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October 20, 1999

State Settles Suit With Company That Sold Medical Discount Cards

Suit alleged that American Discount Services, Inc., made false claims about drug and medical discounts and targeted older Iowans. Company is ordered to pay $10,000 in restitution and is prohibited from making misrepresentations.

DES MOINES-- The Attorney General's Consumer Protection Division has obtained a court order concluding a lawsuit that alleged a Des Moines company called American Discount Services Inc. made false promises to older Iowans in selling health discount cards. The company was ordered to pay $10,000 in restitution as a result of a consent judgment and order entered Friday in Polk County District Court.

The defendants also were permanently prohibited from making any misrepresentations about health discount cards. The defendants were ordered to pay a civil penalty of $25,000 if they fail to comply with the consent judgment and order.

The discount cards were supposed to provide price breaks on items such as prescription medications and care provided by physicians, dentists, chiropractors and others. The lawsuit, which was filed last March, alleged the discounts were exaggerated and sometimes were not available at all. Roland L. Huff, Sr., of Des Moines, also was a defendant in the suit.

"We alleged that the defendants made false representations that consumers' health care providers and pharmacies would provide price breaks to persons with the discount cards," said Attorney General Tom Miller. "We alleged that they targeted older Iowans, induced consumers to authorize withdrawal of hundreds of dollars every year, but then failed to provide the promised price breaks." In some cases, the company provided no cards or information at all for many months, Miller said.

Miller said American Discount Services stopped operations after the suit was filed. The defendants did not admit the allegations, but they agreed to the consent judgment filed Friday.

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