Recent FTC Action May Broadly Impact Insurance Pay-Per-Call Niche

By Richard NewmanNovember 12, 2018

On November 2, 2018, the Federal Trade Commission announced an action against marketers of alleged sham health insurance information plans. The complaint was filed against Simple Health Plans LLC, the company’s owner and five other entities.

According to the Commission, the Florida-based defendants collected more than $100 million with a deceptive scheme targeting Americans in need of insurance coverage. The complaint alleges that consumers were sold medical discount programs or extremely limited benefit programs, while being led to believe that they were buying comprehensive health insurance that would cover preexisting medical conditions, prescription drugs, primary and specialty care treatment, and hospital care. According to the Commission, tens of thousands of people were unwittingly left uninsured. A federal judge has temporarily shut down the operation that purportedly collected more than $100 million.

“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 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.”

The complaint alleges that the defendants behind Simple Health lured consumers through a network of deceptive lead generation websites that claimed to provide information about comprehensive health insurance. On the sites, the defendants allegedly falsely held themselves out as experts on and providers of government-sponsored health insurance policies, such as those offered under Medicare and the Affordable Care Act. In many cases, the FTC states, the websites also misleadingly featured the logos of the AARP or well-known insurance carriers, such as Blue Cross Blue Shield plans, when in fact the defendants were not affiliated with such entities.

As alleged in the complaint, one of the websites, www.trumpcarequotes.com, deceptively claimed to offer “Health Insurance for Smart People” from “the Nation’s Leading Carriers” at “Low Affordable Premiums” with “Prescription Drug Coverage.” Another Simple Health website, www.simplemedicareplans.com, promoted “Medicare Health Plans for Your Needs and Budget.”

According to the FTC’s complaint, consumers who submitted their contact information to one of the defendants’ lead generation websites or called one of the toll-free phone numbers on the sites ended up on the phone with telemarketers working for the defendants. The telemarketers allegedly falsely identified themselves as insurance agents licensed in the consumer’s state.

The defendants’ telemarketers led consumers to believe that for a one-time enrollment fee, ranging from approximately $60 to $175, and a monthly payment, ranging from approximately $40 to $500, Simple Health could provide them with a “PPO” health insurance plan that was comprehensive and widely accepted by doctors in the consumers’ geographical areas, the FTC states. In many cases, according to the agency, they promised that the plans would have no copays or deductibles.

The FTC’s complaint states that those who enrolled subsequently learned that the plans they had purchased from Simple Health are not comprehensive health insurance and do not provide the promised coverage and benefits. For example, the FTC alleges that a typical plan provides no coverage for preexisting medical conditions or prescription medications, pays only $50 toward physician visits—capped at three visits per year—and covers a maximum of $100 per day for hospitalization. The maximum benefit a consumer could realize from the plan is $3200 per person, per year, and only if that person were hospitalized for 30 days, the Commission states.

The defendants are charged with violating the Federal Trade Commission Act and the Telemarketing Sales Rule.

The action is likely to ripple across the insurance lead generation niche, particularly with regard to pay-per-call networks that worked directly with the defendants.

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