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Operators charged with scamming people who did not have health insurance – the uninsured, the unemployed, and the uninsurable – have been targeted by a federal-state coalition of law enforcement agencies for fraudulently marketing “medical discount plans” as health insurance. The Federal Trade Commission and law enforcers in 24 states have filed a total of 54 lawsuits and regulatory actions to stop the deceptive practices.

“With so many Americans struggling to deal with the costs of health care, these medical discount benefit plans sound appealing because they masquerade as health insurance,” said 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.”

The FTC filed three cases charging companies with deceptively marketing medical discount plans.

In one case, at the request of the FTC, a U.S. district court has ordered a temporary halt to the deceptive actions of Consumer Health Benefits Association, which targeted consumers who sought information on the Internet about major medical health insurance plans. CHBA telemarketers allegedly pitched consumers with a long list of false claims, including:

  • that they worked closely with major medical insurers;
  • that the discount plan was widely accepted by doctors, pharmacies, and other health care facilities;
  • that the plan would save consumers up to 85 percent on medical expenses;
  • that CHBA’s plan was accepted wherever Blue Cross Blue Shield was accepted; and
  • that consumers could use their medical discount card with any health care provider that accepts insurance.

Consumers paid between $29 and $280 in enrollment fees before they received written information about the plan. When they tried to use the plan with physicians CHBA claimed were “participating providers,” the providers said they did not accept the plan. One consumer who tried to use the plan to buy prescription medicine discovered the “discounted” price was higher than the price she had paid without the medical discount plan.

The FTC also charged that CHBA misrepresented its refund policies and that typically, consumers received refunds only after they threatened to complain to consumer protection agencies. The FTC seeks a permanent halt to the allegedly illegal activities and has asked the court to order the defendants to give up their ill-gotten gains.

In another case, at the FTC’s request a U.S. district court ordered Health Care One LLC to stop marketing a medical discount plan that it had disguised as health insurance. The FTC alleged that Health Care One’s promotional material implied that it was affiliated with the federal government and claimed that consumers who enrolled in the plan would receive substantial savings on health care costs. In fact, the agency said consumers weren’t able to achieve such savings. Health Care One also claimed that its plan was widely accepted by health care providers in consumers’ local communities. But when consumers tried to get discounts from their providers, they discovered that the providers did not accept the plan.

Health Care One induced consumers to pay hundreds of dollars to enroll by promising “100% satisfaction” and a “money back guarantee.” The FTC charged that the company made it difficult or impossible for consumers to cancel, and when they got their money back, it was subject to a hefty “processing fee.” The FTC has asked the court to permanently halt the deceptive operation and order the defendants to give up their ill-gotten gains.

In a third case, a U.S. district court temporarily halted the deceptive actions of United States Benefits, LLC. The FTC and Tennessee Attorney General Robert E. Cooper, Jr. charged U.S. Benefits with selling medical benefits plans disguised as major medical health insurance. The telemarketers claimed that the plan was available to all – including consumers with pre-existing conditions – and provided medical coverage with no deductible and no waiting period. But when consumers received written information from the company, they discovered that instead of health insurance, they had purchased membership in a “benefits association” consisting of healthcare-related discounts with little or no value.

The agencies assert that U.S. Benefits charged consumers enrollment fees ranging from $100 to $500 and monthly fees ranging from $300 to $1,300. When consumers tried to complain, cancel, or seek a refund, they were ignored. The FTC also alleged that U.S. Benefits made illegal prerecorded “robocalls” to consumers. The agencies seek a permanent ban on the deceptive practices and a return of ill-gotten gains.

In addition to the FTC cases, Attorneys General and Insurance Commissioners in 24 states have filed a total of 54 enforcement actions to stop the scammers. They include lawsuits or regulatory actions addressing sham insurance, as well as illegal robocalls and fax blasting, and licensing violations.

The Commission votes authorizing the staff to file the complaints were 5-0.

The FTC case against CHBA was filed in U.S. District Court for the Eastern District of New York. The lawsuit also names National Association for Americans; National Benefits Consultants, LLC; National Benefits Solutions LLC; Ron Werner; Rita Werner; and Louis Leo. The FTC received significant support from the office of the Attorney General of Florida and the Coconut Creek Police Department in bringing this case.

The FTC case against Healthcare One was filed in U.S. District Court for the Central District of California. The suit also names Americans4Healthcare, Inc.; Michael Jay Ellman; Elite Business Solutions, Inc.; and Robert Daniel Freeman. This case was brought with substantial assistance from the California Department of Managed Care, the Arizona Office of Attorney General, and the Arizona Better Business Bureau.

The FTC suit against U.S. Benefits was filed in U.S. District Court for the Middle District of Tennessee. It also names Timothy Thomas and Kennan Dozier.

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 defendants have actually violated the law. The cases will be decided by the courts.

More information about medical discount scams is at

The Federal Trade Commission works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click


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Claudia Bourne Farrell
Office of Public Affairs