state website at www.iid.state.ia.usand confirm that the agent and company are licensed to write insurance in Iowa. The second step is to take as much time as you need to carefully consider your options. Remember that if it sounds too good to be true, it probably is. A trusted family member or friend may help you make a careful decision that is right for you.

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