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Heartless: Organ Donation Contractors Lobby Against a Popular Health Care Initiative While Pocketing Pandemic Relief Loans

(Illustration: Leslie Garvey / POGO)

Just as President Donald Trump is trying to boost his re-election chances by scoring “wins” on health care, key players in America’s human-organ-procurement industry are mounting an aggressive lobbying campaign to defeat or delay his only health initiative to achieve bipartisan popularity, a Project On Government Oversight (POGO) investigation has found. Trump’s initiative, contained in a July 2019 executive order, would reform the rules governing organizations that recover organs for transplant. The White House could approve the new rules as soon as this month.

As they battle Trump’s plan, some in the industry have been approved for what may total more than $100 million in federal loans intended to help small businesses survive the COVID-19 pandemic. Cash from the Paycheck Protection Program (PPP) is flowing even though, in some cases, organ procurement industry borrowers involved in the lobbying are sitting on large financial assets, expensive real estate, or other reserves, in one case valued at more than $112 million, POGO found.

Senate Finance Committee Chairman Chuck Grassley (R-IA), who co-authored the CARES Act that supplied PPP loans, issued a statement to POGO sharply critical of the United Network for Organ Sharing (UNOS), a body that oversees America’s 58 so-called organ procurement organizations, or OPOs, operating around the country and contracted with the federal government.

“The Committee’s bipartisan oversight has become increasingly important,” Grassley said, “especially given the risk COVID poses to patients, and now in light of the tens of millions of taxpayer dollars UNOS and OPOs received through the Paycheck Protection Program.”

“This industry’s attempts to block efforts to implement metrics to hold OPOs accountable for their poor performance only further underscores the need for oversight,” Grassley continued.

This industry’s attempts to block efforts to implement metrics to hold OPOs accountable for their poor performance only further underscores the need for oversight.

Chuck Grassley (R-IA), Senate Finance Committee Chairman

“Along with Ranking Member Wyden and our colleagues, Senators Young and Cardin, I intend to further pursue OPO oversight to ensure that the needs of Americans awaiting organ transplants come first,” he said, referring to Senators Ron Wyden (D-OR), Todd Young (R-IN), and Ben Cardin (D-MD).

Grassley and his colleagues on the Finance Committee, who have opened a full-scale investigation of the organ-procurement industry, may have their work cut out for them.

A “Silver Lining”

A tape obtained by POGO of a September 2, 2020, United Network for Organ Sharing “roundtable” records OPO executives and others as they discuss various ways to defeat Trump’s plan, along with rules that would, in Grassley’s words, hold some of them “accountable for their poor performance.” It’s not clear exactly which top officials participated in the “roundtable,” but a UNOS summary says its president-elect, Dr. Matt Cooper, made a presentation at the regional event.

“We were fortunate,” one OPO official says on tape. “If there is a silver lining to the COVID-19 cloud … [it’s that] HHS and CMS have certainly been distracted to [sic] a bigger issue [by the pandemic].”

The executive’s "silver lining": that while focused on COVID-19, the Department of Health and Human Services and the Centers for Medicare and Medicaid Services have delayed finalizing any new organ procurement rules that Trump and a bipartisan coalition in Congress are calling for. The industry is using extra time created by this delay to organize and lobby harder against proposed rules to implement reform.

The executive then detailed an ongoing, “real congressional action campaign” against the proposed rule changes, one accompanied by national letter-writing.

UNOS responded to POGO that, “The views expressed at such forums are those held by the individual participants. They do not necessarily represent views of UNOS leadership and are not subject to any official action.” UNOS did not deny that industry players are lobbying to undermine the president’s reform initiative, as described the on tape.

More Dollars for Lobbying

According to public filings, various organ procurement organizations, UNOS, and the Association of Organ Procurement Organizations (AOPO), the industry’s principal trade group, together spent only about $160,000 per year on lobbying in 2017 and 2018.

But that number ratcheted up dramatically in apparent response to Trump’s executive order. Organ procurement organizations in Los Angeles, Chicago, and New England, all of which applied for Paycheck Protection Program money, began lobbying last year under a new coalition, the Organ Donation Advocacy Group. In 2019, total industry lobbying totaled $452,000, and exceeded $450,000 for the first half of 2020. Even more funds will be needed from organ-procurers to pay for the influence campaign as it intensifies this fall.

Meanwhile, the Association of Organ Procurement Organizations recently told its industry supporters that it would change its nonprofit status from 501(c)(3), where lobbying is sharply restricted, to 501(c)(6), which allows for much freer spending. As Kelly Ranum, the association’s president, noted in an internal memo obtained by POGO and dated June 2, 2020, “Over the past 18 months it has become clear to all of us that AOPO needs to become substantially more involved in advocacy.” The memo’s timing suggests that the group’s shift relates to a boost in spending to oppose rule changes that would implement Trump’s executive order.

Oversight and accountability for organ procurement organizations has been severely lacking because of regulations that were so poorly written as to be effectively unenforceable.

All the organ procurement organizations, which funnel money to the trade group, are 501(c)(3) nonprofits. Their expenses are largely covered by taxpayers through Medicare.

The Association of Organ Procurement Organizations emailed POGO that its lobbying is not an effort to “oppose rule changes” embodied in Trump’s organ procurement reform. Then, in seeming contradiction, it asserted that, “unfortunately the proposed metrics [of the reform] … have the potential to result in unintended consequences which could result in lives lost.” AOPO’s move to obtain 501(c)(6) status is an effort to “comport with all applicable laws,” it said.

