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Two Houston Health Discount Card Companies Sued for Fraud

By TX Atty Gen Staff | May 2, 2005

Lawsuits alleges businesses exaggerate savings, misrepresent themselves as insurance plans

AUSTIN - Texas Attorney General Greg Abbott today announced he has obtained a temporary restraining order freezing more than a million dollars in assets of two Houston companies that falsely promise significant savings on medical bills by offering deceptive health “discount card” plans to those in need of health insurance.

The lawsuit, filed under the Texas Deceptive Trade Practices Act, alleges numerous acts of deception by Family Health and Family Care/NAPP, both of Houston. Internet, fax and telemarketing promotions by the companies claim they can lower a participating member’s medical expenses by up to 80 percent, but consumers complain they never see such savings.


In addition, the companies claim thousands of health care providers participate in the plans, but many of those providers refuse to honor the “discount cards” and some indicate they have never heard of the plans. Consumers are also misled into believing they are purchasing health insurance coverage, although neither of the companies is an insurer.

“These companies shamelessly exploit those in need of health care coverage, then give almost nothing in return to paying members,” said Attorney General Abbott. “With these lawsuits, we intend to put an end to this outrageous practice and protect consumers in Texas and elsewhere from harm.”

The lawsuit, announced just days after the Attorney General sued two North Texas companies for similar violations, alleges Family Health and Family Care/NAPP charge from $50 to $100 in monthly fees for an entire family, plus an enrollment fee of between $30 and $90. The companies falsely promise savings in the range of 20 percent to 80 percent off the medical providers’ customary fees.

Only after signing up with the companies are consumers told discounts will vary and are based on payment at the time of service, and that a hospital may ask for a $1,000-per-day advance deposit prior to admission for nonemergency inpatient services.

According to the lawsuit, although the companies offer a money-back guarantee if consumers are dissatisfied with the plan, they fail to honor refunds for those who decide to drop the program within the specified time. The “enrollment fees” are nonrefundable, but the companies do not inform consumers of this until after they have signed up.

The lawsuit seeks refunds for affected consumers, civil penalties and attorneys’ fees. A hearing in the case is scheduled for May 13 in the 189th District Court.

Consumers in Texas who wish to file complaints against the companies can contact the Office of the Attorney General at 1-800-252-8011. Out-of-state consumers can call 512-463-2100 or file complaints online at www.oag.state.tx.us.