07 July 2004

Kansas sues Florida drug card firm

Kansas Attorney General Phill Kline is seeking $2.8 million in penalties from a Florida company that he claims misled 280 Kansans who purchased drug discount cards.

Kline filed a civil suit against HealthCare Advantage of Plantation, Fla. The suit, filed in Shawnee County District Court, alleges that the company violated the Kansas Consumer Protection Act and the Kansas Discount Card Act.

The suit seeks $10,000 in penalties for each alleged violation. The suit claims consumers received no benefits because no local health care providers accepted the cards.

The lawsuit resulted from a joint investigation by the attorney general and Kansas Insurance Commissioner Sandy Praeger's office.

Kline said that by filing the suit "we are serving notice that we will use all resources necessary to aggressively protect Kansas citizens from this type of activity."

Officials for the Florida company were not available for comment.

The suit alleges that HealthCare Advantage made misleading, deceptive or fraudulent representations about the discounts available through the use of its card.

The suit also alleges the company took unauthorized payments from consumers and told them its program was insurance when it was not.

Discount cards are not illegal, but consumers must be told that they are not insurance, officials said. Concerns that consumers may be deceived by fraudulent discount cards have grown as prescription drugs have increased in cost.

The federal government's Medicare program sponsors a national drug discount program. Officials have warned consumers that some unscrupulous companies are marketing discount cards that look like the federally sanctioned cards but are worthless.

"Consumers are the beneficiaries of this joint effort because insurance fraud takes money out of their pockets at the rate of $120 billion a year," Praeger said in a prepared statement.

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