A Christian Ministry Promised An Obamacare Alternative. The FBI Says Its Leaders Pocketed $4 Million And Left Members With Thousands In Unpaid Medical Bills.

Two pregnant women, a heart attack sufferer and a woman who needed airlifting to a hospital after a stroke were amongst hundreds victims of an alleged $4 million fraud perpetrated by a Christian ministry offering an Obamacare alternative, according to the FBI.

Members of the Medical Cost Sharing (MCS) ministry had been promised their medical bills would be covered in return for a monthly contribution. Those membership fees were to be “shared” with a network of “like-minded” Christians, in what appeared to be a legitimate faith-based nonprofit, effectively crowdfunding insurance and charitably disbursing money when claimants required aid. But clients 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— Missouri-based Craig Reynolds and James McGinnis—pocket $4 million of $7.5 million in membership payments, of which only $250,000 (3.2%) went on medical expenses. The feds say the organization has become even stingier in recent years, distributing no money whatsoever to members since 2021.

The involvement of the FBI points to an escalation in government attempts to prosecute ministries failing their clients. A handful of state regulators previously initiated investigations and fined some ministries, while some states, such as California, have ordered them to cease operations for failing to conform to federal laws around provision of healthcare insurance.

“It really is just a matter of faith that claims will be paid.”

Reynolds has denied all claims laid out by the Justice Department. McGinnis had not responded to a request for comment. No criminal charges have been filed, though an injunction on MCS has been issued and the company’s website ordered to close.

According to the FBI, MCS attempted to lower payouts, failed to negotiate prices down with healthcare providers and, in some cases, entirely avoided covering members’ medical costs by using “specious” excuses. Amongst the victims, the FBI said, were two pregnant women who expected the ministry to cover their birth costs, after MCS’ 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, as 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 totalling $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, the Justice Department claimed. 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. Records showed, however, that there was no evidence the stroke was caused by a pre-existing condition, the FBI said. After taking the case to two Attorneys General in their home state of California and Missouri, and getting the overall bill reduced without MCS’ help, the ministry agreed to pay $15,000, but the victim was still left over $20,000 down, according to investigators.

Similarly, a heart attack sufferer was slapped with a $65,000 medical bill, but MCS canceled her membership and didn’t pay out because the client did not disclose that she previously had vaginal cancer and was a smoker, according to the FBI’s account. The member told investigators they disclosed both during a telephone call, however, and that they were both sufficiently far back in her past to adhere to MCS policy. The policy promised payouts would be made for those with pre-existing conditions where medical records showed the condition had gone 36 consecutive months without symptoms, treatment or medication, according to the FBI. Four years after the heart attack, she still owes healthcare providers $36,000, the FBI said.

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 complaint. Feds claimed the membership fees were used, amongst other things, to pay for a holiday to Mexico, various vehicles and a $300 gift to a Donald Trump political action committee.

While such nonprofits claim to offer legitimate insurance alternatives, there’s no real oversight of their operations, said JoAnn Volk, research professor at the Center on Health Insurance Reforms at Georgetown University. “Healthcare 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,” Volk told Forbes. “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.”