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FTC bars couple from health care business

NEW YORK (AP) -- The Federal Trade Commission said Wednesday that it has banned a married couple, Judy and Roy Hamilton, from the health care business after the Florida couple allegedly cheated consumers out of millions of dollars in an insurance scam.

The FTC said the Hamiltons ran a telemarketing operation that contacted consumers and claimed to be offering traditional health insurance. But customers were actually paying for memberships in the Independent Association of Businesses, which has also been charged by the FTC. The IAB had presented itself as a trade association for small businesses and the self-employed, according to the Better Business Bureau's website. Customers supposedly received discounts on golf and travel, as well as some limited health care services and insurance benefits.

In the operation, customers were charged an initial fee of $50 to several hundred dollars and monthly payments that ranged from $40 to $1,000.

The FTC said the Hamiltons ran companies under the names Health Service Providers Inc., Magnolia Health Management Corp., Magnolia Technologies Corp., and Fav Marketing Inc.

The settlement, in a Florida court Tuesday, includes an $11.8 million judgment against the couple that was suspended after they surrendered their assets to the FTC.

In September the FTC sued the IAB and a slew of related companies. It's still in litigation with the people who ran those businesses: James Wood, his sons James and Michael, and his brother Gary.

The Independent Association of Businesses said the United States District Court for the Southern District of Florida entered a preliminary injunction against it in October. It cannot sell or promote any products and services related to medical discount plans or health-related insurance benefits.

According to its website, the IAB is in receivership, which means the court has appointed an independent person to take custody of the business while litigation continues.