The Securities and Exchange Commission has charged Tampa, Fla.-based Health Insurance Innovations and its former CEO Gavin Southwell for allegedly hiding customer complaints from its investors.
HII sells short-term health insurance plans and has since become a private company called Benefytt Technologies, according to a July 20 news release.
From March 2017 to March 2020, HII and Mr. Southwell allegedly told investors its distributors were banned from misrepresenting its products to customers and that the company had high satisfaction ratings among consumers and state regulators.
The SEC claims the company knew of thousands of consumer complaints that included misrepresentations of its products, charging for unauthorized purchases and failure to cancel plans when asked. The SEC also said the company sold plans that did not meet minimum coverage requirements under the ACA.
The SEC charged HII and Southwell with violating federal anti-fraud and reporting laws. The two agreed to a cease and desist order but did not admit any wrongdoing. HII was fined $11 million, and Mr. Southwell will settle the claims for $1 million.