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FTC Cracks Down on Fake Health Plans

Cheryl Clark, for HealthLeaders Media, August 12, 2010

A coalition of federal agencies has filed charges against three companies said to use deceptive marketing tactics to sell medical discount plans.

The cases were filed against Consumer Health Benefits Association (CHBA), Health Care One LLC, and United States Benefits LLC. In addition to these cases, the FTC and law enforcement agencies in 24 states have filed 54 lawsuits and regulatory actions to curb deceptive practices "to stop the scammers," the Federal Trade Commission said in a statement.

"With so many Americans struggling to deal with the costs of healthcare, these medical discount benefit plans sound appealing because they masquerade as health insurance," says David Vladeck, director of the FTC's Bureau of Consumer Protection. "But they are not insurance. They don't offer the benefits of health insurance, and victims don't know they've been ripped off until after they've tried to use the service and paid their bill."

In the first case, CHBA pitched consumers who found the company on the internet saying falsely that they worked with major medical insurers, that the plan was widely accepted by doctors, pharmacies and other health facilities and that it would save consumers up to 85% on medical expenses, according to the FTC statement.

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