Recently, the United States Federal Trade Commission (FTC) announced a $195 million judgment against Simple Health Plans, LLC and its CEO Steven J. Dorfman. The judgment resolves allegations that Simple Health and Dorfman tricked customers into signing up for health care plans that did not deliver the coverage or benefits that were promised, essentially leaving the consumers uninsured and exposed to higher-than-expected medical expenses. Additional defendants include Health Benefits One LLC, Health Center Management LLC, Innovative Customer Care LLC, Simple Insurance Leads LLC, and Senior Benefits One LLC, all related entities founded by Dorfman.
The FTC had alleged that Simple Health misled consumers into thinking they were purchasing comprehensive health insurance coverage that would cover pre-existing medical conditions, prescription drugs, medical treatment at primary and specialty care offices, inpatient and emergency room care, surgical procedures, and medical and laboratory testing. However, consumers reported paying as much as $500 per month for what was a medical discount program or very limited benefit program – a program that did not deliver the level of promised benefits and often resulted in consumers being left with thousands of dollars in uncovered medical bills and/or unable to get medical attention at all.
Both the FTC and Dorfman filed separate Motions for Summary Judgment, asking the court to rule in its favor without the need for a trial. Judge Darrin P. Gayles, District Judge in the Southern District of Florida, granted the FTC’s Motion – and denied Dorfman’s. In his Order finding that Dorfman and the corporate defendants violated the FTC Act and the FTC Telemarketing Sales Rule, Gayles notes that “[t]he undisputed facts in this action present a well-documented account of a classic bait and switch scheme—aided by rigged internet searches, deceptive sales scripts, and predatory practices,” noting that more than 100,000 consumers were led to “believe they were receiving comprehensive health insurance when, in fact, they received limited indemnity plans or discount memberships.”
The Court ultimately found that all of Dorfman’s and Simple Health’s assets – which have been frozen since shortly after the FTC filed the complaint in 2018 – must be liquidated and all proceeds turned over to the FTC. The FTC is expected to use the money to provide refunds to affected consumers. The Court also prohibited any defendants from collecting any money for any health care product they previously sold and are required to destroy personal information they may have about their customers.
FTC Statements
“Simple Health preyed on consumers by selling them bogus health care insurance that cost them thousands of dollars for ‘benefits’ that in fact left consumers unprotected,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We are pleased the court recognized this blatant bait and switch and ordered the company and its CEO to turn over the money they bilked from consumers.”
“Many consumers were misled into thinking they had purchased comprehensive health insurance, but when they needed to rely on that insurance, they learned they had none of the promised benefits,” said Andrew Smith, the former Director of the FTC’s Bureau of Consumer Protection. “The plans defendants were selling are not health insurance and they aren’t a substitute for health insurance. Get the details in writing and take your time before signing up for any of these plans.”
Related Case
In 2021, former Simple Health Chief Compliance Officer Candida Girouard reached a separate settlement with the FTC. That settlement prohibits Girouard from marketing, promoting, or selling any health care-related products; making representations in connection with the sale of any good or service; and violating the FTC’s Telemarketing Sales Rule.