FTC Files Suit Against Bogus California Medical Billing Opportunity Telemarketer

A federal district court has ordered a temporary halt to a California-based telemarketing scheme that purportedly sold work-at-home medical billing opportunities. Medicor LLC, and its manager, Andrew Rubin, promised consumers that they could earn up to $1,500 per week using their home computers to process medical bills for physicians in the consumers' community. The Federal Trade Commission alleges that the defendants misrepresented their medical billing work-at-home opportunities by touting false earnings claims, misrepresenting the assistance that they would arrange for consumers to get medical billing work and that refunds were readily available. At the Commission's request, the court froze the defendants' assets, and appointed a temporary receiver pending a hearing on the Commission's motion for a preliminary injunction.

The FTC filed its complaint in the U.S. District Court in the Central District of California against Medicor and Rubin as part of "Project Homework" - a law enforcement action targeting work-at-home scams that typically victimize stay-at-home parents, the physically disabled, non-English speakers, and people who cannot secure employment in traditional venues outside the home. Companies that promote these schemes promise consumers that they can reasonably expect to earn substantial income by working from home performing various tasks, such as assembling crafts, stuffing envelopes, or performing medical billing services for physicians. On March 8, the FTC amended its complaint to add Matthew Rubin, Maven Holdings, Inc., and S&M Trust as defendants.

The defendants promoted and sold medical billing work-at-home opportunities to consumers throughout the United States via newspaper ads and an Internet web site, www.medicorllc.com. According to the FTC, Medicor, based in Van Nuys, California, advertised in the "help wanted" section of various local newspapers touting the high earnings consumers could make using Medicor's medical billing software. A typical ad stated:

"EARN $$$ HELPING DOCTORS process claims from home.
$20 - $40/ hour potential. Computer & modem required. We train.
(888) 736-9051 Ext. 895."

When consumers responded to the ad, the telemarketers falsely represented that stay-at-home parents or others who wish to work from their homes could make from $20 to $40 per hour processing claims for doctors, or as much as $40,000 per year.

To further induce consumers to purchase Medicor's billing software, the defendants' telemarketers would falsely represent that they would arrange for doctors whose claims the consumers would be processing. In an attempt to convince consumers that Medicor was a legitimate company, the defendants would sometimes refer potential customers to their web site, which offered testimonials from purportedly successful Medicor billers. The defendants charged from $325 to $495 for their business opportunity. When consumers complained that Medicor's business opportunity had been misrepresented, the defendants would often refuse to refund the purchase price. At this point, most consumers were told for the first time that company policy was not to give a refund if the software package was opened.

The FTC complaint alleges that the defendants misrepresented how much consumers who purchased the medical billing opportunity would earn; that they would arrange for consumers to receive medical billing work from physicians; and that consumers would readily obtain refunds upon request. According to the FTC, consumers, in fact, did not earn the promised income, Medicor did not arrange for consumers to receive medical billing services from physicians, and consumers could not readily obtain refunds.

The Commission vote to authorize staff to file the complaint in district court was 4-0-1, with Commissioner Sheila Anthony not participating. The complaint was filed under seal in the U.S. District Court, Central District of California, Western Division, in Los Angeles, on February 28. The judge signed the TRO with Asset Freeze on March 1 and lifted the seal on March 7, 2001. The FTC received tremendous assistance in this matter from the United States Postal Inspection Service and the Colton, California Better Business Bureau.

NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law. The case will be decided by the court.

Copies of the complaint are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, NW, Washington, DC 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the online complaint form. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.

(FTC File No. 002 3356)
(Civil Action No. CV01-1896 (CBM))