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Life Health > Health Insurance

Judge Keeps Health Care Sharing Ministry Case in Court

By Greg Land

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What You Need to Know

  • The case involves Aliera.
  • The proposed class could include about 100,000 people.
  • The new ruling involves a dispute over use of arbitration.

A federal judge in Atlanta declined to grant the prayers of an Atlanta-based marketer of health care coverage for affiliated faith-based “health care sharing ministries” that sought the dismissal or compelled arbitration of a putative class action claiming its plans are both illegal and do not provide the coverage participants pay for.

According to the complaint Atlanta-based Aliera Cos., formerly known as Aliera Healthcare Inc., pockets 84 cents for every dollar in premiums it collects, while federal statutes generally limit administrative costs and profits to 15% of premiums.

The proposed class consists of an estimated 100,000 participants who have paid more than $200 million to cover medical bills that Aliera either denied or delayed paying since 2017.

Aliera had argued that its plans are not insurance but are legitimate offerings by health care sharing ministries [HCSM], which are not subject to the Affordable Care Act or other federal regulation, and that they contain mandatory arbitration clauses for any disputes with participants.

Two companies, Unity Healthshare and Trinity Healthshare Inc., are named as the HCSMs affiliated with Aliera, and in a 2020 statement the company said “Aliera is a holding and management company and is neither an insurance company nor a Health Care Sharing Ministry.”

But in an 84-page ruling, District Judge Amy Totenberg of the U.S. District Court for the Northern District of Georgia said the plans are in fact insurance — Aliera’s claims to the commentary notwithstanding — and that Georgia law specifically prohibits mandatory arbitration provisions in insurance contracts.

In addition to requiring mandatory monthly payments — which HCSMs are not allowed to require (and which Aliera denies) — Totenberg said the plans Aliera marketed were restricted to any particular faith or creed, in violation of federal requirements that they “share common ethical or religious beliefs.”

Pointing to marketing materials proclaiming that its program is open to “Christian, Jewish, Muslim, or non-denominational” particpants, Totenberg said said investigations into Aliera’s programs by insurance commissioners in multiple states have found that it violated ACA regulations.

“While the Court is highly cautious of assessing the genuineness of an individual or entity’s religious beliefs, the case here is not a close call,” Totenberg wrote. “The Court here does not weigh the credibility of evidence about the legitimacy of any alleged religious beliefs but finds that, in the administration or marketing of the plans at issue, there is no indication of a faith requirement at all.”

“Moreover,” she said, “even if Trinity and Unity did limit members to a particular faith, they still are not valid HCSMs as they do not meet additional requirements under the Georgia statute” governing HCSMs.

Rejecting Aliera’s efforts to toss or the suit or compel arbitration, Totenberg gave the parties two weeks to file a preliminary report and discovery plan.

“We think it’s a very thoughtful and detailed order,” said Parks, Chesin & Walbert partner David Walbert, who filed the complaint last June. “It’s complex, as she noted, but she did a very thorough analysis, and I think it’s 100% correct.”

“Now we’re looking forward to getting into discovery to see how many people are actually in the class,” said Walbert, whose co-counsel includes firm partner Jennifer Coalson and Stephen Fearon Jr. and Paul Sweeny of New York’s Squitieri & Fearon in New York.

The complaint was filed on behalf of three former participants in the plans, Walbert, said, but “our clients’ situation is very common, and if you replicate those by 100,000 people or more, it’s tragic. Some of the calls to our office are tragic: People who’ve filed claims, had them denied, then gotten the runaround when they try to appeal the denial.”

Aliera is represented by Burr and Forman partner Elizabeth Shirley and associates Kevin Stone and Sadie Craig; neither they nor a company spokesman replied to a request for comment Thursday.

According to the complaint and order, Aliera was formed in 2015 and is operated by Timothy Moses and his wife, Shelly Steele, and their son, Chase Moses. Timothy Moses served six years in federal prison for securities fraud and perjury before founding the company with his family.

Steele serves as the company’s CEO and Chase Moses as its president, but “at all times relevant to this Complaint Timothy Moses has exercised and continues to exercise control of Aliera through his wife and son,” the complaint said.

Aliera has been issued cease-and-desist orders in Maryland, Washington, New Hampshire, Colorado and Connecticut and sued by the state of Texas in a complaint claiming it “illegally engaged in the business of insurance” that characterized it “as a multi-million dollar for profit business that admittedly siphons off over 70% of every dollar collected from its members to ‘administrative costs,” the complaint said.

The plaintiffs in the complaint include a New York woman, Noelle LeCann, who allegedly paid Aliera about $1,700 a month in 2018 and 2019.

She needed surgery for a shoulder repair and Aliera preapproved the procedure, but, when her doctor submitted bills, the company “delayed payment and has continued to refuse to pay the bills.”

Plaintiff Kristin Selimo of New Jersey paid Aliera $900 a month starting in January 2018,  but, when she became pregnant and delivered a baby in October 2019, the company refused to pay for her care or delivery.

“Despite assuring Ms. Selimo that the medical bills would be covered, Defendant has unreasonably delayed and protracted payment, the complaint said. “Plaintiff Selimo continues to receive demands for payment of the medical bills and those bills will soon be placed in collections.”

Plaintiff Tania Funduk of Atlanta paid $500 a month for coverage, but, when she and her doctors submitted bills, Aliera “continuously delayed and refused to pay” despite continuing to collect premiums.

Their claims include unjust enrichment, breach of contract and breach of covenant of good faith and fair dealing, conversion, breach of fiduciary duty, intentional or negligent misrepresentation and violation of the Georgia Fair Business Practices and Deceptive Trade Practices Acts.

Aliera moved for dismissal, arguing that the plaintiffs never attempted to mediate their disputes as required by their contracts, but “the Court is not convinced that the language of the contracts evidences that mediation is a condition precedent to filing a lawsuit,” Totenberg wrote.

The company also denied that it is in the insurance business at all.

“After thorough review of the record and evidence presented by the Parties, the Court concludes that the language of the member guides, the findings of insurance commissioners and departments across the country that have been furnished as part of the record to the Court, and Aliera’s own admissions demonstrate that Aliera’s plans are insurance under Georgia law,” Totenberg said.

Georgia’s arbitration statute “prohibits arbitration agreements in insurance contracts and is excepted from preemption by the [Federal Arbitration Act] by virtue of the McCarran-Ferguson Act, a federal law which generally reserves for the states the power to regulate insurance,” she said.

As a result, she said, the court has no authority to compel arbitration.

The case in U.S. District Court for Georgia’s Northern District is captioned LeCann v. Aliera Cos., case number  1:20-cv-02429.

U.S. District Judge Amy Totenberg (Photo: John Disney/ALM)

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