Kentucky v. Reinhold

325 S.W.3d 272 (2010)

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Nature of the Case

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Facts

Medi-Share is a program operated by the American Evangelistic Association and the Christian Share Ministry, which advertises itself as a 'sharing ministry' providing 'Affordable, Biblical Healthcare.' People voluntarily join the program, according to P, to help pay the medical bills of other members. The people who join Medi-Share are eligible to receive donations from other members to help pay for their own medical expenses. Medi-Share does not consider itself insurance and it is not licensed to sell insurance in P, and it avoids other regulatory requirements and oversight to which conventional insurance companies are subject. Medi-Share uses an application form that serves as a 'commitment' contract whereby the applicant promises to abide by certain Medi-Share rules and regulations while participating in the program. The applicant must be committed to being a Christian, live by 'biblical standards,' attend church regularly, not use tobacco or illegal drugs, and refrain from abusing legal substances such as alcohol. The 'commitment contract' also places the following responsibility on being a Medi-Share member: I understand that I will be responsible each month to access the member website, which identifies a fellow Christian who will be receiving my gift toward their medical need. I will endeavor to pray for this person and to give him or her encouragement by mail. I understand that my fellow believers in Christ are relying upon the receipt of my monthly share by the first of each month. I understand that Christian Care Ministry (CCM) matches a Medi-Share member's medical need with other Members who have volunteered, in faith, to share in meeting needs through the biblical concept of Christian mutual sharing. I further understand that all money comes from the voluntary giving of Members, not from the Christian Care Ministry and that the Christian Care Ministry is not liable for the payment of any medical bills. I will accept the decisions made during the Appeal Process by the 'Seven Member Appeal Panel' described in the Guidelines and will bring no suit, legal claim, or demand of any sort against CCM for unpaid medical expenses. The application form expressly states that a Medi-Share contract is not an insurance policy. Medi-Share does not guarantee or promise that anyone's medical bills will be published or assigned to others for payment. Whether anyone chooses to pay your medical bills is strictly voluntary. This publication should never be considered a substitute for an insurance policy. Whether or not you receive any payments for medical expenses and whether or not this publication continues to operate, you are responsible for the payment of your own medical bills. An underwriting manual is used by Medi-Share to review each applicant's information. This manual contains information on pre-existing medical exclusions and other exclusions that can keep a person from being granted membership in Medi-Share. Such exclusions frequently appear in the health insurance industry. Medi-Share calculates the member's monthly 'share' by applying underwriting standards and interpreting statistical data to fix the contribution based on anticipated future claims. The member's expected monthly 'share' can also be increased by Medi-Share based on that member's previous claims history and an actuarial analysis of risk. A member who is late in paying his monthly 'share' is assessed an 'extra blessing gifts' penalty. Members who fail to pay their monthly 'share' within a certain period of time are removed from the Medi-Share program. Medi-Share retains a portion of each member's 'share' to cover its administrative costs. When a member has a medical expense, a claim form is sent directly to Medi-Share. Medi-Share's claims adjusters review the claim to see if it is covered under the plan. If the claim is approved to be paid, the payment for the member's medical bills is taken directly from another member's sub-account. The members have no control over which claims get paid for from their individual sub-accounts. Medi-Share has a series of guidelines that define what types of claims will be paid, provide for deductibles, and outline yearly and lifetime caps on benefits each member may receive. The guidelines also encourage the use of medical services within Medi-Share's 'Preferred Provider Organization' by providing penalties for the use of out-of-network providers. P sued D alleging that Medi-Share, American Evangelistic Association, and the Christian Care Ministry were engaging in the unauthorized sale of insurance. The Circuit Court ruled that Medi-Share is not a 'contract for insurance,' because its programs do not shift the risk of incurring medical charges from its members to itself. It also ruled that KRS 304.1-120(7), the Religious Publication Exception to the Insurance Code, applied to Medi-Share, and thus even if Medi-Share was a 'contract for insurance,' it nevertheless is not subject to regulation by the Commonwealth. The Court of Appeals affirmed the Franklin Circuit Court ruling that Medi-Share was not insurance. Two of the three judges on the panel believed that Medi-Share did not qualify for that exception, and thus the majority view of the panel was that Medi-Share did not satisfy the requirements for the Religious Publication Exemption. P appealed.