AP Legal Affairs Writer
BOSTON (AP) – A bone marrow registry and medical laboratory company that used fashion models wearing high heels and short skirts to recruit potential donors will pay the states of Massachusetts and New Hampshire $770,000 for engaging in an improper marketing practice, officials in both states said Thursday.
The Caitlin Raymond International Registry and UMass Memorial Health Ventures Inc. paid models to help recruit potential registrants during donor drives at malls, festivals and sporting ventures, including Gillette Stadium and the Mall of New Hampshire. The practice drew sharp criticism from officials in both Massachusetts and New Hampshire, prompting an apology and a promise to stop using models from UMass Memorial Health Care Inc. in December 2010.
According to a final judgment filed Thursday in Suffolk Superior Court, the registry and lab company _ both subsidiaries of UMass Memorial Health Care _ will pay restitution to Massachusetts consumers for any out-of-pocket payments they previously made for donor testing.
They will also pay the state $500,000 for initiatives to improve health care services and to combat unlawful marketing practices and $20,000 to cover the cost of the state attorney general’s investigation. They also agreed to not charge health plans more than $175 over the next five years for donor testing.
New Hampshire Attorney General Michael Delaney Thursday announced a separate consent judgment in which UMass Memorial will pay the state of New Hampshire $200,000 in civil penalties for unfair and deceptive practices, $50,000 in attorneys’ fees and donate $100,000 to the National Bone Marrow Registry.
Delaney said UMass Memorial violated the public’s trust by overcharging for testing done by its lab and paying commissions to employees who lured donors who had private insurance.
“They lost focus of their charitable mission to save lives and became blinded by their pursuit of money,” Delaney said Thursday.
Massachusetts Attorney General Martha Coakley said that beginning in 2007, UMass Memorial laboratories performed the vast majority of the DNA tests of individual samples collected by the bone marrow registry staff. The number of donor tests performed by UMass Memorial increased significantly, from about 7,000 in 2008 to more than 40,000 in 2010. The amount UMass Memorial charged for individual donor tests ranged from network rates of several hundred dollars up to more than $4,000.
Officials said the tests actually cost about $50.
The complaint says that in an effort to boost registration, both the registry and UMass Memorial Health Ventures improperly waived copayments and deductible amounts for the testing of potential donors, gave away free T-shirts and held free raffles for big-screen televisions and golf clubs. They also failed to disclose to potential donors the cost of the tests.
The judgment prohibits the registry and lab from using models and paying bonuses for enrolling insured donors.
“No health care provider should be allowed to use gimmicks and free gifts to increase the volume of services covered by health plans for their own financial gain,” Coakley said in a statement.
Douglas Brown, senior vice president and general counsel of UMass Memorial Healthcare Inc., said UMass Memorial “expressly denies that any of its practices violated any laws or caused harm to any person.” He said UMass Memorial Healthcare has voluntarily agreed to discontinue the practices.
“We regret that certain past practices may have undermined the public perception of the life-saving importance of donor recruitment,” Brown said in a statement. He added that the registry continued to maintain its database and match donors even as donor recruitment efforts were voluntarily suspended during the attorney general’s review.
Brown said 48 patients received transplants from donors in the past year as a result of the registry’s past recruitment efforts.
Brown said that UMass Memorial Healthcare’s reimbursement rates for the lab tests were negotiated directly with most insurers in the same way hospitals across the country negotiate reimbursement rates for other tests and procedures.
“We recognize that although these rates were fairly negotiated, the rates charged were perceived as inappropriate and going forward we have agreed to a reduced rate for these tests for all payers,” he said.
Coakley said both the registry and lab company cooperated with the state’s investigation and consented to the final judgment entered in court Thursday. She said the registry has already refunded Massachusetts consumers nearly $100,000 and paid several times that amount to reimburse health plans.
The questionable practices in New Hampshire were brought to light in late 2010 two Manchester firefighters who were stunned to see the thousands of dollars their insurer paid out for the tests and reported it to city officials.
New Hampshire Senior Assistant Attorney General James Boffetti said UMass Memorial was paying Click Models of Boston $80,000 a month in modeling fees.
Associated Press writer Lynne Tuohy in Concord, N.H. contributed to this report.
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