WASHINGTON — A healthcare company, two subsidiaries currently or formerly registered in Oklahoma, along with two company executives, have been punished by the Federal Trade Commission.
Benefytt Technologies; subsidiaries Health Plan Intermediaries Holdings, LLC and HealthPocket Inc, doing business as AgileHealthInsurance; Gavin D. Southwell, formerly the president and director at Benefytt Technologies, president and chief executive officer of HealthPocket Inc., and CEO of Health Plan Intermediaries Holdings LLC; and Amy Brady, former vice president of sales, were punished by the FTC for lying to consumers about their sham health insurance plans and using deceptive lead generation websites to lure them in.
The FTC complaint alleged that Benefytt also illegally charged people exorbitant junk fees for unwanted add-on products without their permission.
AgileHealthInsurance was actively registered Sept. 5 with Oklahoma’s Secretary of State as a unit of Health Plan Intermediaries Holdings. The registration of Health Plan Intermediaries was listed as canceled.
Court orders require Benefytt to pay $100 million in refunds and prohibit the company from lying about their products or charging illegal junk fees. Southwell and Brady are permanently banned from selling or marketing any healthcare-related product, and Brady is banned from participating in any telemarketing whatsoever in the future.
The parent company, its two subsidiaries and the two former corporate executives “participated in deceptive, unfair, and abusive acts or practices … in connection with the advertising, marketing, telemarketing, promotion, offering for sale, or sale of association memberships and related health products,” the FTC charged.
None of the defendants admitted nor denied any of the allegations, records of the U.S. District Court for the Middle District of Florida show.
Besides the $100 million penalty that the FTC will use to provide refunds to consumers harmed by the fraudulent practices, and the resignations of the two corporate executives, Benefytt must inform its customers of the FTC’s complaint and allow them to cancel their enrollment.
The company also is required to get consumers’ express informed consent before billing them for anything, to clearly communicate with consumers about what they are being charged for, and to provide a simple and easy-to-use cancellation method.
“Benefytt pocketed millions selling sham insurance to seniors and other consumers looking for health coverage,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “We’re holding its executives accountable for this fraud.”
Benefytt Technologies, based in Tampa, Florida, sells association memberships and other healthcare-related products to consumers, often through a network of telemarketing companies and lead generators. Southwell was Benefytt’s president and CEO from 2016 to 2021, and Brady was a vice president of sales for more than a decade before also leaving in 2021.
The FTC’s complaint alleged that the defendants and their third-party partners operated a series of deceptive websites such as “Obamacareplans.com” that targeted consumers who were searching for comprehensive health insurance plans qualified under the Affordable Care Act.
Qualified ACA plans must provide certain benefits like preventive care, cover people with pre-existing conditions without charging more for the plan, and cap consumers’ out-of-pocket medical costs.
When consumers navigated the websites, they were often led to a sales agent who would pitch them Benefytt’s unqualified, sham plans. Even though they were led to believe they were buying comprehensive health insurance, people often were charged hundreds of dollars per month for Benefytt products and services that left them unprotected in a medical catastrophe.
The FTC charged that Benefytt’s misrepresentations violated the FTC Act, the Telemarketing Sales Rule and the Restore Online Shoppers Confidence Act, harming consumers in multiple ways.
For example, the defendants frequently tricked consumers into buying an inferior healthcare plan, and sales agents told consumers that Benefytt’s products would cover pre-existing conditions or prescription drugs when they did not.
Also, Benefytt regularly bundled with the deceptively sold healthcare plan multiple unwanted products, such as life or accident insurance plans, telemedicine access, and fitness programs. The separate cost of these bundled products typically was not disclosed clearly, so that consumers were often unaware they were purchasing any additional products. At times, Benefytt continued to charge consumers for these additional products even after consumers canceled their core healthcare plan.
Benefytt made it difficult for consumers to cancel their plans; in some instances, consumers who were calling to cancel were transferred back to the sales agents who deceived them in the first place.