August 6, 2010 / 2:29 AM / 9 years ago

Cuomo opens probe into healthcare kickbacks

NEW YORK (Reuters) - New York’s attorney general said on Wednesday he has opened a probe into possible predatory lending and kickbacks in the healthcare industry.

Attorney General Andrew Cuomo said he has issued subpoenas to General Electric Co’s GE Money finance unit, which issues the CareCredit healthcare credit card, and to 10 healthcare providers in the state.

Cuomo’s office said it also sent subpoenas to Citigroup Inc, JPMorgan Chase & Co and Visa Inc units that also offer healthcare services.

The attorney general said he is examining whether healthcare lending practices are driving seniors and lower income patients deeper into debt.

Cuomo said some providers have pressured consumers into using the CareCredit card through “fast-talking sales pitches and deceit,” and that CareCredit often pays kickbacks to those providers based on how much business is charged.

The attorney general cited several cases in which patients with CareCredit agreements were allegedly charged thousands of dollars each for work that was done improperly or not at all.

“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 said in a statement.

The attorney general is seeking information about applications, credit terms, marketing materials, rebate agreements and consumer complaints, his office said.

Cuomo, a Democrat, is running to become New York’s next governor and is widely considered the frontrunner.

According to its website, CareCredit offers payment options for expenses not covered by insurance, including no-interest loans for as long as 24 months.

It said more than 125,000 providers nationwide accept CareCredit, mainly for cosmetic treatment, dentistry, hearing care, veterinary medicine and vision correction.

“We look forward to learning more about the investigation and working with the attorney general’s office,” GE spokesman Stephen White said.

Citigroup spokesman Samuel Wang said that bank has spoken with Cuomo’s office about the probe and will provide the requested information.

Representatives of JPMorgan and Visa did not immediately return calls seeking comment.

Cuomo said he also asked 14 nationwide and state medical groups including the American Dental Association to explain why they endorse CareCredit and whether they are paid to do so.

ADA President Ronald Tankersley in a statement said his group shares Cuomo’s concern about patient credit financing practices and will respond to the attorney general.

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