The California Attorney General announced a $1.3 million settlement with Sedera, Inc. (Sedera) and Sedera Medical Cost Sharing Community, LLC (SMC) to resolve allegations that they violated California law by advertising and selling sham health insurance plans to over two thousand Californians.

In addition, the settlement resolves allegations that Sedera and SMC falsely advertised their sham plans as both novel “non-insurance” medical cost sharing products and as health care sharing ministry (HCSM) plans.

Sedera, Inc. and Sedera Medical Cost Sharing Community, LLC are organizations that offer a medical cost-sharing model as an alternative to traditional health insurance. They operate by pooling contributions from members to share the costs of large and unexpected medical expenses. Members voluntarily contribute monthly amounts, and the community collectively helps cover eligible medical needs.

Sedera, Inc.is a fon-profit corporation incorporated in Delaware in July of 2014 and with its principle place of business in Texas. It conducted and/or contracted business through its agents, employees and representatives in counties throughout the State of California, including Los Angeles County.

Sedera Medical Cost Sharing Community is a corporation organized under the laws of Texas. It was incorporated in Texas in November of 2019. It purports to be a non-profit with IRS 501(c)(3) status. However according to the complaint filed by the Attorney General “there is no record of the IRS ever providing 501(c)(3) status to SMC”. It conducted and/or contracted business through its agents, employees and representatives in counties throughout the State of California,

An investigation by the California Department of Justice found that because, among other things, Sedera and SMC collected mandatory monthly payments in exchange for the payment of medical services, Sedera and SMC operated health plans. Health plans are required to comply with a myriad of important state consumer protection laws and regulations. Those laws and regulations require that, among other things, health plans provide coverage for all essential health benefits, including preventative care. The products offered by Sedera and SMC did not.

“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,” said the Attorney General. “Today’s settlement includes not only strong injunctive terms that prohibit Sedera and SMC from marketing, selling, or operating any plans in California, but also consumer restitution and payment for civil penalties. We welcome businesses in our state, but we will not allow them to prey on our people. Lastly, to my fellow Californians: please do your research and first consider applying for affordable, reliable coverage through Covered California.”

SMC, a corporation that falsely purported to be a non-profit, created, operated, and sold unauthorized health plans through its for-profit administrative vendor, Sedera. As part of the settlement, Sedera and SMC:

– – Will be prohibited from selling, marketing, and operating any health plans in California.
– – Will be prohibited from moving its California members to another plan or directing them to any other cost sharing entities.
– – Must delete their California customer lists and provide members with notice of their plan termination.
– – Must pay $1.3 million. Of that total, $800,000 will be for consumer restitution (two payments over six months) and $560,000 will be for civil penalties.

In April 2021, after receiving multiple complaints from consumers alleging that their HCSM plans refused to cover treatments and pay their medical bills, the California Attorney General issued a consumer alert, warning Californians about illegitimate HCSMs.

In January 2022, he filed a lawsuit against The Aliera Companies for purporting to be a HCSM. Further, in March 2023, the Attorney General announced a $2.1 million settlement against Alliance for Shared Health to resolve allegations that they offered and deceptively advertised sham health insurance.