‘Fake insurance plans’ trigger lawsuit in California, attorney says

A California couple said they were saddled with thousands of dollars in medical expenses when a company misled them into purchasing what one attorney described as “fake insurance plans.”

Now they want a judge to force the company — Aliera Healthcare Inc. — to cover those costs and others, according to a class action lawsuit filed Tuesday in U.S. District Court in Sacramento.

The lawsuit names as defendants The Aliera Companies, Inc, Aliera Healthcare, Inc., and Trinity HealthShare Inc. The company this week told The Bee the claims in the lawsuit are false.

Thousands of Californians who struggle to afford private health insurance have turned to faith-based health care sharing ministries for their care. Members make monthly payments into a system for health care costs to be shared among all members.

However, experts who previously spoke with The Bee/USC Center for Health Journalism Collaborative have said the product isn’t a replacement for insurance.

Eleanor Hamburger, one of several attorneys involved in the lawsuit, said her law firm filed several complaints in multiple states on behalf of people she said were “harmed by the sale of these fake insurance plans.”

If approved by a judge, the lawsuit would seek to have medical bills paid off and to recapture premium costs for anyone who purchased a plan from the company dating back to September 2017.

“They don’t have to do anything to join, they’ll automatically be in if the class (action lawsuit) is certified, and typically they would be given the chance to opt-out,” Hamburger said.

The lead plaintiffs in the case are Corlyn and Bruce Duncan of Benicia.

According to the lawsuit, the couple enrolled in an Aliera plan in 2017. Initially, they paid $1,287.56 per month for the plan, but the cost later increased to $1, 612.91.

The lawsuit says Aliera approved a spinal cord surgery Corlyn Duncan underwent in 2018 but later refused to pay, saying her medical need was tied to a pre-existing condition. The company eventually paid a portion of the costs. The Duncans, however, were left with more than $70,000 in unpaid bills, according to the lawsuit.

Debt collectors have pursed the couple, and their credit scores have suffered, the lawsuit says.

“We realize now that we’ve just been taken for a ride, and I’d like to see justice as far as shutting them down so they cannot do this to another party,” Bruce Duncan told The Bee. “It’s becoming a big problem, not only in California but throughout the U.S. right now.”

In a statement to The Bee, a company spokesperson said Aliera for years has provided its services to health care sharing ministries to assist them with expanding their membership.

“HCSM (Health care sharing ministries) programs provide an affordable and flexible alternative to the high costs of traditional health insurance,” according to the statement. “HCSM marketing materials make a point of stating very clearly that these programs are absolutely not insurance. Any assertions to the contrary are simply incorrect. We will continue to vigorously defend against false claims about the services our company provides its clients.”

The lawsuit comes on the heels of the California Department of Insurance’s cease-and-desist order, handed down in March against Aliera Healthcare, Inc., and its subsidiary Trinity HealthShare, to get the companies to stop doing business in the state.

This story was originally published by The Fresno Bee. 

Follow the USC Center for Health Journalism Collaborative series "Uncovered California" here.