Feds crack down on health care firm for ‘sham’ insurance plans

Tampa health care company Benefytt Technologies, along with two subsidiaries and two former executives, has come under fire from a federal agency for, according to a news release, lying to consumers about “sham” health insurance plans and using deceptive lead-generation websites, such as “Obamacareplans.com,” to stoke sales.

The Federal Trade Commission has ordered the company to pay $100 million in refunds to customers, who, the agency says, were also charged exorbitant junk fees for add-on products without their permission — violations of the Restore Online Shoppers Confidence Act.

Former CEO Gavin Southwell and former Vice President of Sales Amy Brady will be permanently banned from selling or marketing any health-care-related product, while Brady will be prohibited from engaging in any form of telemarketing now and in the future, the release states. 

“Benefytt pocketed millions selling sham insurance to seniors and other consumers looking for health coverage,” states Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in the release. “The company is being ordered to pay $100 million, and we’re holding its executives accountable for this fraud.”

Benefytt customers, the release states, were led to believe they were buying comprehensive health insurance but often were charged hundreds of dollars per month for products and services that left them unprotected in a medical catastrophe.

The company, its subsidiaries and the former executives have agreed to the court order, the release states. The order was filed in U.S. District Court for the Middle District of Florida.

Formerly known as Health Insurance Innovations Inc., the company changed its name to Benefytt Technologies in 2020. It also changed its NASDAQ ticker symbol to BFYT, though it appears to no longer be publicly traded. In June, the firm hired Todd Baxter as its new CEO.