A Missouri woman’s heart attack cost her $45,000 in medical bills. Treatment of a Georgia man’s kidney stones resulted in a $67,000 bill. A California woman was treated for a stroke and received a $125,000 bill.
All depended on the St. Joseph, Missouri-based nonprofit Medical Cost Sharing Inc. to pay most of those costs. They were members, some paying monthly premiums of up to $750 a month, of a so-called health care sharing ministry. Such groups are essentially charities where members united by religious beliefs agree to help each other to cover unexpected medical expenses.
But, according to the FBI and Justice Department lawyers, they were all victims of an elaborate fraud scheme that spanned the better part of a decade, foiled with sales pitch aimed at “like-minded Christians “. And meanwhile, authorities say, the two men who started the nonprofit were motivated by personal enrichment.
Complaints against the group have been public for years: The Star reported in August 2017 that at least eight people said they had poured into the fund without receiving a penny for their medical care. Many of them had filed complaints with then Missouri Attorney General Josh Hawley’s office, which they claimed were mediating between the organization and consumers.
But now, federal officials have shut down the organization as they gathered information they say amounts to evidence of years of widespread fraud. And they seized the founders’ assets, namely their homes, saying the properties were the result of wire fraud and a money laundering conspiracy.
Among those who filed formal complaints was Texas pastor Jeff Gore, who put about $4,000 in membership dues into the fund but never received compensation for treatment.
“That’s ridiculous. I mean, it’s been five or six years and the feds are only now involved?” she told The Star during a recent phone interview. “I wasn’t the first to complain. The Better Business Bureau had already opened a file. The Attorney General already had a file on these people when I contacted them.”
Since its creation in 2013, Medical Cost Sharing has — according to government estimates, based on access to its financial records — raised approximately $7.5 million in membership fees from members across the country. But in that time, about $246,000 — or 3.5 percent of the money raised — went to cost sharing on health care bills, according to government estimates.
Medical Cost Sharing plans included features that were like insurance, but health sharing ministries are not regulated by state insurance departments. Medical Cost Sharing co-founder Craig A. Reynolds is a former insurance agent who had his license revoked in Kansas and Missouri.
While advertising its services through Christian-affiliated radio and social media, the federal government says, Medical Cost Sharing has engaged in a pattern of denying legitimate medical claims “based on a variety of specious reasons.”
Instead, founders James L. McGinnis and Craig A. Reynolds, both of St. Joseph’s, reportedly spent much of the charity’s money on a variety of non-healthcare related things. And they put at least $4 million into their own bank accounts, the federal government says, allegedly receiving compensation far greater than what was listed in the documents they filed with the IRS on their tax forms.
Reynolds was an insurance broker licensed to work in both Kansas and Missouri prior to the creation of Medical Cost Sharing. But in 2009, his license was revoked in both states amid allegations that he forged signatures on insurance applications.
McGinnis previously had a Missouri insurance license, but it expired in 2018. There is no record of an enforceable action against him listed by the Missouri Department of Insurance.
In early December, the FBI and IRS raided McGinnis and Reynolds’ homes along with office space in St. Joseph looking for evidence to support their case involving a wire fraud conspiracy built on empty promises and gross misrepresentations. Both houses were also seized under the Civil Forfeiture Act as allegedly the result of wire fraud and money laundering.
Neither McGinnis nor Reynolds have been criminally charged. They retained the advice of Hensley Law Office, a Raymore firm that specializes in criminal defense.
Asked to respond to the government’s allegations, lawyers did not respond to The Star’s requests for comment. In a formal response to the charges, filed Feb. 3 in the Western District of Missouri, the defendants denied that McGinnis, Reynolds or Medical Cost Sharing were committing fraud.
But the allegations were enough for District Judge Greg Kays to issue a preliminary injunction against the charity.
In an order filed in January, Kays found sufficient probable cause of “pending fraudulent conduct in violation of the wire fraud statute.” His order effectively barred Medical Cost Sharing from doing any business, including maintaining its website, until further notice.
The organization was also ordered to keep all records relating to its activity, to stop enrolling members in the program or soliciting others, and banned from taking money from its current members.
After the passage of the historic Affordable Care Act, commonly known as Obamacare, health premiums increased for most Americans as insurers had to cover certain preventative care and not discriminate against pre-existing conditions.
