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February 02. 2012 10:12PM

UMass marrow registry fined for being a 'consumer scam'

CONCORD — UMass Memorial Health Ventures Inc. and Caitlin Raymond International Registry Inc. agreed to pay New Hampshire $250,000 in civil penalties in a consent judgment reached after the state filed a complaint alleging company methods of soliciting bone marrow registry donors was unfair and deceptive, state Attorney General Michael A. Delaney announced Thursday.

UMass Memorial Health Ventures and its Caitlin Raymond International Registry subsidiary, both based in Worcester, Mass., also agreed to donate $100,000 to the National Bone Marrow Registry to help repair the damage done to the international bone marrow registry movement by what Delaney called a “consumer scam.”

The state Attorney General’s Office filed a civil complaint in Hillsborough County Superior Court North in Manchester on Thursday alleging UMass Memorial and Caitlin Raymond misinformed consumers that DNA testing necessary to be listed on the national bone marrow registry would result in minimal or no charge to their insurance companies.

Instead, UMass and Caitlin Raymond billed insurance companies from $700 to $4,300 for the test that costs between $50 to $150, the state alleged.

The state filed the complaint at the same time it filed the consent judgment, which must be approved by the court.

UMass and Caitlin Raymond admitted no wrongdoing in the consent judgment, but agreed to the civil penalties and the $100,000 donation and an injunction that would require they make fundamental changes to their New Hampshire recruitment practices, including capping the amount they can charge insurance companies at $150 a test.

“We accept full responsibility for the mistakes and errors in judgment that were made. We are pleased to have reached a resolution with the New Hampshire Attorney General that validates this important work of the Caitlin Raymond International Registry,” UMass Memorial Health Care president and chief executive officer John G. O’Brien said in a statement Thursday.

The consent judgment made with the New Hampshire Attorney General’s Office is similar to one reached with the Massachusetts Attorney General, also on Thursday, O’Brien said.

In its complaint, the New Hampshire Attorney General also alleged UMass and Caitlin Raymond violated the state’s consumer protection laws by using high-priced professional models dressed in UMass lab coats to lure consumers to submit to the tests and held raffles involving expensive prizes such as flat-screen televisions to attract prospective donors and rush them through the consent process.

“UMass was tugging at people’s hearts to save lives. They were luring them to kiosks using high-priced models that the hospital required them to use a dress code of mini-skirts and wigs,” Delaney said.

“They charged municipalities and insurance companies an arm and a leg for a relatively cheap bone marrow test,” he added.

Delaney assailed UMass for allegedly abusing its non-profit, charitable mission to promote public health and care for the sick.

“In this case, it is clear that UMass violated that public trust. They lost focus on their charitable mission to save lives, and they became blinded by the pursuit of money and financial gain, and they tried to do it on the back of the taxpayers of New Hampshire, on our municipalities and on our insurance companies,” Delaney said.

The complaint and consent judgment conclude an investigation into alleged questionable billing and recruitment practices that began in December 2010 when Manchester Mayor Ted Gatsas alerted the Attorney General’s Office to hefty charges two city firefighters discovered their insurance had been charged for submitting to the tests.

UMass recruited donors at kiosks they rented at the Mall of New Hampshire in Manchester, Pheasant Lane Mall in Nashua and the Mall at Rockingham Park, among other places.

Prosecutors said the venture paid models about $80,000 a month to recruit donors. UMass agreed to suspend its operations immediately during the investigation of its billing and markeing practices.

CRIR was charging upwards of $4,336 for each screening test, which involves a simple inner-cheek swab and typically costs $50.

The testing was “generating a huge amount of income for the lab,” said Senior Assistant Attorney General James T. Boffetti, head of the consumer protection bureau. He estimated UMass was making “in the range of $50 million a year” on the screening tests — the bulk of it coming from Massachusetts.

As part of the consent judgment, the UMass hospital and Caitlin Raymond must inform donors of the amount that will appear on the explanation of benefits form provided by their health insurance carriers. They also must discontinue the practice of holding raffles and using models to solicit donors, Boffetti said. They also must modify their consent forms and retrain their staff, he said.

UMass on Tuesday announced it is selling its Hospital Labs Outreach Business as part of a series of steps to cut costs by about $50 million to keep from ending the fiscal year at a loss. Testing of bone marrow donor samples was done at the labs, along with other work, UMass spokesman Robert Brogna said.

UMass said it will cut about 150 full-time positions from the Medical Center, Medical Group and other corporate departments and is looking for a buyer for its Home Health and Hospice. In all, its cost-cutting actions could result in the loss of 700 to 900 UMass Memorial jobs.

Brogna said the sale of the lab has nothing to do with the consent judgments reached with the New Hampshire and Massachusetts attorneys general.

Delaney would not comment when asked if UMass Memorial notified him of any disciplinary actions being taken against its employees.

“I’m not going to comment regarding any personnel matters,” Delaney said.

UMass and Caitlin Raymond compensated recruiters and administrators under a lucrative commission compensation system that encouraged recruiters to seek out prospective donors with insurance coverage, the state alleged.



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