In bad faith? Cost-share ministry puzzles patients

DALLAS — When David Martinez switched jobs, he was suddenly without health insurance for the first time in his life. For months, the businessman searched for an affordable plan until a broker steered him to a Georgia company promising comprehensive coverage for about one-third of the cost of other plans.

What Aliera Healthcare was peddling was not insurance, but rather connection to a Christian health care cost-sharing ministry, an obscure but growing type of coverage based on the biblical principle that the like-minded should help each other in times of need. Members contribute monthly into an Aliera-administered fund to help pay their future medical bills.

It sure sounded like insurance to Martinez. Or close enough. And, as a Christian, he figured any company marketing faith should be more trustworthy. He signed up in April 2018 and began paying Aliera thousands of dollars. The only problem: The plan turned out to be worthless. He now owes $129,000 in medical bills currently in collections.

As similar cases have surfaced across the country, regulators in several states, including Texas, are taking action against Aliera, accusing the 4-year-old company of fraudulently selling insurance without a license — a charge Aliera denies. But the story runs deeper, emerging as a tangled tale of broken deals, politics, religion, prison and, of course, money. And it is unfolding at a time when the nation’s health insurance regulations are steadily unspooling.

Martinez became ensnared when his wife underwent urgent surgery and Aliera refused to pay, denying the claim multiple times and asserting that Megan Martinez had apre-existing condition, even though her doctor said she did not. Further, since Aliera is not technically insurance, it is not bound by laws that would require coverage under the Affordable Care Act, nor does it fall under much other oversight.

“It really is an extraordinary case,” said Jo Ann Volk, a research professor at the Georgetown University Center on Health Insurance Reforms, who has been watching from afar. “There are completely legitimate health-sharing ministries out there, but there are others that are taking advantage of this wild west of insurance we are living in now.”

A request for comment from Aliera was forwarded to a public relations spokesman who answered questions and issued a company statement by email. Aliera’s leadership was not available for interviews. Attempts to reach them directly were unsuccessful. Details for this story were taken from court records in Texas and Georgia, as well as interviews with regulatory officials and former Aliera members.

“We will vigorously defend against the false claims directed at our company,” Aliera said in the statement, “and we are confident we will prevail when these questions are ultimately determined by impartial judicial review.”

On Tuesday, the day this story appeared online, an Aliera claims director called Martinez and said the company had reversed its previous denials and would pay the entire claim.

20 cents on the dollar?

On May 7, the Texas Department of Insurance said it would seek a cease and desist order in administrative court against Aliera for misleading customers into thinking they were buying insurance and blurring the line between the for-profit parent company and its affiliated nonprofit health-share ministry. The company countered members know exactly what they are getting.

Still, the similarities between traditional health insurance plans and the products Aliera promotes can be striking. Aliera’s website touts individual and family coverage that includes “primary care physician visits, pharmaceuticals, basic eye and hearing examines (sic), both in- and out-patient procedures, extended hospitalizations, urgent care needs, labs and diagnostic procedures.” Plans come in gold, silver and bronze, using the same metal designations as insurance plans offered under the Affordable Care Act’s exchange.

Aliera, however, is under no legal obligation to pay claims. In fact, authorities allege just 20 cents out of every dollar collected in member fees appear to go to medical bills. That’s the exact opposite of Affordable Care Act rules that generally require insurers devote 80 percent of what they collect in premiums to covering health care costs.

Texas insurance authorities also say that Aliera’s affiliated health-sharing ministry, Trinity Health-Share, fails to comply with state rules on such groups and operates as a “shell that was created to disguise Aliera and its control by Aliera.”

In a Texas court filing, Aliera denied “each and every, all and singular, material allegations.”

Aliera has more than 100,000 overall customers nationwide, with 17,000 in Texas, and its annual revenue last year was $215 million, the company said.

It also confirmed it pays Texas insurance brokers up to 30 percent commission to enroll members, with an average of about 15 percent. The typical commission for selling a health plan in the state is between 2 and 5 percent, according to several Texas brokers.

Six days after Texas’ action, Washington ordered Aliera to stop doing business in that state, alleging “deceptive business practices.” The next day, on May 14, New Hampshire issued a warning about Aliera on its website. And by month’s end, Colorado’s insurance commissioner posted a broad caution against health care-sharing ministries: “If it sounds too good to be true, it probably is.”

Then, on June 13, Texas Attorney General Ken Paxton sued Aliera in state district court, mostly mirroring the Texas Department of Insurance complaint, but seeking penalties of $10,000 for each violation and for each day of violation. No hearing date has been set.

Aliera has vowed to fight back in both Texas and Washington.

A prior conviction

Aliera Healthcare Inc. was formed at the end of 2015 as a for-profit corporation with headquarters in Atlanta, incorporation records in Delaware show. The CEO is Shelley Steele and her son, Chase Moses, is president. Her husband, Timothy Moses, was executive director until April when he left to become business development specialist at Ciel Capital Group, described as a privately held Atlanta consulting firm.

In October 2005, Timothy Moses was convicted in Atlanta of two counts of federal securities fraud and one count of perjury. Then the CEO of a bankrupt biotechnology firm, he was found guilty of artificially inflating the value of his company’s stock through news releases and selling his shares right before the price crashed, according to the U.S. Securities and Exchange Commission and the U.S. Attorney’s Office for the Northern District of Georgia.

He was sentenced to 78 months in prison and ordered to pay more than $1.6 million in restitution. He also was ordered to five years of supervised probation beginning in early 2011. But federal prosecutors later tried to send him back to prison for allegedly violating the terms of his probation, including failing to make restitution payments, opening new lines of credit and not being truthful about his finances to his probation officer, according to court documents. His attorney disputed the allegations and Moses avoided a return to prison because of health issues, court papers show.

