Ky. Court: Christian-Only Health Plan Is Insurance

A Christians-only health care plan provides a "contract for insurance" and doesn't qualify for exemption from state regulations as a religious publication, the Kentucky Supreme Court ruled Thursday in a decision that potentially opens the plan to stricter regulations by the state.

A split high court found that that the Medi-Share program "fits comfortably within the statutory definition of an insurance contract" because it shifts the risk of payments for medical expenses from the individual to a pool of people paying into the program.

"Thus, regardless of how Medi-Share defines itself or what disclaimers it includes in its literature, in the final analysis, there is a shifting of risk," Justice Daniel J. Venters wrote for the court.

The court also found that Medi-Share doesn't qualify for the Religious Publication Exemption to Kentucky's insurance code because the funds paid into the program go to a pool and not directly from one person to another, a requirement to be excluded from regulations.

At issue is how tightly the state can regulate a program that serves nearly 40,000 churchgoers in 49 states by accepting contributions from participants. The program, which generates about $42 million a year, excludes non-Christians because, organizers say, their lifestyles can result in unnecessary medical care.

Participants can't smoke, use illegal drugs or abuse alcohol. They're also not allowed to enroll if they have pre-existing conditions like heart disease, diabetes or cancer.

Medi-Share, based in Melbourne, Fla., publishes a disclaimer that says it doesn't guarantee the payment of medical bills and that it should never be considered a substitute for an insurance policy. The program has about 300 families in Kentucky.

Lexington attorney Brent Caldwell, who represents Medi-Share, had not seen the opinion Thursday morning and declined immediate comment.

The Kentucky attorney general's office sought to reverse two lower court decisions that held Medi-Share to be a medical cost-sharing program, not insurance. Franklin Circuit Judge Thomas Wingate ruled in 2007 that the Medi-Share program isn't insurance and therefore doesn't violate the state's insurance laws. The Kentucky Court of Appeals agreed.

Justices Will T. Scott, joined by Justice Bill Cunningham, dissented, saying Medi-Share is in the business of promoting and managing cost-sharing, but not insurance.

"The crux of my position is based on the fact that Medi-Share bears no risk when it admits a member to the pool," Scott wrote. "The risk is carried by members of the pool — not Medi-Share."

Medi-Share argued that members aren't buying insurance, but taking part in a charitable endeavor, similar to someone who donates monthly to the United Way. Venters rejected that argument.

"The giver receives no financial benefit," Venters wrote. "The only direct benefit is the joy derived from helping a person in need or supporting a worthy cause."

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Online:

http://opinions.kycourts.net/sc/2008-SC-000839-DG.pdf