Kentucky v. Reinhold

E. John Reinhold, the American Evangelistic Association, and Christian Care Ministry (defendants) operated a program called Medi-Share, which was advertised as a sharing ministry that provided a biblical way of managing healthcare costs. Members would apply for enrollment in the program and pay an enrollment fee to be added to the pool of members who would share healthcare costs of other members. Members paid annual fees, which were added to subaccounts that acted as escrow accounts to pay medical bills for members who submitted claims and whose expenses were covered under the plan as determined by claim adjusters. When members’ claims were approved, Medi-Share paid the members’ outstanding medical bills directly to their medical providers from other members’ subaccounts. The program was based on the Christian principle of mutual sharing. However, like health-insurance plans, the program had preexisting-condition exclusions and used health-insurance-underwriting standards. Medi-Share’s application form expressly stated that the program was not insurance, and its commitment contract expressly disclaimed liability for members’ medical bills. However, the commonwealth of Kentucky filed suit against Reinhold, American Evangelistic Association, and Christian Care Ministry for the unauthorized sale of insurance. A state circuit court found that Medi-Share was not insurance because the program did not shift the burden of payment of members’ medical bills to Medi-Share. The commonwealth appealed. A court of appeals affirmed the circuit court in a split decision. The commonwealth again appealed.