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Scan-Shop Chain Faces More Legal Trouble

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Heart Check America, a multistate chain that offers full-body CT scans and other “preventive imaging,” suffered the latest in a series of legal blows last week when Illinois Attorney General Lisa Madigan sued the company.

The attorney general accused owner Sheila Haddad and manager David Haddad, her son, of using “unfair and deceptive business practices” to pressure customers into 10-year screening contracts costing up to $7,000, plus additional annual dues.

The company is based in Tinley Park, Illinois, a Chicago suburb. Its Illinois locations have closed. Regulators shut down a Denver office in May. The company’s sister organization in Hilton Head, South Carolina, Cancer Check of America, also closed in May after scrutiny from state public-health officials. The Las Vegas office closed suddenly about the same time.

The company’s Web site has disappeared — replaced by a page promising that a Web site for “Health Screening Plus” will be up in early August. A link on that page downloads a letter to customers of Heart Check America, signed by Sheila Haddad. It says that Health Screening Plus, “operated by board certified radiologists,” will take over servicing the contracts of Heart Check America customers.

A report by Marshall Allen of ProPublica says California entrepreneur Bruce Friedman and another investor founded the company in 1992. It used electron beam tomography machines to do heart scans and other imaging for preventive screening of asymptomatic patients. Insurance usually doesn’t cover such scans. Because of the risk from radiation exposure, the chance of false positives, and the small likelihood that they would pick up significant problems in patients without symptoms, these preventive scans are medically dubious at best.

By 2008, Heart Check America was struggling. In 2009, David Haddad struck a deal to have his mother buy the company. He told ProPublica that as a child he had seen an aunt die of breast cancer at 33. He said he thought the company represented a chance for him to use his marketing skills to a good end:

If I’m going to sell alarm systems or time-shares or carpets, I’d rather sell something I really believe in.

Funny he should mention time-shares. In 2007, the Indiana attorney general sued him, alleging that he fraudulently sold time-share condominiums. The attorney general’s office said he was ordered to pay $25,000 in restitution.

After the Haddads took over, Heart Check America began direct-marketing 10-year service contracts. And complaints of high-pressure and misleading sales tactics and failure to deliver on promises began popping up. The Illinois attorney general’s office said it had received 25 complaints about Heart Check America since June 2010.

Friedman, the company founder, still has an ownership stake. He told ProPublica that the Haddads had destroyed the good reputation he created. “You can’t build a business for the long term … by misleading people,” he said.

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