Last summer, the FTC and Tennessee Attorney General Robert E. Cooper Jr. filed suit against United States Benefits, LLC for alleged insurance fraud. While the allegations originally focused on the company's owner and chief executive, Timothy Thomas, the FTC has now expanded the case and named Thomas' wife, Kennan Dozier, as a primary defendent who helped peddle deceptive medical discount plans as insurance.
Medical discount plans are a tool to save on certain types of care but are not themselves insurance. Insurance pays for care usually minus a deductible or copay. A discount is simply a certain amount or percentage off the cost of treatment. Discount plans are not inherently fraudulent, but they are not insurance. Discount plans do not guarantee coverage the way insurance does, they do not pay to large limits the way insurance does, and they are not necessarily as widely accepted as insurance plans are.
The FTC and Tennessee Attorney General claim that this fraud targets people who cannot afford health insurance. The scam appears to be a bait and switch, offering the poor affordable insurance and selling them something far less valuable instead. It is the kind of fraud that victimizes those who are trying to improve their lives and makes them poorer, essentially punishing them for trying to do the right thing. In this case, United States Benefits allegedly used hard sell tactics to get people to sign up for the plans over the phones. See the details below.