Intrigued by a grocery flier promising to slash her medical and dental costs by up to 80%, Manuela Zermeno signed up her family of six for a Care Entree discount healthcare card.
But first one and then another of the dental offices that the company sent them to said it had never heard of the Texas-based company. And for nearly a year, Care Entree ignored Zermeno's requests to stop taking a $55 monthly fee out of her bank account, the Saugus stay-at-home mother said.
The Zermenos sued, and Care Entree, without admitting wrongdoing, settled for $25,000. Now, with the help of Neighborhood Legal Services -- a legal aid group in Los Angeles -- the family is trying to bar the company from doing business in the state. A hearing on the family's bid is set for today in Los Angeles County Superior Court.
"People need to know; it's a fraud," Zermeno said. "People are desperate for health insurance. These companies take advantage of that."
The Zermenos' suit is part of a growing list of complaints against discount health-card companies, a burgeoning industry with a combined 21 million subscribers across the U.S., including about 5 million in California, according to a leading trade organization.
Too often, the cards are not accepted by the medical providers the companies say will honor them or the discounts they offer are negligible, critics say.
A recent Georgetown University study found that four of five cards examined in the Washington, D.C., area were not honored by many of the medical providers on the referral lists. The fifth card promised up to 40% in savings, but the discount given was as low as 4%, according to the March 2005 report by researchers at Georgetown's Health Policy Institute. Advocates say families could do as well on their own by offering to pay doctors and dentists in cash.
Health discount cards are not insurance, but consumer and medical advocates say the issuers trick customers into thinking they are by using insurance-like language, such as "PPO networks."
"We and other consumer groups have grave concerns about what we believe are essentially scams," said Anthony Wright, executive director of Health Access California, a statewide advocacy coalition of more than 200 organizations. "People are being sold what they think is coverage, but it's an imaginary discount.... It's a way to prey on people who don't have health coverage."
