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Bloomberg Businessweek September 23, 2019As the couple discussed what to do, David started talking
about bankruptcy. Marisia tried to put on a brave face. “Don’t
talk that way,” she recalls telling him. “God is going to take
care of us.” The couple didn’t tell their friends or family about
their debt, except for their son, Mickey, who does communi-
cations for a law firm in Phoenix. He got them a referral for
an attorney named Charles Surrano.S
urrano once defended insurers. Now he sues them.
He specializes in “bad faith” cases, in which companies
deny claims without basis. He once won a $59 million judg-
ment for a client whose disability insurance payments were
stopped by an insurer that was systematically cutting off its
most expensive customers. Originally a New Yorker, Surrano
has worked in Arizona for more than 30 years. The confer-
ence room at his office overlooking downtown Scottsdale
overflows with fake succulents, and his shelves display twin
license plates reading GOODF8TH and BADF8TH. (The one
on his Tesla says REASON.)
In August 2018, after meeting the Diazes and hearing their
story, he filed a lawsuit against HIIQ, Everest, and Thiel,
accusing the broker and HIIQ of consumer fraud and negli-
gent misrepresentation, and Everest of breach of contract.
Everest says in court filings that the Diazes were informed of
the limitations of the policy and that it handled claims appro-
priately. HIIQ and Thiel denied the allegations but didn’t
provide an alternative version of events. The company told
Bloomberg Businessweek it couldn’t discuss the specifics of any
particular customer’s experience but said in a statement that
it requires brokers to disclose the limitations of any policies
they sell. It also said it isn’t an insurer and isn’t responsible for
coverage decisions made by insurers whose policies it offers.
Surrano saw insurers behaving badly long before
Obamacare, but he credits the Trump administration with
the abuses being perpetrated today. “Creating an exception
to the requirements of Obamacare is what gave rise to this
kind of stuff,” he says. “This is what you get—you get people
like Mrs. Diaz and her family.”
Similar stories aren’t hard to find. Complaints to the
Federal Trade Commission obtained by Businessweek via
the Freedom of Information Act detail numerous cases of
HIIQ customers buying medical insurance they believed was
comprehensive, then having their claims rejected or barely
paid out. “I feel me really dumb,” wrote one person who’d
found out her ADHD medication wasn’t covered. Another
customer said she was reminded of the John Grisham novel
The Rainmaker, in which an insurance company has a pol-
icy of rejecting every claim. Trudy Slawson, a 65-year-old in
Great Falls, Mont., who bought an HIIQ-administered plan
in 2016, thought she had comprehensive coverage until get-
ting a surprise bill for $60,000 after her husband’s emergency
gallbladder removal. The insurer paid only $100. “I believed
what they were telling me,” she says.
Some brokers who’ve worked with HIIQ have run into trou-
ble with regulators. The Massachusetts attorney general is▲ Surrano
PHOTOGRAPH BY CASSIDY ARAIZA FOR BLOOMBERG BUSINESSWEEKinvestigating HIIQ and at least one brokerage that formerly
sold for the company over what she calls misleading tactics.
“You sell bad products to people under false terms,” an anon-
ymous reviewer on indeed.com wrote of the brokerage. “You
get paid well if you scam enough people.”
HIIQ doesn’t directly employ brokers, but the company
says it goes to great lengths to ensure that agents are hon-
est with customers, including by providing training, running
background checks, conducting site visits, and staging phone
calls from secret shoppers. Those who break the rules can be
kicked off the platform. “HIIQ has diligent vetting and effective
ongoing compliance monitoring,” Elizabeth Locke, an attorney
representing the company, wrote in a letter toBusinessweek.
Last year, HIIQ settled a 43-state investigation into broker sales
practices by agreeing to pay $3 million and monitor salespeo-
ple more closely, without admitting wrongdoing.
A recent FTC lawsuit raised further questions about how
closely the company has been watching its brokers. Filed in
November 2018 in federal court in Fort Lauderdale, the suit
sought to shut down a group of boiler rooms run by a flashy
35-year-old named Steven Dorfman. The FTC said he’d swin-
dled tens of thousands of people out of more than $100 mil-
lion by passing off “sham” insurance policies as comprehensive
health insurance, spending the profits on private jet flights, a
white Lamborghini Aventador, a black Rolls-Royce Wraith, and
a $300,000 wedding in Bal Harbour, Fla. One former customer