A federal jury in Florida has convicted an insurance brokerage president and the CEO of a marketing company for their roles in a scheme to fraudulently enroll individuals in subsidized ACA plans to obtain commission payments from insurers.
The scheme sought more than $233 million in fraudulent ACA subsidies, for which the federal government paid at least $180 million, according to court documents and a Nov. 17 Justice Department news release.
The two convicted men submitted false applications for individuals whose income did not meet minimum requirements for subsidies. The brokerage president received commissions from an insurance company for enrolling consumers in ACA plans, then paid commissions to the marketing company’s CEO for consumer referrals.
The two individuals targeted vulnerable, low-income people experiencing homelessness, unemployment and mental health and substance abuse disorders, according to evidence presented at trial. They sometimes offered bribes through street marketers to induce enrollment in subsidized ACA plans. Some enrolled individuals experienced disruption in medical care and lost other insurance coverage under Medicaid or other programs.
The defendants used misleading sales scripts to convince the individuals to state they would attempt to earn the minimum income necessary to qualify, even when those individuals initially stated they had no income. They also conspired to bypass federal income verification requirements and deliberately submitted Medicaid applications designed to be denied so they could enroll the individuals in fully subsidized ACA plans outside open enrollment periods to maximize year-round commissions.
The defendants financed luxury homes and vehicles with the fraud proceeds.
Each defendant faces a maximum of 20 years in prison for conspiracy to commit wire fraud, 20 years for each wire fraud count and five years for conspiracy to defraud the United States. The marketing company CEO faces a maximum of 10 years for each money laundering count.
Sentencing is set for Feb. 4.
