Randall,
I had the same problem. I brought in my 01 E320 wagon with 20k miles and they called me telling me I needed new brakes. I told them NOT to do the work. Go to pick up the car, they did the work. I had to pay in order to pick up the car since the service department was closed. Called the service department the next day and since I asked them not to change the pads, they negotiated the price down so I paid.
I took it in again recently with 30k miles and they called me and said the same thing. I told them I thought they just changed them and they say "no that was the rear brakes". Regardless, I told them not to change them. Guess what? They changed them anyway. Service department was closed so I had to pay again. That night, I checked my service records and realized they had already replaced the pads recently. When I called them on it, they immediately refunded the entire amount, not questions asked.
Seems to me that this is a common practice to tell everyone they need to replace brake pads. I know the service reps are on commission which seems like a conflict of interest since customers are relying on the rep to keep their cars running properly and safely. Maybe MB should set some minimum ethical standards for their dealerships.