FTC Sues to Stop Deceptive Health Care Scheme

FTC alleges scheme has generated millions of dollars by deceiving consumers seeking comprehensive health plans or those who already have coverage At the Federal Trade Commission’s request, a U.S. district court in Florida has temporarily halted a nationwide operation that allegedly impersonates the government and large insurance carriers to deceive consumers seeking health insurance into buying supposedly comprehensive PPO plans that do not offer the coverage they seek. According to the Commission’s complaint, the scheme—which operates under several names including Innovative Partners and American Collective—also targets already-insured consumers by claiming they need to pay to maintain or renew coverage. The FTC alleges that consumers paid the defendants millions in “premiums” for products they did not want or need, and which expose them to potentially significant and unexpected medical costs. This action follows FTC Chairman Andrew N. Ferguson’s creation of a Healthcare Task Force in March, as well as the FTC’s prior enforcement efforts against related healthcare schemes. “Targeting unlawful conduct that drives up Americans’ costs, especially healthcare costs, is one of my top priorities,” said Chairman Andrew N. Ferguson. “The Healthcare Task Force launched last month underscores my commitment to bringing the full strength of the agency to bear on the challenges facing American patients, providers, and communities. The Commission’s work here is essential: When companies engage in practices that inflate prices, limit patient access to medical care, or undermine the integrity of the healthcare system, consumers suffer. Under my leadership, the Commission will continue to pursue fraudsters who deceive or disadvantage people seeking medical treatment, and we will do so with every enforcement tool at my disposal.” The FTC alleges that since at least early 2023, the six defendants named in the complaint have jointly operated a fraudulent telemarketing scheme that takes advantage of consumers seeking comprehensive health insurance coverage. In making their pitch, the defendants often falsely tell consumers they are buying “state issued” PPO insurance policies that have no deductible and provide full coverage with low or no co-payments, according to the complaint. The complaint further alleges that when dealing with consumers who already have health insurance, the company’s telemarketers deceptively tell them they are calling from real insurance carriers or the government, and that without immediate payment their policies will be canceled. The products the defendants sell are not PPO plans or comprehensive health insurance policies, and they cannot be sold on any state or federal government health insurance marketplace, according to the complaint. Instead, the defendants’ plans typically include an assortment of medical discounts, ancillary products, and capped payouts for certain medical events such as emergency room visits—while some plans exclude hospital care entirely. While at least one defendant has claimed they do not market or sell insurance, the defendants lead consumers to believe the products they offer—which can cost hundreds of dollars a month and thousands of dollars a year—will provide comprehensive coverage, according to the complaint. The complaint further alleges that when consumers who enroll in the defendants’ supposed PPO policies attempt to use them, they discover that the products do not provide the comprehensive coverage they were promised. As a result, some are forced to postpone care until they can get insurance coverage, while others are faced with substantial medical debt. When frustrated consumers try to cancel their purchase of the products, the defendants often ignore them and the monthly payments continue. In addition, the complaint alleges that the defendants: unfairly charge consumers without their express, informed consent and fail to disclose material terms and conditions of their negative option feature, specifically the steps consumers must take to cancel the monthly recurring payments; make misrepresentations while telemarketing and fail to disclose material information in telemarketing before the consumer consents to pay for the goods or services provided; engage in unlawful telemarketing acts and practices by charging consumers for products or services for which they have not provided their express, informed consent; deceptively pose as businesses and government officials or misrepresent their affiliation with, or endorsement or sponsorship by, a government entity; and use false, fictitious, or fraudulent statements or representations to obtain customer information of a financial institution, such as credit or debit card numbers. The complaint alleges that the defendants violated the FTC Act, the Telemarketing Sales Rule, the Impersonation Rule, and the Gramm-Leach-Bliley Act and seeks refunds for affected consumers. The court entered a temporary restraining order against the defendants based on their alleged law violations.