Federal Officials Shut Down Sales of ‘Ruinous’ Health Insurance Plans

WASHINGTON — Federal authorities have shut down a network of Florida companies that they say used aggressive, deceptive tactics to sell skimpy health insurance products that skirt requirements of the Affordable Care Act and left tens of thousands of people around the country with unpaid medical bills.

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Robert Pear
, New York Times

WASHINGTON — Federal authorities have shut down a network of Florida companies that they say used aggressive, deceptive tactics to sell skimpy health insurance products that skirt requirements of the Affordable Care Act and left tens of thousands of people around the country with unpaid medical bills.

“There is good cause to believe” that the Florida companies have sold shoddy coverage by falsely claiming that such policies were comprehensive health insurance or qualified health plans under the Affordable Care Act, Judge Darrin P. Gayles of the U.S. District Court in Miami said in a temporary restraining order issued last week at the request of the Federal Trade Commission.

Telemarketers lured consumers through websites offering Trumpcare and Obamacare, using logos of well-known insurers to make the coverage appear credible, the trade commission said.

The commission filed a lawsuit against Simple Health Plans and its owner, Steven J. Dorfman, and five other entities in a “common enterprise,” saying they had misled consumers to believe they were buying comprehensive insurance that would cover pre-existing medical conditions, prescription drugs, doctors’ services and hospital care.

Among the products offered through Simple Health and its websites were “short term” health insurance plans like those promoted by President Donald Trump as an alternative to the Affordable Care Act.

Gayles froze the assets of Simple Health and its affiliates and appointed a receiver to take control of the companies. He said the companies appeared to have made “false and misleading statements,” marketing “limited benefit plans” and membership in medical discount programs as if they were major medical coverage. He will hold a hearing next week on whether to extend his order by issuing an injunction.

The trade commission said the financial consequences of the misrepresentations “have been ruinous for consumers, many of whom do not realize” the limits of the coverage until they incur substantial medical expenses.

The commission described Dorfman as “the architect of this scam” and said he had “siphoned millions of dollars of proceeds from defrauded consumers to pay for private jet travel, gambling sprees in Las Vegas, the rent for his oceanfront condominium, luxury automobiles, over $1 million in jewelry, and even the nearly $300,000 cost of his recent wedding at the St. Regis Hotel in Miami.”

The luxury vehicles, it said, included a Rolls-Royce Wraith and a Lamborghini Aventador.

Ryan D. O’Quinn, a lawyer for Dorfman, said Monday that his client “vigorously denies the allegations of misconduct made by the Federal Trade Commission, and he looks forward to having an opportunity to defend himself in the appropriate forum.”

The members of the trade commission — three Republicans and two Democrats — voted unanimously to take action against the Florida operation, which the commission described as “a classic bait-and-switch scheme designed to trick consumers into paying hundreds of dollars for substandard products under the pretense that they are actually receiving comprehensive health insurance.”

James Quiggle, a spokesman for the Coalition Against Insurance Fraud, a nonprofit alliance of insurance companies and consumer groups, said Monday: “This latest scam is a classic case of empty promises. It’s reminiscent of fake health plans that were marketed nationally in the early 2000s. How many more scams like this are operating just beneath the radar of federal and state regulators?”

The commission said it had learned about the sales tactics of Simple Health from consumer complaints, undercover telephone calls made by FTC investigators, and bank and phone records of the Florida companies.

Those records indicate that “boiler rooms” of Simple Health and its affiliates handled 62 million calls with consumers, as part of a scheme that generated “well over $150 million in revenue” from January 2016 to April 2018, the commission said in court papers.

The commission said the people behind Simple Health enticed consumers through websites such as, and

In marketing materials and on websites, the commission said, the Florida companies “falsely claim to be affiliated with AARP” and with legitimate insurers, including Blue Cross and Blue Shield plans.

On a Simple Health website, Dorfman is identified as the founder and chief executive of the company. The site says he “positioned Simple Health to capitalize” on the Affordable Care Act.

If consumers ask for written information before buying a Simple Health plan, “telemarketers often refuse to provide it, stating that they either are not allowed to provide such information or are not capable of providing it,” the commission said.

The telemarketers typically identify themselves as insurance agents licensed in the consumer’s state, but in many cases “are not, in fact, properly licensed insurance agents,” the complaint said.

The trade commission told Gayles that he needed to take swift action because the annual open enrollment period under the Affordable Care Act began Thursday.

Michael I. Goldberg, the court-appointed receiver, said he “shut down the business operations” of Simple Health and related companies Thursday, within hours of being named.

The commission had urged Gayles to freeze the companies’ assets so the funds could be used to provide restitution to victims of the scheme. The defendants have bank accounts in Panama and the Dominican Republic “to which they could easily transfer funds in the absence of an asset freeze,” the commission said.

In its complaint, the commission said that Simple Health had recruited employees with advertisements that showed a cigar-smoking man tossing a wad of cash. “You will have money thrown at you” during open enrollment, the ads tell prospective employees, offering up to $4,000 a week.

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