Texas Companies Selling "Discount Medical Plans" Can't Understand Why They Keep Getting Sued

Until Obamacare is passed and we have Death Panels deciding our fate, many folks are left on their own to find affordable insurance, or an insurance-like product. The latter comes in the form of "discount medical plans," which -- surely through no fault of the companies themselves -- often wind up being purchased by people who think they're buying actual insurance. We wrote about these, and their bastard cousins "limited insurance plans," last July.

Minnesota Attorney General Lori Swanson last week sued two Texas companies offering these plans. In a press release, she said Houston-based Family Care and Southlake-based Direct Medical Network "deceptively marketed and sold their limited discount plans to Minnesota consumers, in part by misleading them into believing that the plans are health insurance or insurance-like products." Direct Medical, according to the press release, charged a $135 enrollment fee and a monthly fee of $459.50. Family Care charged $100 for enrollment and a monthly charge of at least $109.95. Both companies claim they are part of a provider network that offers significant discounts on routine medical care.

Rhonda Payne, Family Care's general counsel, tells Hair Balls that the company denies all the allegations and plans to "vigorously defend" itself. She didn't want to comment any further. She just said she had "no idea" where the allegations came from -- as if this was the first time in the history of the discount medical industry that an official has called "bullshit!"

According to Swanson's office, "more than 90 percent of the 3,411 Minnesota consumers who signed with Family Care since 2004 have since cancelled, with 38 percent of Family Care's enrollees cancelling in the first month and 71 percent cancelling in the first six months." Hair Balls wonders what Family Care thinks the explanation is for all these cancellations. Mass coincidence? Or maybe those customers just felt too guilty for getting such an awesomely amazing product at such a bargain-basement rate?

CNN reported on some complaints against Direct Medical last year as well. Man, these companies just can't catch a break. We can't imagine why.   

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Contributor Craig Malisow covers crooks, quacks, animal abusers, elected officials, and other assorted people for the Houston Press.
Contact: Craig Malisow