Insurance telemarketing CEO sentenced to 25 years in federal prison for lying to consumers

The owner of a health insurance telemarketing company was sentenced to 25 years in federal prison for selling limited indemnity health insurance plans using false and deceptive practices. The Federal Trade Commission also had the courts liquidate the company’s assets earlier this year. 

Steven Dorfman, 40, of Fort Lauderdale, Florida, owned, operated, and functioned as the CEO of Simple Health. In February, a jury convicted Dorfman of one count of conspiracy to commit mail and wire fraud, four counts of mail fraud and eight counts of wire fraud in connection with his operation of Simple Health and its sales of limited indemnity health insurance plans. He was sentenced July 25 by a district court judge in southern Illinois to 25 years in prison, followed by five years of supervised release.

“Steven Dorfman orchestrated a scam to enrich himself by deceiving thousands of victims. He directed sales agents at his telemarketing company to lie to consumers and trick them into believing the limited indemnity insurance plans they were peddling would function like major medical insurance,” said U.S. Attorney Rachelle Aud Crowe in a statement. “This brazen fraud had lasting, and financially disastrous, effects on many victims." 

Simple Health salespersons had promised that the policies would cover most medical expenses. Aud Crowe said that, when the victims attempted to use these policies, they found out they had little to no coverage. As a result, victims were left owing thousands of dollars for medical services that were not covered by the limited indemnity plans sold by Simple Health.

According to court documents and evidence presented during the trial, Dorfman’s company trained employees to use deceptive sales tactics to scam consumers into purchasing the limited indemnity insurance plans. These plans cover relatively low amounts of medical expenses. Once the low caps were reached, the consumers were then responsible for paying 100% of their medical expenses.

Aud Crowe’s office said the company used deceptive scripts and the blatant lies to mislead consumers and sell these low-value health insurance policies to more than 400,000 unsuspecting victims across the country between May 2012 and November 2018. The company generated more than $190 million in revenue, selling more than 1,400 of these limited indemnity policies to individuals from all 38 counties in the Southern District of Illinois.

Court documents said following these scripts Dorfman provided, salespeople would make statements such as “the whole idea of this plan is to make your out-of-pocket expenses as low as possible” and “when all is said and done, you’ll end up owing pennies on the dollar.” Evidence at trial also established that Simple Health’s commissioned salespersons frequently told additional, off-script lies to the consumers to get them to buy them to buy the policies, with little to no effort by Dorfman to stop this practice.

“This sentencing is a statement that mail fraud will not be tolerated, and the perpetrators will be brought to justice,” Acting Inspector in Charge, John Jackman, who leads the St. Louis Field Office of the U.S. Postal Inspection Service said in a statement. “The Postal Inspection Service will continue to partner with other law enforcement agencies to collectively pursue criminals who victimize postal customers and U.S. consumers.”