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Sunday, June 23, 2024 | Back issues
Courthouse News Service Courthouse News Service

Bogus! State Tells ‘Health Discount’ Company

MINNEAPOLIS (CN) - A Texas-based company exploits consumers by "deceptively marketing and selling" them "limited discount health plans ... by misleading them into believing that the plans are health insurance," Minnesota's Attorney General says. The state demands restitution and penalties from Direct Medical Network Solutions.

Attorney General Lori Swanson says the defendant and its telemarketers lie about its so-called discount programs, "which provide, at best, only limited savings to consumers and only for a limited pool of providers," and refuse to give refunds to customers who realize have been duped.

"As a result of the disparity between how Direct medical markets its plans during sales calls to consumers and the plans' actual terms, many consumers promptly cancel the plan," according to the complaint in Hennepin County Court. "Over half - 58% - of Direct Medical's Minnesota consumers canceled within one month, and only 4% of Minnesotans who signed up for a Direct Medical plan remain Direct Medical customers. Direct Medical refuses to provide refunds to consumers who realize that they have been deceived."

Direct Medical agents falsely informed its victims that its plan covers 80 percent of medical expenses and included direct payments to medical providers, Swanson says.

Direct Medical lies when it claims that its plan requires only a small co-pay for visits to a hospital or clinic, and that the company has "an extensive network of doctors, hospitals and providers;" none of this is true, Swanson says.

Direct Medical agents use words such as "coverage," "deductible," "co-pay" and "premium," and even offer an "accidental death and dismemberment insurance policy" during sales calls, to mislead consumers to believe they are buying health insurance, the attorney general says.

Swanson says that Direct Medical agents even deny that they are selling a discount plan, when customers ask.

Direct Medical charges an enrollment fee of about $135, and a first-month fee of $99 to $459.50 before it sends any paperwork about the plan, the attorney general says.

Direct Medical is a privately held, for-profit Delaware corporation that operates out of Southlake, Texas. Its president it Ty Bruggemann. It also does business as Direct Medical and DirectMed.

Swanson demands restitution and civil penalties for consumer fraud and deceptive trade.

In a separate complaint in the same court, Swanson sued Texas-based Association Healthcare Management dba Family Care, on similar allegations.

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