Medical Billing "Businesses" Flagged As "Hot" New Scheme
Advertisers who promised fabulous earnings to consumers who invested in home-based medical billing businesses are the target of a federal/state crackdown on this new trend in business opportunity scams. The Federal Trade Commission has asked federal district courts to halt the bogus practices of three medical billing business opportunity operators and another has been targeted by the state of Florida.
"This is a new twist on the old problem of business opportunity fraud," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "Unscrupulous operators convince consumers with ads that say they can cash in on the well-known hassle of processing billing and insurance claims by providing billing services for doctors. The fact is that most doctors who outsource their billing don't do so with small start-up companies. And after investing thousands of dollars in 'medical billing center' software and services, many consumers don't even end up with one customer and most don't even recover their original investment," she said.
Typically, classified newspaper ads tout the medical billing business opportunities, promising that consumers can earn substantial income, either full or part-time, and that no selling or experience is required. The ads direct consumers to call a toll-free number for more information. The call exposes the consumer to promotional packages and sales pitches that promise high earnings for an investment in software, and in some cases training, that will allow the consumer to provide claims processing and billing services to doctors and dentists. One company pledged that consumers could expect to earn $10,000 a month -- or $3,000 a month, part-time, in the business. Sales pitches emphasize the cost and trouble associated with paper processing of medical billing and insurance claims, declare that electronic processing is the remedy and tell consumers that the market for electronic processing is "wide open," suggesting that it will be easy for consumers to get medical clients. Consumers invested amounts ranging from $2,500 to $8,500 to purchase the software and services. The FTC alleged that few, if any, consumers could expect to earn a substantial income from their investment.
The FTC charged three companies and their officers with making false and misleading representations in violation of federal law and has asked federal district courts to halt the deceptive sales practices, freeze their assets to preserve funds and order redress for consumers who invested in the schemes. Two of the companies also were charged with violations of the FTC Franchise Rule, which requires a franchisor to provide prospective franchisees with a complete and accurate basic disclosure statement containing twenty categories of information, including information about the history of the franchisor, the terms and conditions under which the franchise operates, and information about other franchisees. Disclosure of the information enables a prospective franchisee to assess potential risks involved with the purchase of the franchise. The FTC charged:
- Electronic Filing Associates, a Nevada corporation doing business in Scottsdale Arizona, Electronic Filing Academy, and their president, Edward E. Epstein, with violation of the FTC Act, which bars deceptive and misleading business practices;
- National Electronic Healthcare Corporation and Electronic Healthcare Products of Reno, Nevada, and its officers; Steve Shelton; Lynne Shelton; Gary White and Leslie White with violations of the FTC Act and the Franchise Rule; and
- National Consulting Group, Inc. and Brian G. Fisher of Arlington Heights, Illinois, with FTC Act and Franchise Rule violations.
In related cases, Electronic Healthcare Products has agreed to settle charges by the Florida Department of Agriculture and Consumer Services that it provided incomplete disclosure documents to consumers, in violation of Florida state law. The Department also has filed charges against Professional Claims of South Carolina, and has initiated an investigation of Mars Medical, of Phoenix, Arizona.
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 complaints and a consumer publication, "Medical Billing Business Opportunity Schemes: A Bitter Pill," are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-3128; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File Nos. National Consulting Group 972 3092; National Electronic Healthcare and Electronic Healthcare Products, Inc. 972 3096; Electronic Filing Associates and Electronic Filing Academy 972 3098)
Office of Public Affairs
National Electronic Healthcare Corp.,
Electronic Healthcare Products, Inc.
Janice L. Charter
FTC Denver Regional Office
1961 Stout Street, Suite 1525
Denver, Colorado 80294
National Consulting Group and Brian Fischer
C. Steven Baker
FTC Chicago Regional Office
55 East Monroe Street, Suite 1437
Chicago, Illinois 60603
Electronic Healthcare Products Mars Medical
Florida Department of Agriculture and Consumer Services
Steve Lux, Investigator
Florida Department of Agriculture and Consumer Services Robert Lastinger, Investigator 850 922-2759