Liberty HealthShare sued in federal court, members seek class-action status
A Christian organization in Jackson Township that is among the largest health care sharing ministries nationwide is being sued by four out-of-state members who claim Liberty HealthShare misrepresented itself, sold illegal health insurance and funneled money that was supposed to help pay people’s medical bills to its leaders and their friends and family.
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The four Liberty HealthShare members — current member William Rooker of Maryland and former members Rochelle Glasgow of Montana, Donna Landry of Washington and Bonnie Martin of Maryland — are seeking class-action status for the federal lawsuit that was filed in October in the U.S. Northern District Court of Ohio. If granted, the lawsuit could include all current and former members of Liberty, which incorporated in 2014 and served more than 70,000 families nationwide in 2020.
Ohio Attorney General Dave Yost, whose office is responsible for regulating Ohio nonprofit organizations such as Liberty, is listed as a nominal plaintiff in the 70-page lawsuit.
Besides Liberty HealthShare, the lawsuit names 10 people as defendants:
Druzilla "Drudy" Abel and Dale E. Bellis, who are two of Liberty’s founders, and Matt Bellis, who is a Liberty executive.
Daniel Beers Jr., Brandon Fabris and Ronald Beers, who are the principals of Cost Sharing Solutions, which is a Jackson Township-based company that handles marketing, telemarketing, design and call center services. The company also has partnered with Liberty as a sponsor of the Conservative Political Action Conference.
Thomas Fabris, owner of Medical Cost Savings Solution, which is a Jackson Township company that provides claim repricing, balance bill advocacy and self-pay patient legal support.
Douglas Behrens, a former director for a business venture that preceded Liberty and owner of SavNet International, which is a pharmacy and prescription discount program in Fairlawn.
Daniel J. Beers Sr., Benjamin "Bennie" Beers, Rachel Beers and Pamela K. Johnson who are relatives of either Liberty's founders or of the leaders of the three service providers.
The lawsuit’s two central allegations are: That Liberty has been selling and administering illegal health insurance under the guise of a faith-based health care sharing ministry as a way to avoid paying taxes and state and federal government oversight. And that Liberty officials used member contributions to pay inflated service costs to companies operated by friends and relatives instead of using the money to pay member medical expenses, leaving members stuck with paying large medical bills on their own.
The lawsuit also questions whether those named in the lawsuit engaged in mail or wire fraud, violated federal laws regarding racketeering activities and broke the rules for nonprofit organizations to keep their tax-exempt status.
Represented by attorneys in Kent, Georgia and California, the four members seek a declaration that Liberty’s health plans are unauthorized health insurance and illegal contracts; the removal and replacement of Liberty’s Board of Directors and named employees; and the repayment of the money that members paid for undelivered services, plus damages, litigation costs and other expenses.
Liberty HealthShare defends itself
In an email Friday evening, a Liberty HealthShare representative called the claims in the lawsuit "false or inaccurate."
Terrie Ipson, vice president of marketing and communication, wrote in an email that Liberty is a health care sharing ministry as outlined in the Affordable Care Act and statutes in more than 30 states.
"We follow the rules set for health care sharing ministries," she said.
Ipson said Liberty won't discuss details of the lawsuit, but added that Liberty is not, and has never been, an insurance company.
"It does not sell health insurance policies," Ipson wrote. "Distinct from health insurance, we deliver members the power to share in one another’s health care costs through faith-based giving."
Attorney Laura Mills, of Mills, Mills, Fiely & Lucas, who is representing Cost Sharing Solutions, Medical Cost Savings Solution and some of the people named in the case, wrote in a statement that the lawsuit is primarily directed at Liberty by four members who do not specify any actual damages in the complaint as a result of their membership with Liberty.
Mills said the companies she represents are private sector vendors and will continue to service Liberty under existing contracts while waiting to be dismissed from the lawsuit.
"It is unfortunate that family members who have no connection or relationship with Liberty, MCS or CSS have been named as defendants, but it certainly demonstrates the lack of factual basis to the complaint," Mills said in the emailed statement. "On behalf of MCS, CSS and its owners, we look forward to providing their side of these allegations in the upcoming months and through the proper channel which is our court system."
