MORRISON ORDERS ILLEGAL DISCOUNT CARD SCHEME TO SHUT DOWN
California-Based Prudent Choice Issued Cease and Desist Order by Montana State Auditor
Helena, Mont., March 2, 2006 - Montana State Auditor John Morrison took action to end a comprehensive illegal discount card scheme aimed at Montanans. Morrison issued a Cease and Desist Order prohibiting Stephen T. Cook and his company Prudent Choice of Irvine, California, from promoting and offering medical care discount card programs for sale in Montana.
"This is a serious problem," Morrison said. "These operators are taking people's money, but when the victim suffers a loss, they find that they have no insurance and no discount. Our main goal is protecting consumers and we will aggressively pursue bad actors in the industry to prevent them from taking advantage of Montanans."
Morrison's order is based on his findings that Stephen T. Cook and his company Prudent Choice, which are not organized or licensed as insurance companies, are promoting and selling unauthorized and unapproved medical care discount card plans. Morrison strongly urges any Montanan who has purchased medical care discount coverage from Stephen T. Cook and his company Prudent Choice to contact the Montana State Auditor's Office and to meet with a licensed insurance agent as soon as possible to secure legitimate coverage.
Cook and his group are accused of advertising and selling illegal medical discount plans for a one-time fee of $99 and $39.99 per month for individual coverage or $55.99 per month for family coverage. Although Morrison put Cook on notice last fall to stop operating as a supplier of medical care discount cards until they had properly registered with the State Auditor's Office, Cook continued offering the illegal product. Advertisements offering Prudent Choice medical care discount plans ran in newspapers across the state and were also broadcast to Montana fax machines.
"With insurance premiums on the rise and consumers searching for ways to obtain medical care coverage at a manageable cost, I caution folks to be wary of plans that appear too good to be true," Morrison said.
In the 2005 legislative session Morrison requested a proposal to protect Montanans from fake discount card scams. The measure, which passed overwhelmingly, gives the State Auditor greater regulatory authority over the sale of medical discount cards. Under the new law, promoters of medical care discount cards are required to register their product with the State Auditors Office. To enforce the new law, Morrison can impose stiff penalties. "I have zero tolerance for scam artists who prey on Montanans," said Morrison. "This new law helps us weed out the swindlers from the legitimate players so Montanans are protected."
The Department may hold a hearing and if the Department prevails, administrative fines of up to $25,000 per violation per day may be sought. Additionally, Morrison will seek restitution for victims of the alleged illegal scheme.
"Protecting consumers and ridding the state of this type of costly, illegal activity will continue to be a top priority of the State Auditor's Office," stated Morrison. "Before purchasing any discount card or insurance policy, Montanans are urged to check with the State Auditor's Office to confirm that the agent and product are properly registered in the state of Montana. Folks can either call us or check out our website at www.sao.mt.gov."
If you purchased, or have information concerning Prudent Choice, please contact the Investigations Unit at the State Auditor's Office at 1-800-332-6148.