OAKLAND — California Attorney General Rob Bonta today announced a $2.1 million settlement against two companies, Shared Health Alliance, Inc. (SHA) and Alliance for Shared Health (ASH), to resolve allegations that they offered and deceptively advertised sham health insurance and violated insurance regulations that protect consumers. ASH, a nonprofit corporation that purported to be a healthcare sharing ministry (HCSM), created, operated, and sold unauthorized health insurance through its for-profit administrative vendor, SHA. An investigation by the California Department of Justice (DOJ) found that ASH and SHA advertised their plans as the equivalent of standard health insurance when in reality, the plans were unreliable and did not provide mandated coverage for pre-existing conditions and reproductive care. Today’s settlement recovers restitution for every California consumer who contributed to ASH’s plans. In addition, it prohibits ASH and SHA and its executives from conducting future business related to HCSMs in the state.
“ASH and SHA promised peace of mind and security to Californians looking for health insurance,” said Attorney General Bonta. “What these companies didn’t mention was that their plans had shoddy coverage that could leave members holding the bag on medical bills in case of a health crisis. Our settlement today holds ASH and SHA accountable, and should serve as a warning to other shams insurers. I urge all Californians looking for affordable healthcare to be aware of sham health plans, do their research, and most importantly — consider applying for reliable, inexpensive coverage through Covered California.”
HCSMs began as a way for people with common ethical or religious beliefs to pool together their money and share the cost of medical care. However, HCSMs are not required to provide the crucial and lifesaving aspects of standard health insurance plans, because they are exempt from the Affordable Care Act (ACA) mandates to cover pre-existing conditions, preventive care, reproductive care, and mental healthcare. After the ACA was passed, some companies began to capitalize on the ACA exemptions granted to HCSMs by entering into agreements with churches, then presenting themselves as HCSMs and marketing their plans as a cheaper alternative to ACA-compliant health insurance.
In 2021, after receiving multiple complaints from consumers alleging that their HCSM plans refused to cover treatments and pay their medical bills, Attorney General Bonta issued a consumer alert, warning Californians about illegitimate HCSMs.
As part of its investigation into ASH and SHA, the DOJ found evidence that the companies falsely advertised ASH as a legitimate HCSM even though it did not qualify as one. Further, ASH and SHA violated California’s Unfair Competition Law and False Advertising Law by misleading members and potential members into thinking their plans were the functional equivalent to comprehensive health insurance.
Today’s settlement agreement requires ASH and SHA to pay more than $1.76 million in restitution for victims and around $357,000 in civil penalties. It also imposes injunctive terms, including:
- A requirement to cease all marketing, sales, and operations in California or aimed at Californians and refrain from any future operations in California; and
- A prohibition on its executives from holding leadership or ownership positions in an organization that purports to be an HCSM in California.
A copy of the complaint can be found here. A copy of the stipulated judgment, which is subject to court approval, can be found here.