California Attorney General Rob Bonta announced that Sedera, Inc. and Sedera Medical Cost Sharing Community, LLC (SMC) have agreed to a $1.3 million settlement to resolve allegations of selling fraudulent health insurance plans to over 2,000 Californians. The settlement also addresses allegations that the companies falsely marketed their products as non-insurance medical cost-sharing plans and health care sharing ministry (HCSM) plans, both of which failed to comply with state consumer protection laws.
The investigation, conducted by the California Department of Justice, uncovered that Sedera and SMC collected mandatory monthly payments from customers in exchange for covering medical expenses, positioning their products as health plans. However, the products offered by the companies did not meet the legal requirements of a health plan, which must provide essential health benefits such as preventative care. Sedera and SMC’s plans did not offer these required benefits, misleading consumers about their coverage.
“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,” said Attorney General Bonta. “They did not offer Californians the essential health benefits they were entitled to. This settlement includes strong protections for consumers, including restitution, civil penalties, and prohibitions on their future operations in California. We will not allow businesses to prey on Californians by offering misleading and inadequate health coverage.”
As part of the settlement, Sedera and SMC will be required to:
- Cease marketing, selling, and operating any health plans in California.
- Refrain from moving California members to other plans or directing them to alternative cost-sharing entities.
- Delete all California customer lists and notify members of the termination of their plans.
- Pay $1.3 million, with $800,000 allocated for consumer restitution (to be paid in two installments over six months) and $560,000 for civil penalties.
The settlement follows an earlier consumer alert issued by Attorney General Bonta in April 2021, warning Californians about deceptive HCSMs after numerous complaints about refusal to cover treatments and unpaid medical bills. This case is part of a broader effort by the Attorney General’s office to protect consumers from fraudulent health plans. In January 2022, Bonta filed a lawsuit against The Aliera Companies for similar deceptive practices, and in March 2023, he announced a $2.1 million settlement with Alliance for Shared Health.
Attorney General Bonta also urged Californians to be vigilant when selecting health insurance coverage and to consider applying for affordable, reliable coverage through Covered California, the state’s official health insurance marketplace.
“To my fellow Californians: Please do your research and first consider applying for affordable, reliable coverage through Covered California,” Bonta added.
The settlement will provide some relief to affected consumers and serves as a stern warning to companies that fail to comply with state regulations. With the case resolved, Bonta’s office continues to monitor the market for other fraudulent health plans and will hold violators accountable.
A copy of the complaint can be found
A copy of the stipulated judgment, which is subject to court approval, can be found here.
