April 14, 2012

AmMed Direct fined $18 million for bait and switch


The Nashville-based AmMed Direct ran a marketing ploy luring Medicare beneficiaries with free cookbooks. AmMed Direct is a company that offered education and support to diabetic patients in addition to mail-order  test supplies.

AmMed advertised free cookbooks, without any mention of Medicare supplies, to cause diabetic patients to call AmMed. Once the potential customer was on the line, an  AmMed representative would inquire if Medicare paid for diabetes supplies.

Once AmMed’s representatives confirmed that a beneficiary calling for the free cookbook was covered by Medicare, they tried to sell the caller supplies and then improperly billed Medicare for the merchandise that was ordered.

This is, without a doubt, a deceptive method of selling. What’s more deceiving is that if the individual returned the merchandise – AmMed would fail to refund money to Medicare or TennCare (the state’s poverty health program) in a timely manner. Sounds fishy, right?

AmMed Direct LLC gave notice to layoff over 200 of its workers earlier this year. In addition to cutbacks in the workforce, AmMed made arrangements to sell assets to a Florida-based competitor, Arriva Medical, and then stop operating.

Crime doesn’t pay. But since AmMed Direct is liquidating and closing the doors – will the $18 million fine ultimately be paid back?  

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