Faith-based Insurance Alternative or Fleecing the Flock?

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Federal Courts in 3 States Scrutinize Insurance Promises

Faith-based health coverage offers the devout the promise of care that aligns with their Christian beliefs, but a trio of companies offering these alternatives to traditional health insurance are fighting off federal class action lawsuits aimed at figuring out if they are doing what Jesus would do, or fleecing the flock.

Aliera Companies, Aliera Healthcare and Trinity Healthshare were sued in the states of Washington, Missouri and California over claims of illegal contracting and consumer protection violations. However, despite piles of unpaid bills that allegedly should have been covered, they aren’t open-and-shut cases.

“It gets very dicey when you’re dealing with religious organizations that claim a religious right to be exempt from legal requirements because the government, government regulators and courts are often reluctant to look too far into how religious entities operate, what their rules are and to even question whether they’re religious,” said Professor Jessie Hill, who teaches constitutional law at Case Western Reserve University.

Gerald Jackson, Roslyn Jackson and Dean Mellom filed a class action complaint in the Western District of Washington, where U.S. District Judge Barbara Rothstein allowed litigation to proceed.

“The First Amended Complaint contained sufficient factual matter that accepted as true, plausibly alleged that Trinity does not qualify as a Health Care Sharing Ministry (HCSM),” Justice Rothstein wrote in her opinion. “Defendants’ representations that the insurance plans were HCSM plans was unfair and deceptive. At no relevant time did the Defendants’ plans meet the requirements for HCSMs.” 

HCSMs are characterized as faith-based alternatives to traditional insurance that pass the hat much like a church pools monies on Sundays.

“Because they are not technically insurance plans under the Affordable Care Act (ACA), they’re not required to extend any consumer protections that the ACA includes like covering preexisting conditions, covering all essential health benefits and no limits on dollar caps for health services. These are all things that the ACA put into place that these plans do not have to follow,” Ms. Hill told PacerMonitor News.

At the core of all three lawsuits is whether the companies are exempt from insurance regulations due to provisions under the Affordable Care Act.

“What we’re alleging is that they are insurance and therefore they need to comply with all requirements that insurance companies must comply with both the consumer protection statutes and the solvency requirements, or if they’re not insurance, then what they’re selling is unfair and deceptive and violates the Missouri merchandising practices,” said attorney Jay Angoff, who sued Aliera and Trinity on behalf of George T. Kelly in the Western District of Missouri.

According to the Missouri complaint, plaintiff Kelly paid $344.44 each month, but none of his medical expenses were ever covered by the defendants.

“I was the insurance commissioner in Missouri for six years during the 1990s and we got lots of complaints,” Mr. Angoff told PacerMonitor. “If we find a complaint to be justified, we try to get the company to pay the claim but, in this case, because Aliera and Trinity are not regulated by the state insurance division, the consumer has no recourse except for bringing a private lawsuit, which is exactly what’s happened here.”

After plaintiffs Gerald and Roslyn Jackson enrolled in AlieraCare with Trinity in 2019, they paid a monthly premium of $1,205.77, according to court records, and received an insurance card even though neither AlieraCare nor Trinity Care was certified or recognized by any government agency as an HCSM.

The complaint states that when a claim was submitted on behalf of Mrs. Jackson for a monthly arthritic infusion was denied, forcing the Jackson family to pay out-of-pocket for services that would have been covered by AlieraCare had it complied with Washington state law.

“Did the founders of Aliera intentionally mislead consumers by utilizing faith-based exceptions as a shield from oversight and regulation?” asked Nicole Clark, a California based business and litigation attorney and founder of Trellis Law. “While this is a question for the court, it seems highly unlikely that this class of consumers that was potentially misled by Aliera and Trinity will ever be able to recover their fees paid in reliance on misinformation and/or their improperly denied insurance claims.”

In California, Corlyn and Bruce Duncan paid $1,612.91 per month for the purported AlieraCare Comprehensive Gold Plan but the Duncans were left with $70,000 in hospital bills even after Aliera allegedly authorized Mrs. Duncan’s surgery. The Duncans sued, through attorney Nina Wasow, in the Eastern District of California.

“One of the many disadvantages of the defendants not being regulated by the insurance department is that they don’t have to file any data with their state’s insurance regulator or with anyone,” Mr. Angoff said. “So, we don’t know how many people we are representing in the class action lawsuit.”

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