New York Alleges Health Care Providers Committed Fraud

On October 20, the New York State Department of Financial Services (NYSDFS) filed a Statement of Charges and Notice of Hearing against The Aliera Companies Inc., formerly known as Aliera Healthcare Inc. and Trinity Healthshare Inc. In this statement, the NYSDFS alleges that Aliera Healthcare and its subsidiary, Trinity Healthshare, committed seven separate violations of New York Financial Services and New York Insurance Law.

Aliera Healthcare was originally set up as a partner to Anabaptist Healthshare (Anabaptist), for provision of health care cost reimbursements as a HSCM as defined by 26 U.S.C § 5000A. HCSMs were originally set up under the Affordable Care act for the limited purpose of providing an exemption to the individual mandate under the Affordable Care Act for those with religious or moral objections to the direct provision of insurance. The HCSM is intended to pool funds preemptively for the purpose of later paying out those funds to cover medical expenses. To meet the exemption for HSCMs, the HCSM must have been in operation continuously since December 31, 1999. However, Aliera Healthcare moved beyond the partnership with Anabaptist to a partnership with its subsidiary, Trinity Healthshare.

The NYSDFS statement alleged that not only did the new partnership with the subsidiary not meet the length in time qualificatio0ns to meet the requirements of 26 U.S.C § 5000A, but the partnership was deliberately created with fraudulent intent to evade licensing and fiscal requirements of full insurance plans. New York is one of the jurisdictions that regulate HSCMs under insurance provisions, regardless; however, the complaint also emphasized the behavior of Aliera Healthcare in acting, marketing and selling the relationship as if it was insurance directly.

The statement also alleged that beyond the misrepresentation of what product is being used, that Aliera Healthcare actively did not meet the division of funding requirements for an HSCM. These allegations include providing less than 20% of funds received from subscribers to covering the medical bills submitted, having no consistent policy or pattern of payment of bills and refusing to refund premiums after cancellations of subscription.

The NYSDFS statement seeks imposition of civil monetary penalties per count of fraud and misrepresentation and imposition of remedial orders to bring the company into compliance with the New York Financial Services and New York Insurance Law. NYSDFS will be represented by counsel to the NYSDFS. Aliera Healthcare and Trinity Healthshare have not entered representation to date.