August 14, 2022

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Company could owe $4.7 million over insurance fraud claims

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A purported health care cost-sharing company, which was once deemed “ruthless in denying coverage” by “Last Week Tonight’s” John Oliver, has lost a $4.7 million lawsuit in Lexington federal court.

The Aliera Companies, which created and marketed “fraudulent” health care coverage, has lost a class-action lawsuit resulting in a nearly $4.7 million judgment. A judge in a Lexington federal court ruled against the company earlier this month after the company’s representatives failed to appear in court multiple times, according to records.

Senior U.S. District Judge Joseph M. Hood declared that the company should have been subjected to Kentucky insurance laws because their claims of selling health care sharing ministry plans were inadequate. Members in health care sharing ministries share medical expenses among themselves.

Health care sharing ministry plans aren’t subject to the same regulations as insurance, but they have to meet strict requirements. Aliera didn’t meet those requirements, Hood ruled.

“Aliera and its partners have taken advantage of hundreds of Kentuckians, many of whom trusted the company because it professed Christian beliefs,” Jay Prather, one of the attorneys who pursued the lawsuit, said in a statement. “Aliera’s customers sought affordable healthcare coverage to protect their families in times of need.

“But when those times of need came, Aliera was more likely to shut the door in the face of its own customers. This ruling by Judge Hood is the first step in helping those families recover what they have lost.”

The class-action lawsuit against Aliera, Trinity HealthShare and OneShare Health was instigated by Lexington residents Hanna Albina and Austin Willard, according to court records. They alleged that they were victims of Aliera’s claims that it offered health care sharing ministry plans.

The victims in the case are entitled to rescind their contract with Aliera or reform their contract to make it comply with applicable insurance law, Hood ruled. Some are entitled to refunds of their premiums or payment of unpaid claims.

How were KY customers deceived or harmed?

Aliera sold “inherently unfair and deceptive health care plans” to people, attorneys wrote in the class-action lawsuit. Aliera claimed the health care plans weren’t insurance, so it could avoid oversight by the state and mandates from the Patient Protection and Affordable Care Act, according to the lawsuit.

Aliera claimed it sold “health care sharing ministry” products, according to the lawsuit. Attorneys argued in the lawsuit that Aliera wasn’t meeting the requirements that health care sharing companies had to meet.

Health care sharing ministries must be 501(c)(3) tax-exempt organizations, their members have to share a set of religious or ethical beliefs and the organization must have been in business since December 1999, according to the lawsuit.

“At no time has for-profit Aliera ever met the definition of an HCSM,” attorneys wrote in the lawsuit.

Aliera created, marketed, sold and administered health care plans for Unity HealthShare and Trinity HealthShare, companies that were purported to be health care sharing ministries, according to the lawsuit. Unity HealthShare later rebranded itself as OneShare Health, according to court records.

“Aliera sold, at the instance of Unity and Trinity, illegal health insurance plans to hundreds, if not thousands, of Kentucky residents. These plans did not comply with the minimum basic requirements for authorized health care plans under federal law,” attorneys wrote in the class-action lawsuit.

Judge Hood sided with the victims that purchased a plan while Aleria was partnered with Trinity, Hood ruled. Assuming each policyholder would elect to receive the higher payout of those two options, Hood reached an aggregate judgment of $4.7 million, according to court records.

Trinity has since filed for bankruptcy, according to court records.

The lawsuit isn’t over yet, as Hood’s judgment only resolved the “sham HCSM policies” that Aliera sold through Trinity, according to attorneys representing the victims.

“During the first phase of its fraud, Aliera sold sham HCSM policies through Unity/OneShare,” attorneys said in a statement after the ruling. “The case in federal court in Lexington will continue until all claims against Aliera, Trinity and Unity/OneShare are fully resolved.”

Aliera, in court records, denied ever purporting to be a health care sharing ministry.

“It is a for-profit entity that contracted with Unity and then Trinity (through its subsidiaries) to market memberships in their sharing programs and to create processes to facilitate member-to-member sharing of medical expenses,” Aliera attorneys wrote in court records.

“Aliera has created a system that is designed to afford members the ability to consent to their contributions being shared on a real-time, case-by-case basis with other members as their needs arise. But, as previously noted, all members are informed that their requests for sharing payments may not be met — there are no payment guarantees or indemnification.”

The allegedly illegal plans resulted in Kentucky residents denied coverage for medical care, which was required by law to be provided, according to the lawsuit.

Meanwhile, Aliera and the purported health care sharing ministry companies “realized exorbitant profits,” according to the lawsuit. Attorneys believed Aliera retained 84 percent of all payments made by Kentucky residents who purchased allegedly illegal plans from Aliera.

The federal government requires regular health insurance companies to use 80 percent of the money paid by plan members for “health care costs and quality improvement activities.” But health care sharing ministries are exempted from that rule, meaning they’re not prevented from putting more money toward overhead, administrative and marketing costs, as Aliera allegedly did.

Aliera and the other companies “have been unjustly enriched by collecting unreasonable fees and commissions, while arbitrarily and unreasonably refusing to pay class members’ medical claims,” attorneys wrote in the lawsuit.

Aliera replied to the class-action lawsuit by asking the court to either dismiss the case or compel those filing the lawsuit to submit their claims through arbitration.

The company’s attorneys argued in court records that those filing the lawsuit “failed to mediate their disputes prior to filing this lawsuit. Failure to mediate a dispute pursuant to an agreement to mediate warrants dismissal of litigation.” Nevertheless, the company didn’t advance its argument by showing up to court. After Aliera wound up in default, Hood ruled against them.

“Since we first started working with victims of this fraud two years ago, we have had two objectives: to end the fraud and to obtain compensation for its victims,” Jay Varellas, one of the attorneys working with victims in the case, said in a statement.

“With Trinity’s bankruptcy, the fraud is now over and we will turn our attention to recovering funds to compensate those who were victimized by Aliera, Trinity and OneShare Health.”

This story was originally published November 30, 2021 12:49 PM.

Profile Image of Jeremy Chisenhall

Jeremy Chisenhall covers criminal justice and breaking news for the Lexington Herald-Leader and Kentucky.com. He joined the paper in 2020, and is originally from Erlanger, Ky.