The law did, however, contain an exclusion for Health Care Sharing ministries, which were explicitly exempt from ACA requirements, allowing them to offer monthly installments below typical insurance premiums, especially for people who take less cover and more risk. personal.
It also exempted members of those ministries from tax penalties levied on the uninsured as an incentive to obtain insurance. While organizations can provide coverage for major expenses, they don’t face the same regulations as traditional insurers.
During its MCS investigation, the FBI spoke to at least seven people — four from Missouri, three others from Georgia, California and Texas — who said they were duped by the charity and ended up as a result. with large health care costs.
They signed up for plans that they said promised to cover all pre-existing conditions in exchange for monthly membership fees, like premiums. But when they complained about astronomical charges by hospitals, they said, Medical Cost Sharing told them members were responsible for negotiating with hospitals and accused them of not being truthful about their health history.
For example, the Georgia man who sought treatment for kidney stones in the hospital did so one day after waking up with severe back pain. Through a family plan, at $784 a month with a $1,000 “personal liability,” he and his wife had contributed nearly $12,000 to the health sharing ministry by that time.
Eight months later, when the $67,000 bill arrived in the mail from the medical provider, he says MCS denied they would “share” the cost because he had a “preexisting condition” of a kidney stone from 12 years ago.
In other cases: Two women, one in Missouri and another in Texas, gave birth to babies in 2020 with the expectation that MCS would share hospital costs associated with the births. But they were denied based on a finding by MCS that their pregnancies were pre-existing conditions for membership.
Of the seven interviewed by the FBI, some reported receiving partial stops from hospitals on their bills after negotiating with the health care providers themselves. Some said they received some kind of restitution after pursuing consumer complaints at state attorney generals’ offices or hiring private attorneys, but all ended up strapped for cash, according to the FBI.
The Missouri woman who suffered the heart attack, and was previously enrolled in a “Platinum” MCS plan at $233 a month, still owes $36,000 to health care providers and is on a $533 monthly repayment plan.
Medical Cost Sharing advertised itself as a health care sharing ministry exempt from the Affordable Care Act. But it lost the IRS non-profit status such ministries are required to have.
At least four of the FBI interviewees filed complaints with the Missouri attorney general’s office dating back to 2018, a year after the office had already investigated several other complaints.
The Star asked the Attorney General’s Office for details of its investigation into MCS, including the total number of complaints filed and actions taken against the charity since MCS’s creation in 2013. The office did not respond to specific questions, but said he is still in active mediation between consumers and MCS, although some complaints have been resolved over the years.
“We encourage all Missouri consumers who believe they have been defrauded by this company to contact our office and we would be happy to investigate their specific complaints,” said Madeline Sieren, spokeswoman for Missouri Attorney General Andrew Bailey.
Gore, the Texas secretary who appeared in The Star’s 2017 story, said he was not involved in the federal government’s investigation into MCS.
Several years ago, he ended up in a doctor’s office. After an MRI, he was diagnosed with a torn meniscus. Although he paid MCS about five months of membership fees, he said the organization never paid any of the medical providers.
“I wanted them to refund my premiums because they were fraudulent,” said Gore, now 60. “It was a scam.”
Gore was drawn to the images of crosses, praying hands and Bible verses that dotted nearly every page of the Medical Cost Sharing website. A “cowboy minister” who goes to rural churches preaching the gospel and playing music, Gore liked what he saw and signed up. “Their website said all the right things,” he told The Star in 2017.
After going through the Attorney General’s mediation process, the organization ended up paying for her medical bills.
He is happy that the federal government shut down the organization, but is frustrated that it has remained open for so many years.
“I think the fact that the scam is over is good,” he said. “I wish they would go to jail and a lot of that money could be recouped for the people who spent it… It seems like white collar crimes never happen. If they had punched someone in the face in a bar, they probably would have had more time.”
Gore and his wife haven’t been insured for years. He said they can’t afford traditional health insurance and their experience with MCS has scared them from joining other health care sharing ministries.
“They are not regulated by the government in the same way as insurance companies. So they can do whatever they want to do, they can write their own rules and regulations and make it what they want it to be,” he said. never anything.
“It was such a frustrating time. And then, on top of that, you’re ashamed. Like, how can I be so dumb and gullible, you know?