Federal authorities have shut down a Missouri-based healthcare ministry after it was accused of committing a $4 million fraud.
Medical Cost Sharing Inc., based in St. Joseph, appeared to be a legitimate faith-based nonprofit, effectively crowdfunding insurance and charitably disbursing money when claimants required aid. But clients, who paid up to $750 per month for membership, claimed they were denied coverage for reasons they couldn’t grasp and left with thousands in unpaid medical bills, according to an FBI search warrant.
The feds claim it was part of a fraud, one that saw the business owners — Craig Reynolds and James McGinnis — pocketed $4 million of $7.5 million in membership payments, of which only $250,000 went to medical expenses. The feds say the organization has become even stingier in recent years, distributing no money whatsoever to members since 2021.
Reynolds has denied all claims laid out by the Justice Department in February. McGinnis did not respond to a request for comment. No criminal charges have been filed, although an injunction on MCS has been issued and the company’s website was ordered to close. According to the FBI, MCS attempted to lower payouts, failed to negotiate lower prices with healthcare providers and, in some cases, entirely avoided covering members’ medical costs by using “specious” excuses.
Among the victims, the FBI said, were two pregnant women who expected the ministry to cover their birth costs after promotional material said “all pre-existing conditions, including maternity, are covered from day one.” But the FBI said that after the women gave birth, they each began receiving bills for nearly $15,000. One was told that she wouldn’t be covered and her membership was going to be canceled. MCS accused her of lying on her application about previous medical conditions, namely being pregnant, the FBI said. Three years after the birth of her child, she still owes $9,000. The other paid nearly $12,000 directly to medical providers, on top of the $4,400 in membership fees she paid MCS.
Another member suffered a stroke and was flown to hospital, with her bills totaling $125,000, the FBI said. After paying nearly $11,000 in membership dues, she forwarded the bills to MCS for processing, only to be told nothing would be covered. Furthermore, she was told she would be cut off from the ministry because of “lies” told in the application process relating to her high blood pressure, per the search warrant.
Meanwhile, according to investigators, Reynolds and McGinnis have enjoyed the fruits of their illicit labor, taking money out of MCS accounts to the point where the nonprofit didn’t have enough funds to cover claimants, the DOJ said in a criminal complaint. The membership fees were used, among other things, to pay for a vacation to Mexico, and various vehicles.
Although such nonprofits offer legitimate insurance alternatives, there is no real oversight of their operations, said JoAnn Volk, research professor at the Center on Health Insurance Reforms at Georgetown University.
“Health-care-sharing ministries claim an exemption from federal and state insurance laws, so there’s no guarantee that the organization maintains funds sufficient to pay claims and certainly no guarantee that they will, even if the funds are there,” he said. “There are no solvency requirements, no requirement to pay members in a timely way — no requirement to pay at all. It really is just a matter of faith that claims will be paid, though the marketing typically suggests otherwise.”
–Dwight Widaman | Metro Voice