Telemarketers Gull the Vulnerable, FTC Says

BROOKLYN (CN) - Four telemarketing companies defraud consumers by pushing bogus medical discount plans as health insurance, and charging as much as $259 a month for it, the FTC says. It sued the Consumer Health Benefits Association, National Benefits Consultants, National Benefits Solutions and National Association for Americans, and the three people who run them.

"Numerous consumers purchase defendants' plan under the impression that it is major medical health insurance or the equivalent of major medical health insurance based on the representations made by defendants during the initial sales calls," according to the federal complaint.

But few providers honor the putative discounts, the FTC says. In one instance, a consumer seeking medicine for her daughter "received a 'discounted' price that was higher than the price she previously paid ... without the medical discount plan," the FTC says.

The defendants not identify themselves or the nature of their services, the FTC says. Many of the alleged victims are uninsured because of pre-existing medical conditions, or because they lost their coverage along with their job. Some "require surgery or suffer from chronic diseases," the FTC says.

Defendant Louis Leo runs National Benefits Consultants and National Benefits Solutions out of Coconut Creek, Fla., with assistance from defendant Ron Werner, who also runs the Consumer Health Benefits Association, with help from Rita Werner, according to the complaint.

The FTC says the telemarketers use industry terms such as "PPO," "deductibles," "co-pay" and "network" to lure customers. They "often claim that they work closely with Blue Cross Blue Shield, Aetna and United Healthcare and that there is virtually no difference between defendants' plan and a major medical health insurance plan." But that is not the case, the FTC says.

The agency says the telemarketers use "high-pressure tactics" by claiming there are a limited number of plans by state, that the offer "will only be available that day," or that the price will increase soon.

If customers ask to see the plan, sales reps reply "that they will not mail any written materials until after the consumers purchase the plan," the FTC says.

Customers who fall for it then get mailers with "multiple disclaimers" saying the medical discount plan is "not health insurance," according to the complaint.

The defendants promise that consumers will save up to 85 percent on medical expenses, but "few, if any consumers save money," the FTC says.

For the alleged "benefits," the defendants charge an enrollment fee ranging from $29 to $279.85, plus monthly service charges of $65 to $259.

While the telemarketers "typically" say that customers can cancel at any time, their victims often "cannot reach a live representative," the FTC says. And even if customers manage to cancel, the companies keep charging monthly fees from credit cards and bank accounts, according to the complaint.

The FTC seeks fines, costs and an injunction.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit