55Bloomberg Businessweek September 23, 2019
service manager told the commission that Dorfman’s opera-
tion fielded as many as 3,000 complaints a day.
The FTC said that Dorfman was selling policies through
HIIQ and that the company had paid him $145.7 million in
commissions across several years, meaning he might have
been one of HIIQ’s biggest brokers. Dorfman, who declined
to comment, denied the allegations. HIIQ, which wasn’t sued
itself, said that it had stopped doing business with Dorfman
as soon as the case was filed.
Hedge funds that bet against corporate wrongdoers took
notice of the FTC’s lawsuit. Last year an anonymous short
seller posting under the pen name Aurelius Value wrote
a blog post calling attention to the company’s connection
with Dorfman. “We believe it is now a question of when, not
if, HIIQ’s business will implode,” he said. In May, HIIQ was
the most shorted stock in the country, according to finan-
cial analytics company S3 Partners LLC.
Southwell, the CEO, told Wall Street analysts that his com-
pany was under attack. “It is certain people’s full-time job
to try to attack this business with never-ending, false, and
misleading information,” he said. “It is our day job to keep
building a successful growth company with incredible cash
flow.” He asserted that HIIQ’s regulatory problems were in
the past, accused critics of cherry-picking unhappy custom-
ers, and singled out four happy ones whose costly medi-
cal problems had been covered entirely by policies bought
through HIIQ.
“We are not perfect,” he said. “The health system here
has major issues, which are well-publicized, and we work
hard to keep improving, so we have less complaints and less
issues than anyone else that we are aware of.” He also said
it’s heartbreaking when a broker misleads a customer or an
insurer denies a valid claim.
When customers have made accusations to that effect
in court, the company has defended itself aggressively.
Charley Butler, a truck driver in Montana, filed suit in
April 2017 after his insurance didn’t pay for his testicular
cancer treatment, leaving him with $69,000 in unpaid bills.
During a deposition the following year, Lee Henning, an
attorney for HIIQ, tried to undermine Butler’s claim that
the debt had left him anxious. If you need money so badly,
Henning asked, why doesn’t your wife get a second job?
He reminded Butler that the Bible says a wife should be a
good “helpmate.”
“I’m really sorry for everything you’ve gone through,”
he said next. “But whether or not the insurance company
had handled your case differently, you still would have had
cancer, correct?” Henning didn’t respond to a request for
comment; HIIQ says he no longer represents the company
and that it doesn’t condone his comments to Butler.O
n June 14, Trump held a ceremony in the White
House Rose Garden to announce a new policy that
lets employers steer as much as $1,800 in tax-exempt funds
to their employees instead of offering them comprehensive
health plans. The move will likely create many more cus-
tomers for HIIQ’s industry. “We’re putting the people back
in charge with more choice for better care at a far lower
cost—and other people will not be paying for their health
care,” Trump said.
Brokers are already gearing up for November, when the
open enrollment period for Obamacare plans will drive mil-
lions of potential customers online. Earlier this year, HIIQ
paid roughly $70 million to buy TogetherHealth, a company
that runs TV ads targeted at over-65 shoppers and directs
those who call in toward insurance brokers. Southwell told
Wall Street analysts that TogetherHealth brings in a million
customers a year, and that HIIQ can redirect them to its net-
work of brokers and products. “There is much low-hanging
fruit in the over-65 space,” he said. “We expect significant
growth.” HIIQ has since announced that it’s conducting a
strategic review, essentially putting itself up for sale to pri-
vate equity firms, which would get it off the stock market
and solve its problem with short sellers once and for all.
As for the Diazes, Surrano is looking to take depositions
from Thiel and other HIIQ representatives, a process that
could take months. It’s unlikely a trial would start before
next summer. In the meantime, the couple is still struggling
with the debt from David’s heart attack.
After the initial wave of bills came in, Marisia started
sending $10 to each of their creditors, attaching a signed
note asking the recipient to accept the money as a “payment
of good faith.” The debt is never far from her mind. “I wake
up thinking about it,” she says. “I go to bed thinking about
it. It doesn’t go away.” The family switched to a compre-
hensive, ACA-compliant insurance policy in December 2017.
With government subsidies, it costs less than they were pay-
ing for junk insurance. <BW> �With Tatiana Darie“Creating an
exception to the
requirements
of Obamacare
is what gave
rise to this kind
of stuff”