Multi State Lawsuit, Ban On Ads That Imply Discount Drug Cards Are Government Endorsed

attorneygeneral.gov, Nov 30, 2005

Date: November 2, 2005

PHILADELPHIA - Attorney General Tom Corbett today filed a civil lawsuit and a special injunction against Pennsylvania-based Peoples Benefit Services Inc., accusing the company of deceiving thousands of mostly older consumers by falsely implying that its discount drug cards and other products are government-endorsed insurance plans that offer "members" significant savings on prescription drugs, family medical and/or dental "coverage."   

The multi-state lawsuit marks the first legal action against a private company for allegedly using deceptive advertising and marketing to convince consumers that its products are affiliated with the government approved Medicare Part D Prescription Drug Plans.

The special injunction asks the court to immediately prohibit Peoples from advertising, promoting and selling its products and memberships to senior citizens and Medicare recipients in a deceptive manner. The injunction seeks to prevent thousands of consumers from purchasing the defendant's drug cards, which were deceptively marketed to replicate government-approved Medicare Part D Prescription Drug Plans. Enrollment for the government approved drug coverage is scheduled to begin this November 15. Failure to enroll in the true government approved programs could result in loss of critical drug coverage and benefits or a requirement to pay a penalty for delayed enrollment.

The suit claims that the new prescription drug card offers were marketed under the name "Senior Rx Discount Program" and used the same logo, typeface and other language that the states' found objectionable.

The lawsuit and special injunction asks the court to require the defendants to:
1. Immediately cease advertising, promoting and selling its new drug card deceptively.
2. Refund consumers who file complaints claiming that they purchased the plan because they thought it was a government-endorsed prescription drug card offer.
3. Pay civil penalties of $1,000 per violation and $3,000 for each violation involving a consumer age 60 or older.
4. Forfeit its right to conduct business in the Commonwealth pending payment of civil penalties and consumer restitution.
5. Pay the states' investigation costs.