[co-author: Stephanie Kozol]*
Last month, Arizona Attorney General (AG) Kris Mayes announced a lawsuit alleging that CBR Systems, Inc. (CBR), one of the nation’s largest cord blood banking companies, engaged in deceptive and unfair practices.
Cord blood banking is the process of collecting, processing, and storing umbilical cord blood and placenta tissue after a baby’s birth. The collected material is rich in stem cells that may later be used to treat certain illnesses and genetic disorders. According to the complaint, CBR allegedly participates in the following activities:
- Promotes false, deceptive, and misleading health claims, such as failure to adequately disclose experimental uses, unsupported emphases on the “match” of a newborn’s stem cells, and failure to disclose key information regarding usefulness of stem cells;
- Falsely claims certain medical endorsements; and
- Makes false and misleading promises regarding shipping, testing, storge, and communication.
Pursuant to the complaint, this activity violates the Arizona Consumer Fraud Act in at least 11 separate ways. As a result, the state seeks a permanent injunction, disgorgement of all profits, gains, gross receipts, or other benefits obtained from the activity alleged, up to $10,000 in penalties for each willful violation of the CFA, reimbursement of the state’s attorneys’ fees, and pre- and post-judgment interest.
Why It Matters
This complaint not only highlights how states may use consumer protection laws to target the health care industry, but also raises key questions regarding liability faced by companies who are targeted under states’ consumer protection laws. Understanding how the state may calculate damages can be key to limiting exposure and is an important aspect of consumer protection litigation.
*Senior Government Relations Manager
