Unbeknownst to their members nationwide, the leaders of Liberty HealthShare have signed a settlement agreement with state regulators that forces Liberty to pay thousands of dollars in fines and fees, removes Liberty’s top leaders and alters the operations of the Jackson Township-based health care sharing ministry.
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Separately, the owners of three for-profit companies that have been primary vendors of Liberty have signed their own settlement agreement that sets aside millions of dollars intended to benefit former and current Liberty members.
Hundreds of members have accused Liberty of failing to timely pay health claims.
Details of both settlement agreements were revealed in documents filed this week in federal court as part of a lawsuit brought in October by four out-of-state Liberty members who claim Liberty 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.
As a health care sharing ministry, Liberty, which operates two office buildings in Jackson Township and employs roughly 470 workers, is different from traditional health insurance. Its members, who affirm they are of the Christian faith, make monthly payments that are used to cover the medical bills of others in the group.
Healthshares, which often are nonprofit organizations, provide no guarantee that a member’s claim will be shared with other members or covered. Liberty operated on an annual budget of nearly $56 million, according to its IRS filing in 2020.
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. 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 federal lawsuit.
In this week’s court filings, Liberty, its leaders and the vendors argued that their settlement agreements with Yost’s office render the lawsuit moot. They say the lawsuit attempts to litigate claims that were already resolved by the settlement agreements approved last year.
U.S. District Judge John Adams in Akron has given the attorneys for the four Liberty members until March 11 to respond to the filings seeking the lawsuit’s dismissal.
A message seeking comment from Liberty was left Wednesday afternoon.
How did the settlements come about?
According to the court filings, the Ohio Attorney General’s Office began in January 2018 investigating the two nonprofit organizations doing business as Liberty HealthShare, the National Coalition of Health Care Sharing Ministries and Gospel Light Mennonite Medical Aid Plan, to determine whether they had misused charitable funds and property.
The investigation concluded that Liberty may have violated Ohio law related to charitable trust and solicitation activities, but it does not detail the potential violations or how they occurred.
On March 15, Yost approved a settlement agreement with Liberty’s past three chief executive officers, Dale Bellis, Druzilla Abel and Larry Foster, along with each nonprofit’s board of directors, which is responsible for overseeing the finances and general operations of Liberty. The board for the National Coalition of Health Care Sharing Ministries dissolved its nonprofit operations in June and transferred its assets to Gospel Light, records show.
On Dec. 10, Yost approved a separate settlement agreement with three companies and their owners: Cost Sharing Solutions, a marketing and promotional services firm owned by Daniel Beers II, Brandon Fabris and Ronald Beers; The Medical Cost Savings Solution, a company that provides repricing, medical discount, bill negotiations and bill clearinghouse services that is owned by Thomas Fabris; and Barat Consulting, a Barberton company that received payments from Cost Sharing Solutions and Medical Cost Savings Solution and is owned by Scott Barat. Barat and Barat Consulting are not named in the federal lawsuit.
Daniel Beers, the father of Daniel Beers II, also is named in the settlement agreement and listed as previously holding the position of member development partner for Liberty.
Each of the individuals and companies named in the settlements has denied violating Ohio law. Their settlements state the agreement is not an admission of wrongdoing but an act to resolve the issues, allegations and claims.
What are the terms of Liberty HealthShare’s settlement?
The 29-page settlement between Yost and Liberty, Bellis, Abel and Foster:
- Requires National Coalition to pay a civil penalty of $30,000 for failing to timely register with the charitable law section of the attorney general before making charitable solicitations. Of the $30,000, $10,000 will be suspended if National Coalition and Gospel Light fully satisfy their obligations under the agreement.
- Requires Gospel Light to pay $20,000 for the cost of the attorney general’s investigation and $50,000 for related attorneys’ fees.
- Prohibits Abel from working for Liberty or serving on its board of directors. Abel, a founding executive, announced in January 2021 that she would retire as chief executive officer on Jan. 24, 2022. Abel is permitted to work for a trade association and can begin working for a third-party vendor providing services to Liberty a year after her retirement as long as the work is reviewed by Liberty’s board of directors. Liberty’s board, with the attorney general’s approval, has hired Dorsey Morrow of Montgomery, Alabama, as its new chief executive officer.
- Bars Foster from working for Liberty. Foster, who began with Liberty as a board member in 2013, resigned as chief executive officer in October 2019. Foster is permitted to work for trade associations. He also can work for a third-party vendor providing services to Liberty, subject to the review and prior approval of Liberty’s board of directors.
