According to a statement released by the California Department of Justice (CA DOJ), Sedera, Inc. and Sedera Medical Cost Sharing Community, LLC (SMC) have reached a $1.3 million settlement. The settlement resolves accusations that the companies were selling “sham” health insurance plans.
The CA DOJ’s investigation revealed that the companies charged customers monthly fees in return for the payment of medical services. They marketed these services as a “non-insurance” medical cost-sharing product. However, the agency determined that these products met the definition of “health plans” under California law and failed to comply with key regulations.
One critical issue was that the plans did not offer coverage for preventive care, a standard requirement for health plans in the state. “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. For example, they did not offer Californians the essential health benefits they were entitled to,” stated Attorney General Bonta.
Over 2,000 Californians purchased health plans from the two companies. The CA DOJ further reported that SMC “falsely purported to be a non-profit” while selling the health plans via its for-profit administrative vendor, Sedera Inc. The settlement agreement also states that the companies are banned from operating health plans in California going forward. Furthermore, the settlement requires that the companies pay $1.3 million, with $800,000 of this sum slated to be returned to affected customers.
