Zion HealthShare, Inc. v. Office of the Insurance Commissioner

CourtCourt of Appeals of Washington
DecidedFebruary 5, 2026
Docket40454-4
StatusPublished

This text of Zion HealthShare, Inc. v. Office of the Insurance Commissioner (Zion HealthShare, Inc. v. Office of the Insurance Commissioner) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Zion HealthShare, Inc. v. Office of the Insurance Commissioner, (Wash. Ct. App. 2026).

Opinion

FILED FEBRUARY 5, 2026 In the Office of the Clerk of Court WA State Court of Appeals, Division III

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION THREE

ZION HEALTHSHARE, INC., ) No. 40454-4-III ) Appellant, ) ) v. ) PUBLISHED OPINION ) WASHINGTON STATE; THE ) WASHINGTON STATE OFFICE OF ) THE INSURANCE COMMISSIONER, ) MIKE CREIDLER, COMMISSIONER, ) ) Respondents. )

LAWRENCE-BERREY, C.J. — Zion HealthShare, Inc. (Zion) appeals a final

administrative order upholding a cease and desist order issued by this state’s Office of the

Insurance Commissioner (OIC). OIC’s order concluded that Zion was acting as an

insurer, ordered Zion to cease its insurance business until it registered as an insurer, and

imposed a fine, a two percent premium tax, and penalties and interest on that tax.

Zion argues it is not an insurer. It alternatively argues that the seasoning

component in RCW 48.43.009—the component preventing it from being exempt from

registration—is unconstitutional. In affirming, we conclude that Zion is an insurer and

reject its constitutional challenges. No. 40454-4-III Zion HealthShare, Inc. v. Office of Ins. Comm’r

FACTS

Background

Zion HealthShare, Inc. is a nonprofit corporation based in Utah whose purpose “is

to offer and administer a voluntary and benevolent healthcare cost sharing corporation.”

Administrative Record (AR) at 260. Zion was formed on November 7, 2018, has

26 U.S.C. § 501(c)(3) tax-exempt status, and does not hold a certificate of authority to

transact insurance in Washington. In its articles of incorporation, Zion states its general

purpose is “[a]dministering a voluntary community benevolence program designed to

assist in the sharing of legitimate medical expenses by and for the exclusive benefit of

program members.” AR at 260. Zion has about 48,000 members throughout the United

States.

Zion’s Membership Guidelines

Zion’s members sign up for membership through Zion’s website. Zion’s

membership guidelines, a 41-page document, is published on its website for prospective

members to review. In its guidelines, Zion describes its business model and how it

differs from traditional insurance:

A HealthShare is a non-profit membership program that allows members to share in medical expenses. Zion HealthShare is not an insurance program, but members share major medical costs with one another as a community.

AR at 388.

2 No. 40454-4-III Zion HealthShare, Inc. v. Office of Ins. Comm’r

To earn and maintain membership with Zion, individuals must adhere to Zion’s

principles of membership and submit monthly contributions. These principles include:

• I believe that a community of ethical, health-conscious people can most effectively care for one another by directly sharing the costs associated with each other’s healthcare needs. . . . • I understand that Zion HealthShare is a benevolent organization, not an insurance entity, and that Zion HealthShare cannot guarantee payment of medical expenses. .... • I agree to submit to mediation followed by subsequent binding arbitration, if needed, for any instance of a dispute with Zion HealthShare or its affiliates.

AR at 353.

In addition to abiding by these principles, individuals must make the monthly

contributions associated with their membership tier to gain and maintain eligibility to

share costs with other members. Zion retains a percentage of monthly member

contributions to cover its administrative costs. Zion allocates the remaining contributions

toward a fund, which it holds and administers, to pay member-submitted medical

expenses that qualify for sharing under its member guidelines.

When enrolling with Zion, members choose an “Initial Unshareable Amount”

(IUA) of $1,000, $2,500, or $5,000. AR at 360. The lower a member’s chosen IUA, the

higher the member’s monthly contribution. The member is responsible for paying their

chosen IUA before medical expenses are eligible for sharing with other Zion members.

3 No. 40454-4-III Zion HealthShare, Inc. v. Office of Ins. Comm’r

Members need not pay the IUA again for that medical need until they are symptom free

for 12 months. Additionally, once a member pays three IUAs in a 12-month period, any

shareable expense over $500 is paid by the fund.

Premembership medical conditions are not eligible for sharing during the first year

of payment and are thereafter limited through the first four years. Subject to the

foregoing, there are 40 types of medical conditions or services that are eligible for

sharing, subject to various restrictions. There are 16 types of medical conditions or

services that are not eligible for sharing, including abortion.

Zion has a procedure for resolving disputes if a member disagrees with its

determination that an expense is not shareable:

If a member believes that a limitation was incorrectly placed on member sharing, an appeal may be submitted. Members may submit an appeal and provide supporting medical evidence to have the membership limitation removed. All appeals are reviewed by a committee that includes at least one Zion HealthShare board member, as well as trained medical professionals.

AR at 359. Appeal requests must be submitted within 30 days of Zion denying the need

request.

Zion repeatedly asserts in its guidelines that it is not an insurance company. Zion

includes a lengthy two-paragraph disclaimer on the last page of its membership

guidelines. The portion of the disclaimers relevant to this appeal state:

4 No. 40454-4-III Zion HealthShare, Inc. v. Office of Ins. Comm’r

While Zion HealthShare has shared all eligible expenses of its members to date, membership does not guarantee or promise that your eligible need requests will be shared. . . . The financial assistance members receive will come from other members’ monthly contributions and not from Zion HealthShare.

. . . These guidelines do not create a legally enforceable contract between Zion HealthShare and any of its members. . . .

AR at 391.

Procedural History

Zion enrolled 1,694 Washington residents into its cost-sharing program between

2019 and 2021. OIC learned of Zion’s operation through a consumer’s inquiry. OIC

investigated Zion and concluded it was acting as an unauthorized insurer in Washington.

OIC issued an order requiring Zion to cease and desist conducting business in

Washington as an insurer until it registered with the insurance commissioner and ordered

Zion to pay a $50,000 fine, a two percent premium tax on contributions Zion had

collected from its members in Washington, and penalties and interest on that tax.

Zion requested an administrative hearing to contest OIC’s order. The parties filed

cross motions for summary judgment. The initial order granted OIC’s motion and denied

Zion’s motion. Zion appealed administratively. The reviewing officer issued a final

order affirming the initial order. Zion appealed the final order to Thurston County

5 No. 40454-4-III Zion HealthShare, Inc. v. Office of Ins. Comm’r

Superior Court. By stipulated motion, that court certified review to this court in

accordance with RCW 34.05.518.

ANALYSIS

STANDARD OF REVIEW

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Zion HealthShare, Inc. v. Office of the Insurance Commissioner, Counsel Stack Legal Research, https://law.counselstack.com/opinion/zion-healthshare-inc-v-office-of-the-insurance-commissioner-washctapp-2026.