Tag Archives: Medical

FTC And Florida Attorney General Settlement Cripples Medical Alert Device Company

Articles, Food/Drugs/Healthcare/Life Sciences, Latest News, Technology Media & Telecoms

On November 13, 2014, the United States District Court for the Middle District of Florida approved and entered a permanent injunction and settlement between the Federal Trade Commission (“FTC”) and the Florida Attorney General (the “AG”), on the one hand, and Woldwide Info Services, Inc. (“Worldwide”), on the other.  The settlement effectively ends the medical alert device business of Worldwide and its principals.  The settlement is the result of a lawsuit filed by the FTC and the AG in January alleging that Worldwide and its principals fraudulently marketed their devices to seniors in the State of Florida.  The settlement imposes sweeping restrictions on Worldwide and its principals, forbidding them from, among other things, making any robocalls or performing any telemarketing campaigns in the future.

FTC Allegations

According to the complaint, Worldwide and its related entities used pre-recorded messages to robocall senior citizens.  The calls informed consumers that medical alert devices had been purchased for consumers by friends or relatives, and that the shipping costs were prepaid.  The callers were asked to press a number on their telephones to speak with a live agent to schedule delivery.  Thereafter, consumers would be directed to a live operator who, toward the end of the call, would inform consumers that the medical alert service came with a monthly monitoring fee.  To cover the fee, consumers were asked to provide a credit card or bank account information.  Although assured that their accounts would not be charged until the device was received, for many consumers Worldwide would process the monitoring fee on the same day of the call.  The FTC alleged that Worldwide’s business practices violated the FTC Act, the Telemarketing Sales Rule and the Florida Deceptive and Unfair Trade Practices Act, as well as other common law rules.

The FTC Settlement

Pursuant to the terms of the settlement, Worldwide, its related entities, and its principals, are all banned from placing any robocalls or participating in any telemarketing campaign in the future.  Additionally, Worldwide, its related entities and its principals are banned from ever selling, advertising, marketing or promoting medical alert products or services.  A judgment has been entered against the settling defendants for $22,989,609.00, however all but $24,000 of the judgment has been suspended.  The principals have also agreed to sell personal property, such as cars and a boat, with the proceeds to be paid to the FTC.

Protect Yourself

As we have previously noted, the FTC has been increasingly vigilant in pursuing marketers that use deceptive advertising and robocalling in connection with their respective businesses.  The settlement reached with Worldwide demonstrates that business owners risk not only money damages, but also the loss of personal property and possibly the very existence of the business if they run afoul of telemarketing and deceptive advertising laws.

If you are interested in learning more about this topic, or if you have been served with legal process relating to your marketing practices, please e-mail us at [email protected] or call us at (212) 246-0900.

Can I Have A “Skinny” Plan? ACA And The Minimum Value Plan

Articles, Employment and HR, Latest News

No question that employers have been struggling with how to satisfy the ACA requirements of offering coverage while still avoiding what is perceived to be a heavy burned financially of offering full coverage.  Some employers in this situation have considered offering a new type of plan to full-time employees, called a “minimum value” plan.  From that concept derived a type of plan called a “skinny” plan that provides coverage for some medical services, but excludes coverage for others like inpatient hospital services, or possibly physician services.

In IRS Notice 2014-69, there is some clarification that these skinny plans (plans that offer limited or no coverage for in-patient hospitalization services and/or physician services) will not provide “minimum value” under the health reform law.  But then they give a one year extension to offer that coverage if it is already in place.  In order to take advantage of this extension, there are two conditions:

  1. The employer must have a binding written commitment to adopt or began enrolling employees into a skinny plan prior to November 4, 2014.
  2. The employer must have relied on the results of the MV Calculator to determine whether the plan offered minimum value coverage.

Of course more regulation is anticipated, and it is anticipated that  when final regulations are issued, they will not apply to these plans immediately if the above criteria are satisfied.  These plans will be considered minimum value for the purposes of the employer mandate until the end of the plan year as long as the plan year commences prior to March 1, 2015.

If an employer decides to offer a minimum value plan that does not include inpatient hospital or physician services, the employer has to be careful about its disclosures to employees.  First, it must not state or imply that the offer of coverage under the skinny plan prevents an employee from obtaining a premium tax credit in the exchange.  Second, the employer must correct any prior disclosure which implied that the offer of the skinny plan would prevent an employee from being eligible for the subsidies.  This is because employees are not required to consider skinny plans when looking to obtain subsidies for exchange participation.

Based on this notice, it appears fairly clear that if an employer does not already have a skinny plan in place, they can’t create one.  If they have created one, it is a temporary fix, not a permanent solution.  Finally, since they took the time to issue regulations specific to these plans, it should be anticipated that they will be pretty heavily scrutinized if an employer determines to offer it.  But the rules are out there.  So if you decide to maintain a skinny plan, make sure you know what the true limitations are and stay aware of the possibility of future changes to the limits on such an offering.