MORRISON SHUTS DOWN ALLEGED FAKE DISCOUNT CARD OPERATION IN MONTANA
New law provides tools required to charge violators; Fines of up to $25,000 per violation could be imposed
State Auditor John Morrison issued a cease and desist and charged AmeriPlan USA, its founding officers, Dennis and Daniel Bloom, and Shirl Shelley, a Montana resident with numerous violations of both the Montana Insurance Code and the Montana Securities Act. The Notice of Proposed Agency Disciplinary Action is the first of its kind in Montana and possibly the first in the nation, relying on a new law governing medical care discount cards. Morrison promised last year to ensure that medical care discount card providers were legitimate before they were allowed to sell these products in Montana and he is now making good on that promise. Morrison is initiating a statewide investigation into other similar providers.
“I have zero tolerance for illegal schemes that prey on Montanans,” said Morrison. “We designed this new law to help us weed out the swindlers from the legitimate players so Montanans are protected.”
The company and its agents and officers are accused of failing to contract with the medical care providers (including doctors, nurse practitioners, physician’s assistants and hospitals) they advertise as participants in AmeriPlan’s medical care discount program. The Auditor alleges that over 700 Montana AmeriPlan members living all across the state are unable to use the discount cards because there are few, if any, providers in Montana. Additionally, AmeriPlan is charged with conducting an illegal pyramid promotional scheme because it sold “broker packages” for the purpose of recruiting memberships. Because the memberships were for discounts that did not exist, Morrison alleges there is no actual product being sold. AmeriPlan’s largest source of income in Montana is from the sales of these “broker packages,” which are nothing but a pyramid scheme, according to the Auditor’s charging document.
AmeriPlan’s website and other advertising, including oral assertions from some of its agents, claim to have a substantial number of medical care providers, dentists, and chiropractors contracted to provide a significant discount through the purchase of its card. When the Auditor’s office investigated these claims they were unable to find a single medical care provider or chiropractor who honored the discount cards, and the only dentist who had contracted with AmeriPlan is located in Forsyth. The new law requires the discount card companies to have contracts for services with providers located within a 60 mile radius of the card holder.
“This law gives us the tools to crack down on phony discount card plans,” said Morrison. “And my office will also be able to help Montanans make smart choices about medical discount cards – but people need to pick up the phone and call us to check out an offer before moving forward.”
The company was told to stop its activity in November of 2005 but AmeriPlan continued to market its discount cards until the matter was referred to Morrison’s legal staff in late April. Additional charges include securities fraud, using deceptive or fraudulent practices in the marketing of their discount cards, selling unregistered securities by unregistered salespersons and failure to stop marketing the cards when they were not properly registered.