NY Attorney General Investigates Healthcare Credit Cards


Many healthcare service providers over the past few years have turned to private label consumer credit cards, or healthcare credit cards, to help patients in financing private pay procedures and deductibles. Generally, healthcare credit cards have been a win-win situation for both the patients and the healthcare providers, and these financing arrangements have not been scrutinized by state or federal regulators.

However, New York Attorney General Andrew Cuomo recently announced an industry-wide investigation into the marketing practices of healthcare credit card companies. The focus of the investigation is the marketing of such arrangements by healthcare service providers. Specifically, the Attorney General is claiming that some healthcare providers are coercing patients into paying for additional services and the patients are charged interest and fees that were not disclosed. Further, Attorney General Cuomo claims that the rebates some card issuers provide to the healthcare providers who market these cards are tantamount to kickbacks.

The investigation was focused on CareCredit, a card offered by GE Money that is generally marketed to provide consumer credit for dental, chiropractic, cosmetic, or veterinary procedures. As part of his investigation, Attorney General Cuomo subpoenaed 10 different dental and other healthcare providers who promoted the CareCredit card, seeking marketing materials, applications, credit terms and contracts. Since this initial investigation, Attorney General Cuomo has expanded the investigation to include J.P. Morgan Chase & Co.'s Chase Health Advance and Citigroup’s Citi Health.

What does this mean for the healthcare service providers who have entered into similar arrangements with healthcare credit card issuers? While the investigation is currently limited geographically to the state of New York, and in scope to the companies subpoenaed to date, it is likely that the investigation will be expanded. If Attorney General Cuomo finds incriminating evidence as a result of the initial subpoenas, it is probable that he will further expand his investigation to include other healthcare providers and card issuers. Also, other attorneys general in other states may seize upon the opportunity to open their own similar investigations. In order to protect your organization from any liability from such an investigation, you should consider reviewing all marketing procedures and materials that are related to your healthcare credit cards to confirm their compliance with applicable laws. In addition, you may want to contact your customer service representatives at the healthcare credit card companies with which you do business to discuss the investigation and discuss their response and how you can protect your organization.

For more information, please contact Kevin Kidd, Chris Phillips, Chris Siderys or any member of the Waller Payment Processing and Financial Technology industry's practitioners group at 800-487-6380.

The opinions expressed in this bulletin are intended for general guidance only. They are not intended as recommendations for specific situations. As always, readers should consult a qualified attorney for specific legal guidance.