The attorneys who filed the lawsuit did not return a message seeking comment. Glasgow, who was a Liberty member from 2017 until May, declined comment.
A message left with Yost’s office was not returned.
Allegation: Liberty HealthShare isn’t a legitimate health care sharing ministry
The lawsuit accuses Liberty of misleading members by stating that it was a legitimate health care sharing ministry.
Health care sharing ministries, also known as healthshares, are alternatives to traditional health insurance. Healthshare members — typically those of the same religious faith — make monthly payments that are pooled and then used to cover the eligible medical bills of others in the group.
Because they are not insurance companies, healthshares are not required to cover a member with a pre-existing condition and can deny coverage for medical claims that don’t align with the healthshare’s faith mission.
The popularity of healthshares exploded after 2010 when Congress said that individuals who were members of a health care sharing ministry were exempt from the Affordable Care Act’s health insurance coverage requirement.
Liberty, which employs roughly 470 people at its two offices on Fulton Drive NW and Hills and Dales Road NW, promotes itself as a voluntary association of like-minded people who come together to assist each other by sharing medical expenses. It is affiliated with the Gospel Light Mennonite Church in Virginia.
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According to its most recent nonprofit filing, Liberty paid $352 million in medical expenses for its members.
The filing also states that Liberty is legally recognized by the Centers for Medicare and Medicaid Services as a health care sharing ministry.
But the lawsuit contends that Liberty isn’t a health care sharing ministry at all.
The attorneys contend that Liberty doesn’t qualify as a health care sharing ministry under federal law (Internal Revenue Code) or for the Affordable Care Act exemption because it was created after Dec. 31, 1999, with no qualifying predecessor entity and because it doesn't limit its membership based on faith.
For the purposes of the ACA exemption, the federal definition of a health care sharing ministry states the nonprofit organization must have been in existence since Dec. 31, 1999, and the members of the ministry share a common set of ethical or religious beliefs.
The lawsuit also points out that Virginia’s definition of a health care sharing ministry states the arrangement must be among individuals of the "same religion based on their sincerely held religious beliefs" and the ministry must limit its members to individuals who are of a similar faith.
It states that Liberty doesn’t have a process to verify applicants' or members' sincerely and shared religious beliefs.
Ohio doesn't have laws that specifically identify healthshare groups as not being in the business of insurance.
In a 2019 interview, Liberty’s then-chief executive officer Larry Foster told the Canton Repository that Liberty members aren't required to be affiliated with a church, but are asked to attest to their Christian beliefs.
Liberty’s website states it began in 1995, but it incorporated in Ohio as Liberty HealthShare in 2014.
Allegation: Member payments weren't used properly
Liberty members, like other healthshare members, must submit monthly contributions, which are similar to premiums for traditional health insurance users, to obtain coverage for themselves and their families.
Liberty, whose operations are overseen by a six-member board of directors, is to use these monthly contributions to pay eligible member medical expenses and to cover administrative costs.
But the lawsuit alleges that Liberty’s officials eroded the amount of money available to pay member medical expenses when they paid over-market prices for services provided by Cost Sharing Solutions, Medical Cost Savings Solution and SavNet International.
The lawsuit also claims that Liberty’s dispute resolution procedures were designed and used by Liberty to wrongfully delay and deny covered claims.
As the Repository first reported in 2019, Liberty has faced a mounting number of complaints from members who have accused the company of failing to pay qualified medical claims, misrepresenting itself and providing poor service.
As of this week, the Ohio Attorney General's Office has 288 complaints filed against Liberty, with 286 of those complaints filed since March 2019. The most recent was filed on Nov. 29.
According to the Better Business Bureau website, 1,114 complaints about Liberty had been filed as of early November.
Canton Repository staff writer Edd Pritchard contributed to this article.
Reach Kelli at 330-580-8339 or kelli.weir@cantonrep.com.
On Twitter: @kweirREP
This article originally appeared on The Repository: Liberty HealthShare sued by members seeking repayment
