Texas AG Bans Deceptive Advertising by Health ‘Discount Card’ Companies

August 2, 2005

Texas Attorney General Greg Abbott announced he has stopped two Houston companies from making false promises about the benefits consumers can obtain through the health “discount cards” they are peddling.

Family Health and Family Care/NAPP agreed to disclose to consumers that their health plans are not insurance and to stop misrepresenting which health care providers accept their discount cards. The companies also agreed to be truthful about how much consumers can save on their medical bills by using the cards. In addition, Medicaid or Medicare recipients must be informed that they are only eligible for certain benefits associated with the plan.

“Telling the truth is not optional for Texas businesses when they advertise their goods and services,” said Attorney General Abbott. “These companies were deceptive about their discount cards and gave the false impression that they were selling health insurance. This settlement will ensure that consumers have the full story.”

The agreed judgment announced today follows a suit Abbott filed against Family Health and Family Care/NAPP in April, alleging the companies charged from $50 to $100 in monthly fees for an entire family, plus an enrollment fee of up to $90. The companies advertised that the card could lower medical expenses by up to 80 percent, but consumers complained they never saw such savings.

According to the lawsuit, many consumers who followed the process for scheduling doctor’s appointments as outlined in companies’ membership guides discovered at their appointments the doctors did not accept discount cards. Those consumers who did receive a discount found it was generally much less than what had been represented to them.

The judgment mandates that customers be informed in advance that a deposit may be required prior to admission for non-emergency inpatient services and that up-front “enrollment fees” for their health card plans are nonrefundable – information they were not telling consumers before Attorney General Abbott filed the lawsuit.

In addition, the agreed judgment orders that $175,000 be set aside to provide restitution to those consumers who file a written complaint within six months.

Consumers who wish to file complaints against the companies have six months to do so, and can contact the Office of the Attorney General at (800) 252-8011. Out-of-state consumers can call (512) 463-2100 or file complaints online at www.oag.state.tx.us.

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