FTC Prevails in Fraudulent Medical Billing Opportunity Case

Judge Orders Defendants to Pay Over $16.5 Million in Redress

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The United States District Court for the Central District of California has ordered Medicor LLC, Andrew Rubin, and Matthew Rubin to pay more than $16.5 million in redress for consumers who were victims of the defendants' medical billing scam. In March 2001, the FTC charged the Van Nuys, California-based defendants with engaging in a variety of fraudulent practices as part of "Project Homework" - a law enforcement action targeting work-at-home scams that typically victimized stay-at-home parents, the physically disabled, non-English speakers, and people who cannot secure employment in traditional venues outside the home.

The FTC alleged that the defendants engaged in a telemarketing scheme from mid-1999 to 2001 whereby they deceptively sold work-at-home medical billing opportunities to more 40,000 people.

According to the FTC, typically, consumers responded to advertisements in local newspapers touting large salaries and the need for at-home workers to perform medical billing work for doctors in their community. When consumers called the defendants' toll-free number, telemarketers made addition deceptive claims to induce consumers to purchase the medical billing business opportunity. Specifically, the FTC's complaint alleged that the defendants misrepresented: 1) how much consumers who purchased the medical billing opportunity would earn; 2) that the defendants would arrange for consumers to receive medical billing work from physicians; and 3) that consumers would readily obtain refunds upon request. The defendants charged consumers $375 for the opportunity.

On July 18, 2002, the Court granted the FTC's motion for summary judgment against the defendants, entered a judgment for the full amount of consumer redress, and issued a permanent injunction against all defendants.

In addition to ordering the defendants to pay restitution to consumers and disgorge ill-gotten gains, the Court permanently barred the defendants from the promotion, advertising, marketing, sale, or offering for sale of any medical billing work-at-home opportunity. The Court's order also prohibits the defendants from engaging in, or assisting others in engaging in, deceptive acts or practices in the business of telemarketing. The order further enjoins the defendants from making, or assisting others in making, any false or misleading oral or written statement or representation in connection with the promotion, advertising, marketing, sale, or offering for sale of any work-at-home opportunity, product, service, or investment.

The permanent receiver appointed in March 2001 will distribute consumer redress in accordance with the claims process started last year. He has not yet determined how much money will be available for each consumer.

For updates on the status of the Medicor case, interested parties may call the hotline number at 202-326-3539.

Copies of the judge's order, as well as other documents pertaining to the Medicor case, are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. 002 3356)
(Civil Action No. CV 01-1896 CBM (Ex))

Contact Information

Media Contact:
Brenda Mack,
Office of Public Affairs
Staff Contact:
Stephen Gurwitz or Patricia Poss
Bureau of Consumer Protection
202-326-3272 or 202-326-2413