- Bans Bellis, who led Liberty from its founding until he retired in May 2018, from working for Liberty. The settlement also ends Bellis’ 2018 executive employment agreement on Dec. 31, and terminates the agreement terms where Bellis had agreed to not compete with Liberty and Liberty agreed to continue paying Bellis. Bellis earned $519,482 in 2020 for retirement and deferred compensation, IRS filings show. Bellis can work for a trade association and can begin working for any of Liberty’s vendors after Dec. 31 as long as the work is reviewed by Liberty’s board of directors.
- Requires Liberty to appoint two new members to the board of directors. The new members, who must be approved by the attorney general, must have expertise or experience in health care claims administration, law, finance, accounting or business management and cannot have any pre-existing professional or familial relationship with any of the former leaders, any current board members or any of the vendors. As of this week, the board has one new board member, Tae Kim, according to Liberty’s website.
- Prohibits Liberty from using its current auditing firm Sullivan & Company to complete its annual filings with the IRS and attorney general and for its accounting audit. The attorney general must approve the hiring of the new auditing firm, which the board must select after using a competitive process.
- Requires Liberty to include more detailed financial information in its annual IRS filings, including the amount of money its members have contributed to pay other members’ claims, its administrative expense allocations and its cost-containment vendor expenses.
- Prohibits Liberty from renewing or entering into a new contract with The Medical Cost Savings Solution, SavNet International and Cost Sharing Solutions, along with any other vendor with common ownership, without first utilizing a competitive and objective vendor-selection process approved by the board of directors. Records show the three vendors are owned by people who are relatives or prior business partners of Bellis and Abel.
- Releases Liberty, its board and its senior employees, as well as Abel, Bellis and Foster from all claims and causes of action arising from the attorney general’s investigation. It does not release them from any claims or causes of action of any other state agencies or any section of the Ohio Attorney General’s Office other than the charitable law section, including any investigation by the office’s consumer protection section.
What does the settlement with the vendors say?
According to court filings, the Ohio Attorney General’s Office negotiated with the vendors providing services for Liberty HealthShare for eight months before reaching the Dec. 10 settlement agreement.
- Requires the vendors to pay $5.85 million in biyearly installments of $540,000 by Jan. 15, 2027. The money will be deposited into a fund that the attorney general will use to redistribute the money to benefit current or former Liberty members. An explanation of how the funds would be distributed was not included.
- Requires the vendors to pay a civil penalty of $600,000 to be paid in biyearly installments of $60,000 before November 15, 2026. The civil penalty will be deposited into the attorney general’s charitable law fund.
- Requires the vendors to pay the attorney general $20,000 to cover the costs of the investigation and $30,000 for related attorney fees. The funds will be deposited into the charitable law fund.
- Requires Cost Sharing Solutions to register as a professional solicitor with the Ohio Attorney General’s Office and comply with the requirements for professional solicitors.
- Prevents the attorney general from initiating any litigation against the vendors related to the investigation as long as the payments are made on time. It also releases the vendors from all claims and causes of action related to the investigation once the payments have been made in full.
California Attorney General also seeking information
Besides the federal lawsuit, Liberty is fighting an investigative subpoena from California Attorney General Bob Bonta.
Liberty has requested a Stark County Common Pleas judge to grant a protective order to quash the subpoena, stating that it had answered the attorney general’s questions in September about two of its advertisements. Liberty states it declined to respond to the attorney general’s subsequent request in October because the additional information being sought did not pertain to the accuracy of Liberty’s advertising and had no legal basis.
Representatives from Bonta’s office declined to specify whether the attorney general was investigating Liberty specifically or as part of a larger review of health care sharing ministries. Bonta earlier this month announced he was suing The Aliera Companies and the family that founded Sharity Ministries, formerly known as Trinity Healthshare, for selling unauthorized health plans.
“Attorney General Bonta is concerned with any health care sharing ministry (HCSM) that is misleading consumers by using language that makes it harder to distinguish from traditional health insurance; or language that promises to cover medical costs, but leaves consumers holding the bag for exorbitant medical costs; or any fraudulent business that holds itself out to be an HCSM, but is not compliant with federal and state law requirements,” Bonta’s representatives told the Canton Repository in a statement. “If HCSMs are operating outside of the laws in California, we are looking at them.”
Repository staff writer Edd Pritchard contributed to this article.
Reach Kelli at 330-580-8339 or [email protected].
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