East Boston man who signed up for 'faith-based' alternative to insurance sues after he says plan refused to cover his emergency appendectomy

An East Boston man who says he's out $55,000 for the cost of removing his appendix is suing a group that claims to provide a lower-cost, "faith-based" alternative to regular health insurance, but which he says refused to pay for his surgery.

In his suit, filed yesterday in Suffolk Superior Court, Lucas Merchant says he had been a member of Universal Health Fellowship, a non-profit "health care sharing ministry" in Alpharetta, GA, for just two months when he needed emergency surgery to have his appendix removed. He alleges that despite repeated assurances up to the point he went into the operating room that the procedure would be covered, as he recovered, he learned it would not - via a bill from the hospital.

In addition to the group, Merchant is also suing Prodigy North Health Agency of New Jersey and employee Andrew Grasso, whom he says acted as a Universal sales agent and convinced him to sign up.

The group says it and its participants are "united by their faith in the ethical, moral and spiritual principles and traditions of the Unitarian Universalist Church," although the Unitarian Universalist Association, headquartered in Boston, has nothing to do with the group; in fact, it offers insurance from Blue Cross Blue Shield to its member churches.

Health-care sharing ministries, which purport to be a way for people with similar beliefs to pool money to help each other out in a time of medical need, are the result of an exemption included in the Affordable Care Act in a failed attempt to win conservative support. The groups claim to provide similar services to traditional health insurance plans, such as access to a network of doctors and health facilities, at a lower premium than charged by traditional insurers.

Unlike more traditional health insurers, however, they can exclude coverage for preexisting conditions or even preventative care and prescriptions, can charge people with certain conditions more and can cap total benefits in a way traditional insurers can't. Or as the state puts it:

HCSMs are not insurance and not supervised by state insurance departments. Members typically pay a monthly fee that allows them to submit qualifying medical expenses for sharing with other HCSM members. There are not specific consumer protections that apply to these plans. They may not guarantee any payments, and they do not necessarily pay expenses for the same kinds of services that health insurance covers.

Unique in the US, Massachusetts asks these health-share plans to register their existence - but they don't have to provide the same minimum level of coverage as other insurers in the state; they just have to fill out a form with basic financial and membership data and check a box on that form swearing they do not call their plans "insurance" or guarantee to pay medical bills. However, the state also bars the use of "compensated sales agents, sales tactics, or deceptive marketing practices to solicit or enroll members."

In 2021, roughly 2,200 Massachusetts residents were enrolled in one of these plans, the Massachusetts Health Care Connector reported.

In his complaint, Merchant alleges:

Upon learning of the imminent need for emergency surgery, Plaintiff Merchant contacted Defendant Grasso on at least three separate occasions including prior to the surgery and after the surgery at Mass General Brigham's Hospital in Boston, MA., and on each occasion was informed in no uncertain terms that his health care policy was in effect and his surgery would be covered and paid for by his health plan.

Following the emergency appendectomy surgery and related treatment Plaintiff received from the Hospital, Plaintiff was informed by Defendants that his health care plan would not cover his surgery.

Subsequent to his surgery and related care, Plaintiff received an invoice from Mass General Brigham's Hospital for $55,000.00 for their services rendered, upon which presentment and due demand for coverage and payment from the Plaintiff's health care plan, the Defendants have failed and refused to pay.

Merchant is formally suing on charges of breach of contract, fraud, negligent infliction of emotional distress and unfair and deceptive business practices.

The court has yet to set a date by which Universal, Prodigy and Grasso have to respond to the suit.