A proposed class action alleges CBR Systems has deceived parents into believing they will pay a fixed annual fee for the storage of umbilical cord blood collected at a child’s birth.
The 56-page lawsuit alleges CBR has “abuse[d] the very [c]onsumers who depend on their services in the event of a health emergency” by charging undisclosed and increasing costs to ensure the continued preservation of a child’s cord blood, which the FDA has said contains blood-forming stem cells that can be used in the treatment of certain cancers and immune system disorders.
According to the complaint, CBR “slyly and substantially” increases its annual storage fees over time, leading consumers to pay hundreds more than the amounts they initially agreed to for the storage of cord blood, which is found in the blood vessels of the placenta and umbilical cord and collected after a baby is born and the umbilical cord is cut. For those who pay to store cord blood for more than one child, the hidden and undisclosed fees “could cost them thousands of additional dollars,” the suit says, highlighting the amount of money in storage fees the company could stand to earn given the sheer quantity of cord blood CBR reportedly keeps at its Arizona bank.
“And, collectively, these excess storage fees charged to CBR’s clients for the 900,000 cord blood samples over the course of the cord blood storage translate to tens of millions of dollars or more in revenue for CBR,” the filing alleges.
The suit alleges the increased storage fees charged by CBR are not reasonably related to the service the company provides and serve only to pay for unrelated business expenses, such as customer service infrastructure, or to fund clinical studies the company can use to “tout their cord blood services and attract new [c]onsumers, thereby amassing greater profits.” As the lawsuit tells it, paying for business expenses that are unrelated to cord blood storage is not a burden CBR customers should have to bear, especially in light of the substantial up-front fee of roughly $1,500, plus shipping costs, that they have to pay the company.
“The annual storage fee is just that—a fee for storage—and reasonable consumers do not expect this fee to include costs for unrelated business operations,” the case scathes. “Defendants’ lack of financial resources to fund their business expenses or clinical studies, and their desire to avoid reducing their profits by funding such expenses themselves, are not sufficient reasons to deceptively and unlawfully tack additional, irrelevant charges onto the cord blood storage fees paid by Consumers.”
The lawsuit goes on to claim that if and when a consumer discovers that their cord blood storage fee has been increased and explores the possibility of taking their business elsewhere, CBR represents that the transfer of cord blood is “difficult or impossible,” effectively holding the blood for ransom and forcing customers to choose between continuing to pay increasing fees or losing access to the cord blood altogether.
According to the case, when a consumer cannot afford to pay the increased storage fees, CBR notifies them that it now “owns” their child’s cord blood, thereby depriving the consumer—and their child—of any possibility of being able to use it.
“CBR’s conduct is fundamentally deceptive, unlawful, and unfair, and threatens the future health of Consumers by jeopardizing the potential life-saving utility of the stored cord blood.
CBR takes advantage of the sacred bond between child and parents, relative, and/or caregiver, and abuses families who may ultimately have to depend on CBR’s services in order to overcome terminal illness, thereby harming consumers and the public at-large.”
Of the 900,000 cord blood and cord tissue samples in its possession, CBR has helped only around 600 families, or 0.067 percent of its customers, use stem cells for established and experimental treatments, the case claims.
The lawsuit looks to represent all consumers nationwide who have contracted with CBR Systems for cord blood or tissue storage. The case also proposes to cover “subclasses” of Florida and New Jersey residents who fit the same criteria.
In addition to CBR, the suit names as a defendant GI Partners, the San Francisco-based private equity firm that acquired and merged with the cord blood bank in 2018.
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