Medical health insurance marketer faces fines, sanctions for lying about plans it sells

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Benefytt Technologies, Inc. would should refund $100 million and stop misleading customers about coverage

Benefytt Technologies, Inc., a marketer of health care plans, could should refund $100 million to customers and face additional penalties under a criticism filed against the corporate by the Federal Trade Commission (FTC).

Based on an FTC news release, the criticism alleges that Benefytt, two subsidiaries, and two of its top executives lied in regards to the coverage the corporate’s plans provided. It also says that Benefytt used deceptive lead generation web sites to lure customers and charged for add-on products without customers’ permission. The criticism names former Benefytt CEO Gavin Southwell and former vp of sales Amy Brady.

Benefytt, based in Tampa, Florida, sells association memberships and other health care-related products, often through telemarketing firms and lead generators. Southwell was president and CEO of the corporate from 2016 to 2021, while Brady was vp of sales for greater than a decade before also leaving in 2021.

“Benefytt pocketed thousands and thousands selling sham insurance to seniors and other consumers in search of health coverage,” Samuel Levine, JD, director of the FTC’s Bureau of Consumer Protection, said in the discharge. “The corporate is being ordered to pay $100 million, and we’re holding its executives accountable for this fraud.”

The criticism alleges that Benefytt and its partners used high-pressure sales tactics to deceive consumers into believing they were buying comprehensive medical health insurance plans and charging a whole lot of dollars per 30 days for services that left them unprotected in a medical catastrophe. It charges that Benefytt’s sales process harmed consumers by:

  • Lying in regards to the nature of the plans: Agents claimed the plans were qualified under the Inexpensive Care Act, meaning they included advantages similar to preventive care and caps on out-of-pocket medical costs, when the plans weren’t even comprehensive medical health insurance
  • Bundling and charging fees for unwanted products: Plans often included products similar to life or accident insurance and fitness programs, and didn’t clearly disclose the separate costs of those products so consumers were unaware they were buying them
  • Making cancellation difficult: The criticism charges that customers who called to cancel their plans were often transferred to the sales agents who deceived them in the primary place.

The discharge says that Benefytt and two of its subsidiaries have agreed to a proposed court order that will require them to:

  1. Pay $100 million to the FTC, which the FTC will refund to consumers harmed by the defendants’ practices
  2. Notify current Benefytt customers of the FTC’s criticism against the corporate and permit them to cancel their enrollment. The corporate must also refund payments made after the court order is approved to customers who cancel immediately
  3. Stop misleading consumers about their products’ features, including whether or not they are ACA-compliant, disclose facts similar to total costs and limitations prior to buy, and get customers’ informed consent before billing them for anything
  4. Closely monitor all firms selling their products to make sure they aren’t using deceptive or misleading sales tactics

Separate proposed court orders would prohibit Southwell and Brady from playing any role in selling or marketing any health care-related services or products.

The criticism and proposed final orders were filed within the U.S. District Court for the Middle District of Florida. They change into enforceable after they’re signed by a judge.

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