(Image Credit: IMAGN) Senate Judiciary Committee ranking member Dianne Feinstein (D-California) holds up the report as the Justice Department Inspector General Michael Horowitz testifies before the Senate Judiciary Committee on Dec. 11, 2019. The Inspector General will discuss the findings of his investigation into the DOJ and FBI’s conduct during the Foreign Intelligence Surveillance Act (FISA) warrant process as it relates to the 2016 presidential election.
California – Two companies, Sedera, Inc. and Sedera Medical Cost Sharing Community, LLC (SMC), have reached a $1.3 million settlement with the California Department of Justice after being accused of selling illegal and misleading health insurance plans. The companies were found to have operated outside the state’s strict regulatory framework, offering plans that failed to meet essential legal requirements, leaving thousands of Californians unknowingly uninsured.
According to the California DOJ, Sedera and SMC marketed their product as a “non-insurance” medical cost-sharing program, luring customers with the promise of affordable healthcare coverage. Under this system, members paid a monthly fee in exchange for the expectation that their medical bills would be covered. However, state regulators determined that these plans functioned as unlicensed health insurance policies and therefore violated multiple state laws governing the healthcare industry.
One of the major legal violations identified was the companies’ failure to provide coverage for essential preventive care, a requirement for all health plans operating in California. Attorney General Rob Bonta criticized the companies for exploiting this loophole, stating:
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.
The investigation revealed that more than 2,000 Californians purchased these plans under the belief that they were receiving legitimate health insurance. Many customers only discovered the limitations of their coverage when faced with unexpected medical expenses, leaving them financially vulnerable.
Additionally, state officials found that SMC falsely presented itself as a non-profit organization, despite partnering with the for-profit Sedera Inc. to administer its health plans. This setup allowed them to operate outside the regulations imposed on traditional health insurance providers, avoiding oversight while misleading consumers about the nature of their coverage.
Under the terms of the $1.3 million settlement, Sedera and SMC are now permanently banned from offering health plans in California. Of the total settlement amount:
- $800,000 will be paid in direct restitution to affected customers.
- $500,000 will cover penalties and investigative costs incurred by the state.
While the settlement provides some relief to those impacted, consumer advocates warn that cases like this show the ongoing concerns about deceptive health plans that exploit regulatory loopholes. California officials stress the importance of verifying a company’s compliance before purchasing any health coverage, urging residents to use state-regulated insurance marketplaces to ensure protection under the law.
