Two Texas-based companies were sued by the state Attorney General's office Wednesday for allegedly defrauding Minnesotans who purchased so-called health discount plans from the firms.
The suits, filed in Hennepin County District Court, allege that the companies "deceptively" sold and marketed the plans as equivalent to comprehensive health insurance policies.
Instead, according to the lawsuit, the plans offered only limited discounts at a small number of health care providers.
More than 4,600 Minnesotans have signed up for the plans offered by Direct Medical Network Solutions, Inc. and Association Healthcare Management, Inc. in recent years, according to the lawsuit. The vast majority have canceled the plans.
According to the suit, Direct Medical charged consumers an enrollment fee of around $135 and a monthly bill of up to $459.50; Family Care charged consumers an enrollment fee of around $100 and a monthly fee of up to $109.95.
Attorney General Lori Swanson held a news conference Wednesday to announce the suits and was accompanied by Minnesotans who had purchased the plans.
In a prepared statement, Swanson said at a time that health insurance premiums are "rising and health care reform stalled, health discount plans are filling the void. The problem is they don't provide the financial protection people need if they get sick."
She noted a study released last week by the Minnesota Department of Health which found that the percentage of Minnesotans without health insurance rose from 7.2 percent to 9.1 percent between 2007 and 2009.