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Florida health insurance execs cited in Southern Illinois fraud indictment

A  federal  grand  jury  in  East  St.  Louis this week  returned  an  indictment charging  a  former  owner  and  two  top  tier  executives  of  a  south  Florida  telemarketing business known as Simple Health with federal fraud offense involving victims throughout Southern Illinois.

Former owner Steven Dorfman, 37, of Fort Lauderdale, former Chief Compliance Officer, Candida L. Girouard, 45, of Valrico, Fla., and former Vice President of Sales John A. Sand, 47, of Fort Lauderdale,  were all charged with one count of conspiracy to commit mail and wire fraud, four counts of mail fraud, and eight counts of wire fraud.

Simple  Health,  also  known  as  Health  Benefits  One,  sold  health  insurance  policies  over  the  phone.    The  vast  majority  of  the  policies  sold  by  Simple  Health  were  limited  indemnity  plans.    Limited  indemnity plans have a relatively low cap on the amount of medical expenses they will cover.    After those caps are reached, the patients are responsible for paying 100 percent of their medical expenses out of their own pockets.

The  indictment  alleges  that  Simple  Health  employed  a  deceptive  sales  script  to  trick  people  into  purchasing the limited indemnity plans.

Among other things, the script required the Simple Health salespersons to tell the customers that:   “The whole idea of this plan is to make your out of pocket expenses as low as possible … .” and “When all is said and done, you end up with pennies on the dollar!!”  a release said.

Relying on these and other false and misleading representations, thousands of people across the  country  purchased  limited  indemnity  plans  from  Simple  Health.    According  to  the  indictment,  after  customers  purchased  these  policies,  they  frequently  called  Simple  Health’s  Customer  Service  Department and complained that (1) they had incurred significant medical expenses that they had been led to believe would be covered, but were not; (2) their doctors and hospitals did not accept the limited indemnity plans; and (3) their prescription drug costs were not covered, contrary to what they were told when the purchased the policies. In October 2018, the Federal Trade Commission’s Midwest Regional Office in Chicago took action to prevent Simple Health from defrauding any additional consumers.    The complaint filed by the FTC requested that the federal court in south Florida enter an injunction prohibiting Simple Health from violating federal consumer protection laws.    In addition, at the request of the FTC, the court appointed a receiver take over operations of the business.    The litigation in that case is ongoing.

“We credit the Federal Trade Commission for their continued vigilance to protect the community from predatory  and  unscrupulous  businesses  operating  online,”  said  United  States  Attorney  Steven  D.  Weinhoeft. “Crimes like those alleged in the indictment rob people of their hard-earned money, but worse, they have catastrophic consequences when expected insurance benefits aren’t there in a time of need. These offenses ruin lives and must be dealt with harshly.”

The  indictment  charges  that  from  May  4,  2012,  through  Nov.  1,  2018,  Simple  Health  sold  policies  to  over  400,000  people  nationwide,  generating  revenues  to  Simple  Health  of  more  than  $190,000,000.    Simple  Health  sold  1,175  policies  to  individuals  residing  in  all  38  counties  that  comprise the Southern District of Illinois.

Dorfman, Girouard, and Sand are scheduled to appear in federal court in East St. Louis on Monday, March 7, for their arraignments.

Because the alleged scheme was conducted via telemarketing and victimized ten or more persons over the age of 55, the maximum penalty for the conspiracy count is 30 years, pursuant to the SCAMS Act.    Each of the mail and wire fraud counts carries a maximum sentence of up to 20 years in prison.    In addition, the defendants can be ordered to pay full restitution to the victims.

The St. Louis Office of the U.S. Postal Inspection Service is  investigating the case.    Assistant U.S. Attorneys Scott Verseman and Peter Reed are prosecuting the case.

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