An insurance brokerage president and the CEO of a marketing company were each sentenced to 20 years in prison for their roles in a scheme to fraudulently enroll individuals in subsidized ACA plans to obtain commission payments from insurers.
What happened?
- Cory Lloyd, 47, of Stuart, Fla., and Steven Strong, 43, of Mansfield, Texas, were sentenced to prison after being convicted by a federal jury in November, according to a Feb. 18 Justice Department news release.
- The scheme sought more than $233 million in fraudulent ACA subsidies, of which the federal government paid at least $180 million.
- The men submitted fraudulent applications for individuals whose income did not meet minimum requirements for subsidies. They targeted vulnerable, low-income people experiencing homelessness, unemployment and mental health and substance use disorders. They sometimes offered bribes through street marketers to induce enrollment in subsidized ACA plans. Because they were enrolled in subsidized ACA plans for which they did not qualify, some individuals experienced disruptions in coverage or lost other insurance coverage under Medicaid or other programs.
- Mr. Lloyd received commissions and other payments from an insurance company in exchange for enrolling consumers in ACA plans. He then paid commissions to Mr. Strong for consumer referrals. To maximize commission payments, the men used misleading sales scripts to convince 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 individuals in fully subsidized ACA plans outside open enrollment periods to maximize year-round commissions.
- A third defendant, Dafud Iza, previously pleaded guilty to major fraud against the United States and was sentenced to 35 months in prison for his role in the scheme.
