Discount 'insurance' companies sued for exploiting customers

Two companies that allegedly mislead roughly 4,600 customers into believing that they were receiving discount medical coverage are being sued by the state of Minnesota for exploitation. 

Both for-profit companies--Direct Medical Network Solutions of Southlake, Texas and Association Healthcare Management, Inc., of Houston--duped Minnesota consumers into thinking they were paying for health insurance by using terms such as "coverage," "deductible," co-pay" and "premium," according to twin lawsuits brought by Minn. Attorney General Lori Swanson.

The companies also allegedly told customers that they would cover 80 percent of medical expenses, and that they were a part of a "vast network of doctors and hospitals." All the customers actually received were limited-time discounts off of the costs of only a few providers. 

"With insurance premiums rising and healthcare reform stalled, health discount plans are filling the void," Swanson said. "The problem is they don't provide the financial protection people need if they get sick."

Direct Medical charged an enrollment fee of $135 and a monthly fee thereafter--which it referred to as a premium--of up to $459.50, while Family Care charged customers $100 to sign up and at least $109.95 per month. Both companies were given "F" ratings by the Better Business Bureau. One customer, Keith Romann, signed up for Association Healthcare Management after his wife lost her job and health benefits, according to The Pioneer Press.

"I felt like a fool," Romann said. "At 60 years old, you should not be getting conned. These guys were smooth." 

To learn more:
- here's the press release
- read this Pioneer Press article