CareCredit And Predatory Health Care Lending? Cuomo Investigates

There are probably many businesses looking forward to N.Y. Attorney General Andrew Cuomo becoming Governor Cuomo, where he will fight with the state's dysfunctional legislature rather than with them. Today, for example, Cuomo announced an industry-wide investigation into alleged predatory health care lending – where, he said, consumers, especially seniors and vulnerable patients, are misled about financing, causing them to be pushed into debt. 

Cuomo says that an investigation conducted by his office found that some health care providers pressure consumers into using CareCredit, a health care credit card, “through fast-talking sales pitches and deceit.” According to Cuomo, CareCredit “often pays kickbacks in the form of rebates to the providers based on how much business they charge consumers on CareCredit cards.”
 
Cuomo says his office’s investigation was triggered in part on hundreds of consumer complaints received by his office. According to Cuomo: Consumers reported that health care providers promised that the credit card had “no interest,” when it often carried retroactive interest of over 25 percent if not paid in full during a promotional period. Consumers also were unknowingly charged up front for services they never received, and their attempts to obtain refunds were often thwarted or ignored. Meanwhile, CareCredit pays the health care providers in-full within 48 hours of the charge.
 
Cuomo said that his investigation also found that CareCredit charges the providers a fee for the right to offer the cards, and then rebates part of the fee based on the amount of money the providers generated through CareCredit sales. This kickback arrangement, plus CareCredit’s payment in full to providers within two days of the charge, “creates an incentive for providers to push consumers to use CareCredit rather than other methods of payment,” according to Cuomo. In fact, he added, providers pushed CareCredit over cash.
 
“Health care debt is the number one cause of individual bankruptcy, and this scheme is contributing to the economic burden being felt by consumers,” said Cuomo. “People are being tricked by misleading offers that have them paying for services they never received as well as interest charges they never knew about – and they are ignored and given the runaround when they try to get their money back.”
 
Cuomo issued subpoenas to 10 providers that promote CareCredit, a product offered by GE Money, a division of General Electric Company, which was also subpoenaed for its customer list and other information. The subpoenas seek marketing materials, applications, terms of credit, contracts and rebate agreements, policies and procedures, consumer complaints, and regulatory inquiries. Cuomo is also asking several nationwide and state-based medical associations, including the American Dental Association and the New York State Dental Association, to explain why they endorsed CareCredit and whether they received compensation for doing so. 
 
According to Cuomo:  CareCredit is accepted by more than 125,000 health care practices nationwide. The New York State Dental Association asserts that more than eight million dental patients and 80,000 dental practices use CareCredit nationwide. The credit card is advertised as a way to pay for services often not covered by insurance, including:
 
·         Chiropractic procedures
·         Cosmetic procedures
·         Dental procedures
·         Infertility treatment
·         Hearing procedures
·         Vision procedures
·         Weight loss procedures
·         Veterinary services
 
According to Cuomo: 
 
In recent years, his office received hundreds of complaints from consumers indicating that they were lured and misled by providers into applying for, accepting, and using CareCredit. Among the complaints are the following: 
 
·         A Williamsville resident went to a dental provider with a toothache and was told he needed $9,000 in work done. He told the practice’s office manager that he had the ability to pay for the service in cash, but he was still persuaded to sign up for financing through CareCredit. He ended up having the work done elsewhere, but the full amount of charges was billed to his card, despite receiving no services from the practice.
·         An Onondaga County woman was told by a dental practice she needed a variety of procedures, and to get them she would have to sign a CareCredit agreement. After only having one $400 procedure done, which she paid for, she received a bill for $2,600. Her attempts to get a refund were rejected by both the provider and CareCredit.
·         An Oswego woman was given a $6,000 estimate for dental procedures. She was urged to sign up for CareCredit, and was told this was an interest-free, monthly payment plan. However, she was charged up-front before the procedures were done, plus interest.
·         A Monroe County man signed up for CareCredit to pay for an estimated $5,600 in services from his provider, but it was not made clear he was agreeing to a credit card. He left the medical office and sought treatment elsewhere, but continued to receive bills from CareCredit, which insisted he was delinquent on payments, resulting in a negative credit report and the reduction of his other lines of credit.
·         A Syracuse-area consumer was told by his chiropractor that he needed two years of treatment and he was signed up for a CareCredit card without his consent. He was charged $3,000, which CareCredit refused to rescind. When the consumer switched to a different provider because the treatments at his chiropractor worsened his condition, the practice refused to release his medical records, claiming he still owed them money. 
·         A woman from Tioga County went to a provider where an application to CareCredit was “thrown in (her) face.” No other financing options were offered to her, and she was charged $5,000 for a procedure that failed multiple times and for which another provider later charged only $1,200.
 
Subpoenas to Health Care Providers:
 
·         Allcare Dental Management Inc. - Buffalo
·         American Laser Centers - Farmington Hills, MI
·         Aspen Dental Management, Inc. - East Syracuse
·         East Syracuse Family Dental Arts - East Syracuse
·         Laser Cosmetica - New York City
·         Lifestyle Lift - Troy, MI
·         Northern Lights Chiropractic - Watertown
·         S & Y Diamond Dental P.C. - Brooklyn
·         Sunshine Dental - Watertown
·         Toothsavers - New York City
 
Letters to Groups Endorsing CareCredit:
 
·         American College of Eye Surgeons
·         Society for Excellence in Eyecare
·         American Dental Association
·         Academy of General Dentistry
·         American Academy of Periodontology
·         American Association of Oral & Maxillofacial Surgeons
·         New York State Dental Association
·         American Society of Plastic Surgeons
·         American Society of Dermatologic Surgery
·         American Animal Hospital Association
·         New York State Veterinary Medical Society
·         American Hearing Aid Associates
·         American Society of Bariatric Physicians
·         Lite and Hope