California Attorney General Rob Bonta has reached a $1.3 million settlement with Sedera, Inc. and Sedera Medical Cost Sharing Community, LLC over allegations of selling sham health insurance plans to more than two thousand Californians. The settlement resolves claims that the companies falsely marketed their plans as novel "non-insurance" medical cost-sharing products and as health care sharing ministry (HCSM) plans.
The California Department of Justice's investigation found that Sedera and SMC collected mandatory monthly payments in exchange for medical services payment, thus operating as health plans which failed to comply with state consumer protection laws. These laws require coverage for all essential health benefits, including preventative care, which the products offered by Sedera and SMC did not provide.
"Sedera and SMC were able to sell their sham health insurance plans at lower costs precisely because those plans were a sham and failed to comply with state law," said Attorney General Bonta. "Today's settlement includes not only strong injunctive terms that prohibit Sedera and SMC from marketing, selling, or operating any plans in California, but also consumer restitution and payment for civil penalties."
SMC was alleged to have falsely claimed non-profit status while creating unauthorized health plans through its for-profit vendor, Sedera. Under the terms of the settlement:
- Sedera and SMC are barred from selling or marketing any health plans in California.
- They cannot move members to other plans or direct them to cost-sharing entities.
- They must delete customer lists and notify members about plan termination.
- A total of $1.3 million will be paid; $800,000 is allocated for consumer restitution over six months, while $560,000 is designated for civil penalties.
In April 2021, following multiple complaints regarding HCSM plan refusals to cover treatments or pay bills, Attorney General Bonta issued a consumer alert warning against illegitimate HCSMs. He filed a lawsuit against The Aliera Companies in January 2022 for similar reasons. Additionally, in March 2023, Bonta announced a $2.1 million settlement against Alliance for Shared Health over deceptive advertising practices.
A copy of the complaint is available here. The stipulated judgment is subject to court approval.