| Jennifer Larabee CA Bar No. 163989 Kenneth H. Abbe, CA Bar No. 172416 Federal Trade Commission 10877 Wilshire Blvd., Ste. 700 Los Angeles, CA 90024 (310) 824-4343 (ph.) (310) 824-4380 (fax) ATTORNEYS FOR PLAINTIFF UNITED STATES DISTRICT COURT
Plaintiff, the Federal Trade Commission ("FTC" or "the Commission"), for its complaint alleges: 1. The FTC brings this action under Sections 5(a) and 13(b)of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a), 53(b), to obtain preliminary and permanent injunctive relief, rescission or reformation of contracts, restitution, disgorgement, appointment of a receiver, and other equitable relief for Defendants' violations of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). JURISDICTION AND VENUE 2. Subject matter jurisdiction is conferred upon this Court by 15 U.S.C. §§ 45(a), 53(b), and 28 U.S.C. §§ 1331, 1337(a) and 1345. 3. Venue in the United States District Court for the Central District of California is proper under 15 U.S.C. § 53(b) and 28 U.S.C. §§ 1391(b) and (c). THE PARTIES 4. Plaintiff Federal Trade Commission ("Commission" or "FTC"), is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41-58, as amended. The Commission enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission may initiate federal district court proceedings by its own attorneys to enjoin violations of the FTC Act and to secure such equitable relief as is appropriate in each case, including restitution for injured consumers. 15 U.S.C. § 53(b). 5. Defendant Physicians Healthcare Development, Inc., also known as Physician Healthcare Development Inc., Physicians Healthcare Development, Physician and Healthcare Development, PHD and PHD Billing (collectively referred to as "PHD"), a California corporation with its principal place of business at 311 West Burbank Blvd., Suite 201, Burbank, California 91505 promotes and sells work-at-home medical billing employment opportunities. PHD transacts or has transacted business in the Central District of California. 6. Defendant NetBiz, Inc. d/b/a Physicians Healthcare Development ("NetBiz") a California corporation with a registered place of business of 610 East Latham Avenue, Hemet, California 92543, promotes and sells work-at-home medical billing employment opportunities. In March 2001, NetBiz filed a fictitious business name statement in Los Angeles County to do business under the name of "Physicians Healthcare Development." NetBiz transacts or has transacted business in the Central District of California. 7. Defendant Antonio Echavez ("Echavez") is the President, Chief Executive Officer, Chief Financial Officer and sole shareholder of PHD. He is also the Chief Executive Officer, Chief Financial Officer, agent for service of process and a director of NetBiz. At all times material to this complaint, acting alone or in concert with others, he has formulated, directed, controlled, or participated in the acts and practices of PHD and of NetBiz including the acts and practices set forth in this complaint. Defendant Echavez transacts or has transacted business in the Central District of California. COMMERCE 8. At all times relevant to this complaint, Defendants have maintained a substantial course of trade in the offering for sale and sale of medical billing employment opportunities, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANTS' BUSINESS ACTIVITIES 9. Since at least some time in 2001 and continuing thereafter, Defendants have offered and sold work-at-home medical billing employment opportunities to consumers throughout the United States. Defendants have promoted their medical billing employment opportunities to prospective purchasers through a variety of media, including newspaper classified employment advertisements, advertisements in national magazines, and via an Internet web site. 10. In their advertisements, Defendants frequently offer full or part-time medical billing jobs or careers in medical billing. The advertisements frequently entice consumers with promises that they will earn substantial incomes. The Defendants' advertisements state that no experience is necessary and that Defendants will provide complete training. The advertisements urge consumers to call Defendants' toll-free numbers to learn more about the opportunity. For example, a typical newspaper classified advertisement states:
11. Defendants also advertise their medical billing opportunity on their Internet web site at www.phdbilling.com. As with the written advertisements, Defendants' web site also encourages consumers to call the Defendants' toll-free numbers to learn more about the opportunity. 12. Consumers who call Defendants' toll-free telephone numbers are connected to Defendants' telemarketers who represent to consumers that, in exchange for a payment generally in excess of $300.00, consumers will receive all the equipment and training necessary to conduct electronic medical billing for physicians in the consumers' local areas. 13. The Defendants claim that physicians nationwide are now preparing to submit claims through electronic means and that consumers who purchase Defendants' system will be able to provide physicians with an essential service. 14. The Defendants further promise that consumers will receive all necessary training and certification to enable them to conduct a medical billing business and that Defendants will provide consumers a list of physicians who need and desire to retain medical billers. 15. Consumers who purchase Defendants' medical billing package receive software for performing medical billing, a booklet about operating a home based business, a password to access a "members only" section of Defendants' web site and a registration card. 16. In numerous instances, consumers who contact the physicians on the list provided by Defendants learn that the physicians do not have any relationship or arrangements with the Defendants and that the physicians neither want nor need the medical billing services being offered by the consumers. 17. During the time that Defendants have been in business no customers have made more money from purchasing the Defendants' medical billing employment opportunity than they paid Defendants for the opportunity. VIOLATIONS OF SECTION 5 OF THE FTC ACT 18. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits unfair or deceptive acts and practices in or affecting commerce. COUNT I 19. In numerous instances, in the course of offering for sale and selling their medical billing employment opportunities, Defendants or their employees or agents have represented, expressly or by implication, that Defendants will furnish the names and addresses of physicians who are likely to use the consumers to process their medical claims. 20. In truth and in fact, in numerous instances, Defendants do not furnish the names and addresses of physicians who are likely to use the consumers to process their medical claims. 21. Therefore, Defendants' representations as set forth in Paragraph 19 are false and misleading and constitute a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). COUNT II 22. In numerous instances, in the course of offering for sale and selling their medical billing employment opportunities, Defendants or their employees or agents have represented, expressly or by implication, that consumers who purchase Defendants' medical billing employment opportunity will earn a specific level of earnings, such as from $3 to as much as $15 per processed claim. 23. In truth and in fact, few, if any, consumers who purchase the defendants' medical billing employment opportunity earn, or will earn, the specific level of earnings represented by Defendants. 24. Therefore, Defendants' representations as set forth in Paragraph 22 are false and misleading and constitute a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). COUNT III 25. In numerous instances, in the course of offering for sale and selling their medical billing employment opportunities, Defendants or their employees or agents have represented, expressly or by implication, that consumers who purchase Defendants' medical billing employment opportunity will receive a complete package and training suitable for a consumer to start his or her own medical billing business. 26. In truth and in fact, consumers who purchase the medical billing employment opportunity from Defendants do not receive a complete package and training suitable for a consumer to start his or her own medical billing business. 27. Therefore, Defendants' representations as set forth in Paragraph 25 are false and misleading and constitute a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). CONSUMER INJURY 28. Consumers in many areas of the United States have suffered as a result of Defendants' unlawful acts or practices. Absent injunctive relief by this Court, Defendants are likely to continue to injure consumers, reap unjust enrichment, and harm the public interest. THIS COURT'S POWER TO GRANT RELIEF 29. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant injunctive and other ancillary relief, including consumer redress, disgorgement, and restitution, to prevent and remedy any violations of any provision of law enforced by the Commission. 30. This Court, in the exercise of its equitable jurisdiction, may award ancillary relief to remedy injury caused by the Defendants' law violations. PRAYER FOR RELIEF WHEREFORE, plaintiff Federal Trade Commission pursuant to Section 13(b) of the FTC Act, 15 U.S.C. §53(b) and the Court's own equitable powers, requests that the Court:
Respectfully submitted, WILLIAM E. KOVACIC,
DATED:__________________ ______________________ |