Texas Disputes Claims of Health Cards

DALLAS Assets of two Houston companies that sell health “discount cards” have been frozen after Texas Attorney General Greg Abbott accused the firms of using false advertising to deceive customers in need of insurance.

The assets were frozen through a temporary restraining order from a state district court in Austin, Texas, according to the attorney general’s office.

The companies—Family Health and Family Care/NAPP—used telemarketing, faxes and Internet ads to promote savings of up to 80 percent on medical expenses, Abbott said. But consumers told the attorney general’s office that they did not see such savings.

The companies claim thousands of healthcare specialists participate in the plans, but many providers refuse to honor the “discount cards” and some have never heard of the programs, Abbott said. Consumers are also misled into believing they are purchasing health insurance coverage, although neither of the companies is an insurer, he said.

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

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, according to the lawsuit. The companies falsely promise savings in the range of 20 percent to 80 percent off medical providers’ customary fees, the suit claims.

Consumers are told after they sign up that discounts will vary and are based on payment at the time of service, the suit says. Card purchasers are also told that a hospital may ask for a $1,000-per-day advance deposit prior to admission for nonemergency inpatient services.

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

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.