FTC CASE AGAINST FRANCHISOR OF MEDICAL BILLING SERVICES EXPANDED TO INCLUDE S.C., MORE N.Y. DEFENDANTS

 

The Federal Trade Commission has expanded its lawsuit against the Great Neck, New York-based franchisors of a medical billing service business by naming two more corporations and three more individuals as defendants in the case. The FTC told a federal district court that the new defendants were key players in the PMCS, Inc. scheme, which cost consumers between $5,995 and $7,495 each for a package of billing software that retails for about $69, and allegedly offered "extensive" training and support, and a "lead" list of area doctors or dentists who purportedly would be interested in out-placing their insurance billing.

The FTC brought the case as part of "Operation Missed Fortune," a joint federal/state law enforcement "sweep" targeting promoters of get-rich-quick self-employment schemes that netted more than 75 actions. In announcing the sweep last November, the FTC issued brochures cautioning consumers that business opportunities are growing more sophisticated and that, in order to tell whether a great sounding opportunity is potentially a scam, some detailed homework is required. The FTC consumer materials are associated with the FTC news release regarding Missed Fortune, which can be found at the FTC’s web site at http://www.ftc.gov (no period).

The FTC alleged in the PMCS case that the defendants overstated consumers’ potential earnings, gave out useless leads, failed to provide the promised training and support, and violated the FTC’s Franchise Rule by failing to provide consumers with important pre-purchase informa tion that might have alerted them to the false claims. In a memo to the court in support of the case, the FTC detailed consumers’ stories of shoddy training manuals, primitive software, and lead lists containing the names of physicians who have their own in-house billing services or who contract with a major insurer that provides electronic processing at very low cost. Few if any consumers ever attained the level of earnings promised by the defendants, which ranged as high as $250,000 a year, the FTC charged.

The newly-named defendants in the case are:

• Jay Lerner, of White Plains, New York, whom the FTC called a silent partner of original defendant, Dennis Harmon, sole shareholder of PMCS;
• Aqua Marketing Group, based in Hilton Head, South Carolina, which marketed the PMCS business opportunity, produced PMCS promotional materials, handled consumer inquiries and sent representatives to trade shows;
• Todd Deming, who lives in Hilton Head and is president of Aqua;
• MBC, Inc., of Bayside, New York, which offers a business identical to that of PMCS and shares employees with PMCS; and
• Jason Harmon, of Kings Park, New York, sole corporate officer of MBC and son of original defendant Dennis Harmon.

(The original defendants are PMCS, Dennis Harmon and Philip T. Bukowski, an officer of PMCS.)

Upon filing of its original complaint in November 1996, the FTC sought and won a temporary restraining order halting the challenged business practices of the defendants and freezing their assets. Thereafter, the original defendants agreed to the entry of a preliminary injunction extending the conduct prohibitions pending trial, which has not yet been scheduled. The amended complaint seeks consumer redress and a permanent injunction against all the named defendants.

The Commission vote to amend the complaint to name the new defendants was 5-0. The amended complaint was approved by the U.S. District Court for the Eastern District of New York, in Uniondale, on Feb. 5.

NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

 

Copies of the amended complaint and other documents associated with this case are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 202- 326-2502. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases, related documents and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

 

Media Contact:

Bonnie Jansen or Claudia Bourne Farrell
Office of Public Affairs
202-326-2161 or 202-326-2181

Staff Contact:

Eileen Harrington
Bureau of Consumer Protection
202-326-3127

(FTC File No. 962 3286)
(Civil Action No. CV 9605426 ADS))