Phony Medical Billing Telemarketers Agree to Post Performance Bonds as Part of FTC Settlement

For Release

Four individuals and four companies, operating as a common enterprise under various business entities and fictitious names, have agreed to post $150,000 bonds before marketing any medical billing employment opportunities in the future, as part of a settlement with the Federal Trade Commission. The FTC had filed a complaint in federal district court alleging that the defendants, collectively referred to as MediWorks, telemarketed a deceptive medical billing employment opportunity to consumers. According to the complaint, the defendants promised consumers that they would earn a specific level of earnings, such as $4,800 to $8,000 per month. They also promised to provide a list of doctors who purportedly were ready to hire the defendants' customers to process their medical claims. In addition to the bond, the proposed settlements would require the MediWorks defendants to disclose the success rate of any employment opportunity or business venture they sell in the future.

The case against the defendants was filed in February 2000 as part of "Project Biz-illion$," a multi-prong attack by the FTC, the Justice Department, and law enforcement officials from 29 states on traditional get-rich-quick business opportunity and employment scams. The FTC's complaint named Mediworks, Inc.; MediDistribution, Inc.; United Legal Associates; Mediworks; Robert D. Seals; Tate Stringer; Cory Dixon, doing business as MediPros; and Corinna Krueger. The defendants operated telemarketing rooms located in Sherman Oaks, CA and Studio City, CA. The complaint alleged that the defendants, advertising in newspaper ads and on the Internet, misrepresented the earnings consumers would realize, the ease of signing up doctors as clients, and the availability of their money-back guarantee. Consumers paid $325 to $369 for the company's medical billing software.

In four separate proposed settlements, which require the court's approval, the defendants would be prohibited from making any false or misleading statements to consumers concerning the sale of any medical billing, employment, work-at-home, business or investment opportunities and would require the defendants to disclose the success rate of any employment or business opportunity they offer in the future.

The settlements also require each of the defendants to post a $150,000 performance bond before engaging in any future medical billing, employment, work-at-home, business or investment opportunities. The settlement with Tate Stringer would require him to pay $20,000 in redress. The settlements with the other defendants do not call for payment of redress based on their financial information submitted to the FTC. However, the settlements contain an avalanche clause for $8 million in the event the defendants materially misrepresented their financial positions.

Finally, the proposed settlements contain various recordkeeping provisions to assist the FTC in monitoring the defendants' compliance.

The Commission vote to authorize staff to file the four proposed settlements was 5-0. The stipulated final orders were filed in the U.S. District Court, Central District of California, in Los Angeles, on September 6, 2000.

NOTE: These stipulated final order are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated orders have the force of law when signed by the judge.

Copies of the four separate stipulated final orders are available from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357);TDD for the hearing impaired 1-866-653-4261. Copies of the news release, as well as documents associated with "Project Biz-illion$," are also available from the FTC's web site at http://www.ftc.gov To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

 

MEDIA CONTACT:

Brenda Mack

Office of Public Affairs

202-326-2182

STAFF CONTACT:

Kerry O'Brien or Jerry Steiner

Western Region - San Francisco

415-356-5266

(File Matter No. X000021)
(Civil Action No. 00-01079 CAS (MANx))