The Federal Trade Commission and State Insurance Commissioners Pursue Sellers of Fake Insurance Plans.
In this environment of health care reform, rising costs and shrinking budgets, it is easy to be lured by the promise of an extremely affordable health plan. Unfortunately, many of these plans are fake, and the only party benefiting is the scammer behind the plan.
Modern Healthcare (8/12, Vesely) reports, “Federal and state law enforcement agencies are working together to crack down on fake ‘medical discount plans’” that typically “target the uninsured with the promise of cut-rate health coverage.” The FTC is acting with officials in 24 states on “54 lawsuits and regulatory actions to stop these scams. The charges include peddling sham insurance, conducting illegal robocalls and fax blasting.” Modern Healthcare notes that three companies, the Consumer Benefits Association, United States Benefits and Health Care One, “have been charged with deceptively marketing medical discount plans.” Authorities said that those companies took enrollment fees and “then did not allow customers to disenroll.”
Reuters (8/12) reports that such plans have proliferated since healthcare reform laws were passed, and the FTC’s David Vladeck said, “The uncertainty about the benefits that will be available under the new federal insurance program and the fact that the budget doesn’t kick in until 2014 is going to give scammers very fertile ground for this. … They’re going to try to capitalize on uncertainty.”
The Sacramento Business Journal (8/12, Robertson) says that Healthcare One “had already stopped operating in California, though advertisements were posted in the Sacramento area earlier this year.” State authorities “issued a cease-and-desist order in February, after concluding the company was engaged in deceptive marketing that misled consumers into believing they were buying health insurance.”
The South Florida Sun-Sentinel (8/12) reports that the Consumer Health Benefits Association operated in Coconut Creek, had “sold worthless policies to about 40,000 people nationwide” since 2003, “and collected an estimated $15 million over two years,” according to the FTC. The Sun-Sentinel adds that the FTC’s “suit against CHBA also names its Florida subsidiaries, National Benefits Consultants and National Benefits Solutions, as well as company President Ron Werner, Vice President Louis Leo and Operations Manager Rita Werner, all based in Coconut Creek.”
The St. Paul Pioneer-Press (8/12, Snowbeck) reports that Minnesota Attorney General Lori Swanson “brought a lawsuit against one of the three companies — Consumer Health Benefits Association of Florida — charging the firm with pressuring Minnesotans over the phone into buying a low-cost health plan that wasn’t really insurance and offered few benefits.” The state “won a consent judgment barring the company and its principals from selling health discount plans in Minnesota.” In addition, “the company must pay $500,000 in restitution and penalties.” Bloomberg News (8/12, Wayne) reports that Swanson “said economic conditions also created the potential for scams. In her state, the number of uninsured people increased to 9 percent last year from 7 percent in 2007,” creating what she called “a real spike in complaints.”
According to the Memphis Commercial Appeal (8/12), authorities “raided the Nashville office of United States Benefits LLC on Aug. 5 after numerous consumer complaints,” and the FTC filed a complaint in US District Court there accusing “the company and its owner, Timothy Thomas, of violating the Tennessee Consumer Protection Act and the Federal Trade Commission Act” as well as “the federal Telemarketing Sales Rule and the Do-Not-Call law.”
Before you sign, verify the legitimacy of the plan. Call a reputable local insurance broker, the State Insurance Commissioner or the Federal Trade Commission.
Tagged with: discount medical plans • Healthcare reform • insurance commissioner • scam
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