Insurance Distributor Connected To Accused Scammer Spends $50M On New Marketer

With its former top revenue generator facing dissolution by the Federal Trade Commission, a Tampa-based distributor of short-term health coverage products is buying a Coral Springs-based marketing company to help boost its earnings.

Health Insurance Innovations on June 6 announced plans to acquire TogetherHealth of Coral Springs for $50 million plus 630,000 shares of Health Insurance Innovations' common stock.

Meanwhile, it will have to defend itself against two federal lawsuits seeking to hold it responsible for the actions of Hollywood-based Simple Health Plans, accused by the Federal Trade Commission of running a sophisticated health insurance scam that duped consumers out of millions of dollars.

Both suits, filed last week in U.S. District Court in Miami, are seeking class action status.

The two lawsuits allege that Health Insurance Innovations Inc. -- a publicly traded company -- funded, oversaw and approved what the suits call the deceptive business model of Hollywood-based insurance agency Simple Health Plans Inc., which persuaded hundreds of thousands of consumer victims to purchase nearly worthless health insurance plans.

A lawsuit filed Friday by the Miami-based law firm Levine Kellogg Lehman Schneider + Grossman LLP and The Doss Firm of Marietta, Georgia, accuses Health Insurance Innovations and its subsidiary Health Plans Intermediaries Holdings LLC of directing and/or aiding and abetting Simple Health Plans' scheme to misrepresent its products as comprehensive health insurance that complies with requirements of the Affordable Care Act.

Targeting low-income consumers who could not otherwise afford comprehensive health insurance, Simple Health Plans persuaded victims to instead buy a package of limited benefit indemnity plans, medical discount plans and accidental death and dismemberment coverage that left many who tried to use their "insurance" with large bills and crushing debt, the suits said.

The suit was filed on behalf of plaintiffs Elizabeth Belin, identified in the suit as an Ohio resident, and Christopher Mitchell, a Kansas resident.

Simple Health Plans generated nearly 50 percent of Health Insurance Innovations' revenue over four years by targeting uninsured consumers with websites with names like Obamacare-healthquotes.com and myobamacareapplication.com, the suit says.

Health Insurance Innovations knew about thousands of consumer complaints and about sales scripts deliberately written to mislead consumers, it says.

Health Insurance Innovations financed creation of Simple Health Plans by paying millions of dollars in advance commissions and a $1 million bonus advance, the suit says, adding that from 2014 to 2018, Health Insurance Innovations paid Simple Health about $180 million in commissions.

The other suit, filed on June 5 by attorney Jeffery Sonn, of Aventura, on behalf of plaintiffs Patricia Parker of Miami-Dade County and Abigail Sayo of Broward County, says Health Insurance Innovations distributed about 500,000 plans sold by Simple Health Plans.

The two suits rely heavily on evidence collected by the FTC after the agency shut down Simple Health Plans and seized its assets in October. The FTC's effort to permanently close the company continues.

Days after the seizure, Health Insurance Innovations terminated its relationship with Simple Health Plans and its parent, Health Benefits One, saying the company was the agency of record for less than 10 percent of its policies up to that point in 2018.

Asked to comment on the suits, a spokesman for Health Insurance Innovations sent this statement by email:

"The lawsuit has no merit and we will vigorously defend ourselves against all such allegations. Health Insurance Innovations has been supporting the Federal Trade Commission (FTC) and the receiver appointed to Simple [Health Plans] throughout the FTC's investigation. [Health Insurance Innovations] is not and never has been a defendant in the FTC's case and there is no motion or order against the company," the statement said.

In a news release announcing its acquisition of TogetherHealth, the company called it "a premier direct-to-consumer platform connecting individuals with U.S. insurance carriers through consumer acquisition and engagement primarily serving the over-65 insurance market."

The cash portion of the acquisition would be funded by a new $215 million credit agreement arranged through a syndicate of banks led by Bank of America N.A., BofA Securities Inc., and SunTrust Robinson Humphrey Inc., the company said.

TogetherHealth is located at 7551 Wiles Road, Suite 106, according to the Florida Division of Corporations online database.

According to the U.S. Trademark Office's website, TogetherHealth PAP Inc. owns the registered trademarks "Medicare Coverage Helpline" and "Uninsured Helpline."

A 2017 television ad for Medicare Coverage Helpline was flagged as misleading by the watchdog website truthinadvertising.org, a website run by Truth in Advertising Inc., a nonprofit organization based in Madison, Conn., that aims to help consumers protect themselves against false and deceptive advertising.

The site describes an ad featuring Dr. Jason Buchwald, identified in the state's corporations database as manager and registered agent of TogetherHealth PAP, appearing as the words Paid Spokesman appear on the screen. The ad does not disclose that Buchwald is a manager of TogetherHealth, the site reports.

The site also takes issue with the disclosure that "your phone call to the hotline is actually 'sold' to a licensed insurance agent," saying the language is buried in "hard to read screen print," as is a disclosure that the Medicare Coverage Helpline is not affiliated with the federal government, despite a prominent display of the American flag in the commercial.

In an email, Buchwald's attorney, Jeff Ostrow of the Fort Lauderdale-based firm Kopelowitz Ostrow Ferguson Weiselberg Gilbert, said the language in the commercial was approved by the Centers for Medicare and Medicaid Services.

In 2012, Minnesota's Pioneer Press tracked a website offering a medical discount program called AARxP to TogetherHealth. A telemarketer told one of the paper's readers that AARxP would cover medications not covered under Medicare Part D. Contacted by the paper, AARP said it knew nothing about the service.

After the AARP sent a cease and desist letter to AARxP, the website was taken down, the paper reported.

Asked about the Truth in Advertising and Pioneer Press stories, the Health Insurance Innovations spokesman responded: "[Health Insurance Innovations] is committed to full disclosure and transparency and we hold our third-party partners to the same high standard. Combining [the company's] platform with TogetherHealth's customer acquisition capabilities will allow us to engage directly with consumers, which we believe will simplify the entire process."

Meanwhile, the homepage of a website for TogetherHealth's Uninsured Helpline brand asks, "Shopping for the Best Insurance Deal? Rates starting at $99 a month. Quality health plans with broad doctor networks. Coverage in as little as 24 hours."

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