CEO of Hollywood-based ‘sham’ health insurance agency sentenced to 25 years in prison

Ron Hurtibise, South Florida Sun-SentinelSouth Florida Sun Sentinel

Convicted fraudster Steven J. Dorfman was sentenced on Wednesday to 25 years in prison for deceiving customers of his Hollywood-based insurance agency Simple Health Plans into buying coverage that left many owing thousands of dollars for medical procedures.

Dorfman, 40, did not register any emotion or make any statements during the sentencing hearing in East St. Louis, Illinois, five months after a jury convicted him on 13 felony counts of wire fraud, mail fraud, and conspiracy to commit fraud, said Scott A. Verseman, assistant U.S. attorney in the Southern District of Illinois’ Chief, Fraud and Corruption Section.

Prosecutors had asked the judge to sentence Dorfman to 30 years in prison, saying in a sentencing recommendation filed in June that “the level of cruelty demonstrated by defendant Dorfman in the present case is rarely seen in a fraud case.”

Prosecutors argued that Simple Health Plans defrauded 420,000 people by having members of the sales team read scripts — “revised, edited and tightly controlled” by Dorfman — stating that insurance plans sold by the company complied with requirements of the Affordable Care Act and would cover preexisting medical conditions, prescription drugs, primary and specialty care treatment, inpatient and emergency hospital care, surgical procedures, and medical and laboratory testing.

In reality, the customers bought limited indemnity plans that paid just small amounts and left patients to cover 100% of what was left, they said.

Simple Health earned $192 million over six years in commissions alone, Verseman said. But the company’s fraud cost consumers much more in both premiums paid and medical debt incurred when they learned their doctors or hospitals would not accept their coverage, he said.

Two of Simple Health’s victims testified during the trial and again at the sentencing hearing, Verseman said. A woman said her credit was destroyed by medical costs she thought would be covered and now she can’t qualify for a loan to buy a house, he said.

Another victim said she and her husband accrued $50,000 in medical debts they thought would be covered by the policy they bought from Simple Health, according to Verseman. “They weren’t able to get a loan that they needed for their business as a result,” he said. “They ended up closing their small business, and they’re still dealing with all of the ramifications of the debt and it’s been very stressful.”

Reached after the sentencing, Dorfman’s attorney, Paul A. Sand, said only that Dorfman plans to file an appeal “as I believe the jury saw evidence that was not properly admitted.”

The jury also convicted John A. Sand, 49, who served as executive vice president of the company, on the same charges as Dorfman. But on May 7, U.S. District Judge Stephen McGlynn reversed Sand’s conviction, stating that the jury was not presented with evidence he participated in any of the fraud.

A third defendant, Candida L. Girouard, who served as Simple Health’s chief compliance officer, pleaded guilty to a single count of conspiracy to commit wire fraud in November. She was sentenced on May 15 to six months in prison followed by two years of home detention.

The company operated out of call centers in Hollywood, Boca Raton, Doral, Dallas, Texas, the Dominican Republic and Panama.

It generated leads from websites that appeared when prospective customers searched for terms like “health insurance” and Obamacare. Many of the sites contained references to the Affordable Care Act, ACA, Obamacare, and legitimate companies like AARP and Blue Cross/Blue Shield.

Employees in Simple Health’s customer service department took 300 to 500 calls a day from customers, many crying, who complained that the policies did not cover as much of their medical expenses as they were led to believe, and that their doctors, hospitals and other health care providers were not part of the discount program associated with the policies, according to the sentencing recommendation filed by prosecutors.

Dorfman, the filing states, developed a “Saves Team” to try to mollify the customers and convince them that the plans had significant value and provided good coverage.

Shortly after the conviction, the judge approved forfeiture of assets accrued by Dorfman and Simple Health Plans. They included a 2015 Rolls Royce Wraith and 2013 Land Rover Range Rover. The two luxury cars could be seen in photographs from Dorfman’s wedding that were published by a South Florida magazine and included in a civil complaint filed by the Federal Trade Commission to shut the company down in 2018.

The wedding, at St. Regis Bal Harbour Resort, cost $300,000, the FTC said. Dorfman has since divorced.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at [email protected].