Attempts to reach Moses for comment were unsuccessful.

In April 2015, Moses’ probation ended. Eight months later, he and his wife launched Aliera and began marketing what the company called “insurance alternatives.”

Soon after, Aliera joined forces with a small Virginia health-sharing ministry called Anabaptist Healthcare, run by Mennonites. The deal was supposed to expand the reach of both Anabaptist and Aliera. A new ministry, Unity Healthshare, was formed with Aliera in control of nearly all operations.

It wasn’t long, though, before the partnership went south, ending in a nasty court fight still playing out in Georgia.

Aliera filed a lawsuit last August, contending breach of contract and claiming it had built Unity into a successful company, but the leadership of Anabaptist “executed a scheme to cripple Aliera’s entire business” by stealing intellectual property and freezing assets, according to the litigation.

Anabaptist countered that Aliera had been deceptive and misused Unity membership funds — which were to remain separate from Aliera’s —for its own purposes, including $150,000 in checks that Moses wrote to himself. Aliera has said it was amisunderstanding and the money was paid back.

By the time Aliera parted ways with Anabaptist, it had already formed a new health share ministry, called Trinity Healthshare Inc., populating it with Aliera employees and automatically moving Unity members to Trinity unless they specifically opted out. In April, the Georgia judge issued an injunction against Aliera to stop the transfer of money and members pending the outcome of the case. Aliera appealed the order.

A million ministries

The concept of health care cost-sharing ministries is often likened to an old-time Amish barn-raising, with people of faith helping each other in times of trouble. But in fact, the groups have become big business and increasingly under scrutiny.

Because they are mostly unregulated, no one knows for sure how many exist in this country, where they are or how many members they have. A decade ago, overall membership in health-share ministries was thought to be around 200,000. Now, it is estimated at more than 1 million.

Health policy experts believe what propelled the rapid growth is a special carve out in the Affordable Care Act that exempted members from the law’s requirement to carry traditional health insurance or face a penalty. Lawmakers agreed to the exemption after the groups argued it was a matter of religious freedom.

Then, as premiums for individual plans offered through the ACA began to rise sharply, so, too, did interest in the typically cheaper offerings from health-sharing ministries, especially among those who had lost traditional coverage. And as membership grew, the marketing became louder and more sophisticated. Some began relaxing requirements to join.

Health policy advocates and regulatory authorities worry customers may not fully realize they are not buying insurance and there is no guarantee of coverage — or much recourse if something goes wrong. Aliera, for example, avoids traditional insurance terminology to sell its plans, but has used other words for the same concepts. In a broker’s email to another Aliera customer, obtained by the Chronicle, a translation was offered: “Member Shared Responsibility Amount = Deduction” and “Consult Fee = Co-Pay.”

Texas authorities accuse Aliera of piggybacking on the health-sharing ministry concept, cashing in on the religious appeal and limited regulations. Aliera argues it offers health-share plans as just one option from a larger menu, calling them “a choice government at all levels should respect.”

In Texas, a health-sharing ministry must be bound by people of a similar faith. The Trinity Health-share bylaws do not specify any particular religion. When members enroll they are required to sign a series of belief statements that include “personal rights and liberties originate from God and are bestowed on us by God” and “every individual has a fundamental religious right to worship God in his or her own way.”

Martinez, the Dallas businessman, thought the belief statements were just a formality. What hooked him was the price. Coverage for him and his wife was about $680 per month, compared with $1,800 for a plan through the ACA.

His annual Membership Shared Responsibility Amount was $5,000. After it was paid, he said he was told they would have 100 percent coverage. In many traditional insurance plans, members are still responsible for a portion of their medical costs even after their deductible is met.

In June 2018, Megan Martinez underwent surgery for diverticulitis. Aliera had pre-approved the procedure and the couple paid their $5,000, assuming there would be no further bills, Martinez said. And initially it appeared Aliera would indeed pay nearly all of the $130,000 in billed charges, according to the couple’s estimate of benefits.

But then overdue notices began rolling in.

When Martinez confronted Aliera, the company said his wife’s surgery sprang from a pre-existing condition so it was not covered after all. Even when her doctor told the company it was not pre-existing, Aliera would not budge, he said.

“What are you saying, the doctor’s a liar?” Martinez argued.

“We sympathize with them and their frustration, as this is an unfortunate example of the need to understand health plan details, especially what is eligible for cost sharing and what is not — such as a pre-existing condition in this case,” Aliera said in a statement about the Martinez case.

But on Tuesday a claims director called Martinez and said the previous denials were reversed and the claim would be paid.

In a corresponding letter, Aliera said the claim had initially been denied because of his wife’s preexisting condition and because robotics were used in the surgery, which was not authorized. But the company said that upon further review it was “not definitive” there was apre-existing condition and that robotics use had become prevalent enough in surgeries that coverage would be allowed.

“It’s very good news,” Martinez said after the call, “but it’s not good news until all the doctors and the hospitals get paid. I am still very skeptical about all of this. We never should have been put in this position.”

In February he had joined scores of other unhappy customers across the country by venting on Yelp: “Do not be fooled by these so-called faith-based healthcare companies as they do not practice the golden rule at all.”

The company responded online: “Thanks for bringing this to our attention. We’re sorry to hear you didn’t receive the reimbursement you expected.”

Little did Martinez know, the Texas Department of Insurance was scouring online reviews as it built its case against Aliera. He was contacted by TDI lawyers and added to a potential witness list. In April he stopped paying his Aliera member fees. He has now hired a lawyer and bought a United-Healthcare plan.

“I’m angry. And I’m embarrassed,” he said, “but mostly I’m disgusted by the hypocrisy. They are no more faith-based than Satan himself.” jenny.deam@chron.com twitter.com/jenny_deam