Banking on Your Child’s Future: Is There Sufficient Legal Recourse Against the Unregulated Private Cord Blood Bank Industry?

bankingBy Robin Hammond

Cord blood and tissue banking has significantly increased in the past few years, with 2.6% of parents using private banks and over a thousand transplants from public banks. Some benefits are concrete, and others speculative. The stem cells collected can be used to treat several diseases, including leukemia, lymphoma, anemia, and some immune system disorders. Currently, there are over 200 registered clinical trials currently underway around the world investigating the role that stem cells may play in the various systems of the human body, including Macular Degeneration and Cerebral Palsy.

The standards for public and private banks vary like night and day. As with many emergent technologies, the regulation of private banks has been slow. Currently, private banks only need to provide the FDA with their business name and address to be FDA registered. In contrast, public banks are licensed by the FDA and are responsible for adhering to strict quality standards including documentation on processing, storage and sterility, and site inspection. Additionally, public banks are coordinated by Be The Match®, which works with doctors and researchers to improve cord blood transplantation and education as mandated by the Stem Cell Therapeutic and Research Act of 2005 and Reauthorization Act of 2010.

With little oversight of private banks, and the chance of parents discovering errors low – 1 in 2700 will likely call upon the bank to provide the sample – the room for poor practices and even fraud are high. Sadly, the cost to families for failure is also high. The following two stories show how private bank practices have hur medical research and individual children.

First, Duke University’s Joanne Kurtzberg, a leading cord-blood researcher and clinician, said in the past few years she has rejected several hundred samples of cord blood from the estimated 2,000 she has received from private banks to use in clinical studies. Some of the samples were not sterile and had not been tested for contaminants or diseases, she said; others did not have enough cells to be useful.

Second, In Bays v. Corcell, Inc., a mother sought damages for the mislabeling of her son’s umbilical cord blood sample. Her son was eligible for a clinical trial that used cord blood for the treatment of cerebral palsy. When the blood sample arrived, it was not her son’s, but rather another child’s sample and therefore he was ineligible for the clinical trial. She later learned that Corcell did not have its own storage facilities, and the sample had traveled from bank to bank and eventually was lost. She asserted breach of contract and negligence claims against three defendants: the service provider, the parent company, and the subcontractors. The Subcontractors, who maintained storage facilities outside of West Virginia, were not subject to personal jurisdiction because the subcontractors made money from their contractual relationships with the service provider or its parent company and did not avail themselves of the benefits and protections of doing business in West Virginia. She later dropped the suit. In 2012, a California County District Attorney filed a complaint against BioBancUSA for unfair business practices on behalf of a mother because the company allegedly stopped properly storing blood and tissue samples when they were in the process of going out of business.

What recourse do parents have when they discover the unusable bank blood and tissue due to the bank’s error? To date, only breach of contract or unfair business practice theories have been raised. The potential monetary settlement from a successful contract claim will never compensate a parent for the loss of the ability to save their child’s life. And furthermore, the success of such a claim is unlikely, as the harm may be too tenuous for a court to impose liability.

Because there is insufficient legal recourse and oversight of private cord blood banks in the U.S., parents should do two things: (1) recognize banking in the U.S. is less like insurance and more akin to gambling, (2) consider using a private bank in Canada, which are all at least required to follow Health Canada regulations.

Image source: (New York Blood Center).

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