Fed. Trade Comm'n v. Simple Health Plans LLC, 379 F. Supp. 3d 1346

Background

FTC sued Simple Health network (several corporate entities controlled by Steven J. Dorfman) alleging a nationwide bait-and-switch scheme selling limited indemnity and discount plans while representing them as comprehensive or ACA-qualified health insurance.
The FTC obtained an ex parte TRO on Oct 31, 2018 freezing assets and appointing a receiver; the court held an evidentiary show-cause hearing on April 16, 2019 for preliminary injunction relief.
Evidence included hundreds of lead-generation websites, scripted sales calls, recorded verifications (often downplaying disclosures), consumer testimony, and financial records showing substantial commissions (≈$180M paid from 2014–Oct 2018).
Sales tactics: paid AdWords directing consumers searching for “Obamacare” to defendants’ sites, scripted promises of PPO/ACA coverage, post-sale “verifications” that were often ambiguous or off-record, and delay/tactics when consumers complained.
Court found common-enterprise indicia (shared control, commingled funds, shared personnel) and that Dorfman directed scripts and training, supporting individual and corporate liability.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Defendants engaged in deceptive acts violating Section 5 of the FTC Act	Defendants misrepresented limited benefit plans and discount memberships as comprehensive/ACA-qualified insurance; statements were material and likely to mislead	Dorfman denied consumers were misled; argued post-sale verifications and disclosures cured claims	Court: Likely success for FTC; representations (websites + scripts) created a misleading net impression and were material; disclosures after sale insufficient to cure deception
Whether Defendants violated the Telemarketing Sales Rule (TSR)	Sales calls and scripts misrepresented central characteristics, affiliations, and induced payments in violation of TSR	Defendants disputed misrepresentations and reliance	Court: FTC likely to succeed on TSR claims for false/misleading statements and false affiliation claims
Whether Dorfman and the corporate entities constitute a common enterprise and whether Dorfman is individually liable	Entities operated as an integrated scheme under Dorfman’s control; he drafted/approved scripts and trained staff	Dorfman argued limited responsibility and argued limits on remedies (e.g., disgorgement)	Court: Found common enterprise; Dorfman likely individually liable for participating in and controlling deceptive practices
Scope of equitable relief: asset freeze, receiver, and disgorgement/restitution authority	FTC sought preliminary injunction, asset freeze, receiver appointment, and power to seek disgorgement/restitution under Section 13(b)	Dorfman argued Section 13(b) does not authorize monetary equitable relief (citing Kokesh/Graham/AMG concurrence) and disputed necessity of freeze/receiver	Court: Granted preliminary injunction, asset freeze, and continued receiver; followed Eleventh Circuit precedent allowing disgorgement/restitution under §13(b) and found asset freeze appropriate to preserve funds for consumer redress

Key Cases Cited

FTC v. IAB Mktg. Assocs., LP, 746 F.3d 1228 (11th Cir.) (standard for FTC preliminary injunctive relief and asset-freeze authority)
FTC v. Univ. Health, Inc., 938 F.2d 1206 (11th Cir.) (public-interest and likelihood-of-success framework for FTC injunctions)
FTC v. Gem Merchandising Corp., 87 F.3d 466 (11th Cir.) (§13(b) equitable remedies include disgorgement/restitution)
Kokesh v. SEC, 137 S. Ct. 1635 (Sup. Ct.) (discussed limits of Kokesh—court noted Kokesh did not resolve authority to order disgorgement)
SEC v. Graham, 823 F.3d 1357 (11th Cir.) (disgorgement characterized for limitations-period purposes)
FTC v. Colgate-Palmolive Co., 380 U.S. 374 (U.S.) (deference to FTC's consumer-protection expertise)
FTC v. IAB Mktg. Assocs., LP, 972 F. Supp. 2d 1307 (S.D. Fla.) (asset-freeze evidentiary burden discussion relied upon by court)