Trump’s reform offers the most sweeping changes to the nation’s transplant system since the National Organ Transplant Act of 1984. That law created legal infrastructure for the organ procurement industry. But in the view of many critics, oversight and accountability for organ procurement organizations has been severely lacking because of regulations that were so poorly written as to be effectively unenforceable. Indeed, Health and Human Services data shows that while some of the organizations have relatively high organ recovery rates, others are abysmal, and the variation between the best and worst is more than 400%. And low recovery rates mean unnecessarily lost lives for those awaiting a transplant.

Despite that, none of the organizations has ever lost its government contract to collect organs during the more than 35 years that the system has been in operation.

Not Responsible for Lost Organs

Additional industry problems have also come to light. In February, for example, Kaiser Health News reported that due to “a primitive system of phone calls and paper manifests, with no GPS or other electronic tracking required,” more than 500 organs have been lost or damaged in transit in the last several years. That led to the conclusion that UNOS, which oversees the system, “is approximately 15 times as likely to lose, damage or mishandle an organ than the airline industry is your luggage,” according to Kidney News.

So far in 2020, adding to the more than 500 vanished body parts are “another 20 kidneys [that] failed to be transplanted after transportation problems,” according to Reveal, a broadcast of the Center for Investigative Reporting.

Many organs, especially kidneys, the most commonly transplanted, are ferried to surgical centers on commercial aircraft, a process that is apparently not well-managed.

More than 500 organs have been lost or damaged in transit in the last several years.

In response, a United Network for Organ Sharing spokesperson said it is studying ways to improve the situation, but that it does not have “direct oversight over transportation of all organs nationwide, nor is this responsibility addressed within the scope of authority granted … by federal law and regulation.” Of the organs over which they do have oversight, however, Kaiser Health News found, “a startling number of life-saving organs are lost or delayed after being shipped on commercial flights, the delays often rendering them unusable.”

Yet those and other shortcomings appear to have had little impact on the pay of some organ procurement CEOs. Their average salary is more than $450,000 and tops out above $900,000. Yet that compensation can vary from year to year: in a July 2020 oversight letter, Representatives Katie Porter (D-CA) and Karen Bass (D-CA) cited a 2017 CEO paycheck at one OPO of $2.5 million.

No financial disclosures are required for these nonprofit federal contractors or their executives with financial interests in the multi-billion-dollar human tissue industry that operates in cozy proximity to many organ procurement organizations. This can lead to potentially undisclosed conflicts of interest. According to a recent investigation by the Los Angeles Times, “80% of [the OPOs] were harvesting tissues and sending them in exchange for fees to tissue processors and distributors, many of which are for-profit companies.” Tissue vendors buy and sell everything from heart valves to human skin.

Trump, in announcing his executive order last year, argued that reforms to the organ procurement industry would benefit patients in need of organs. “By streamlining rules to help patients and by incentivizing the supply of kidneys … an estimated 17,000 additional Americans could receive kidneys that they desperately need,” Trump said. He added that, “up to 11,000 more Americans could receive heart, lung, and liver transplants annually.”

Reform is Popular

Trump’s reform is broadly popular, notably in Congress, where it enjoys the backing of everyone from the chair of the Congressional Black Caucus to a member of the Tea Party. The reform also gets support among health and patient advocates.

Many who back the reform, Republicans and Democrats alike, argue it’s urgently needed to help the more than 109,000 Americans languishing on transplant waiting lists. Seventeen people die each day—and more than 6,000 people per year—because a transplant is unavailable.

Much, but not all, of the organ shortage stems from an inadequate supply of transplantable kidneys, which forces thousands of patients to remain on dialysis, at a cost to Medicare of more than $35 billion annually, or nearly 1% of the federal budget. That figure could be substantially reduced if OPOs could procure additional organs.

Republican and Democratic critics who want to fix the problem cite federal watchdogs and news reports documenting, “lapses in patient safety, misuse of taxpayer dollars, and tens of thousands of organs going unrecovered or not transplanted.” That was how Grassley, Wyden, Young, and Cardin described the crisis in a blistering, nine-page letter to the chief executive of UNOS in February. The letter included a voluminous request for information into organ-collection practices, part of the bipartisan Finance Committee investigation currently underway.

In their July 2020 oversight letter, Porter and Bass cited Health and Human Services’ own data to show that reform is needed now, and they opposed a delay until 2026 that the industry’s biggest trade association is calling for.

“We cannot consign 20,000 or more patients to die waiting for organ transplants,” the letter said, “while federal contractors [OPOs] are not held accountable.”

Small Business Loans

Public records examined by POGO show that nearly 30 of America’s 58 organ procurement organizations have gotten federal Paycheck Protection Program loans—which can be forgiven if recipients meet certain requirements—collectively borrowing between $50 million and more than $100 million. The organizations’ individual borrowings from the program range from several hundred thousand dollars to as much as $10 million.

Other significant loan recipients include the United Network for Organ Sharing, the industry’s overseer based in Richmond, Virginia, and its trade group, the Association of Organ Procurement Organizations.

The loans, intended to support jobs at COVID-battered small enterprises as part of the CARES Act relief legislation, come with a so-called “necessity” requirement. Designed to prevent wealthy and other unqualified beneficiaries from getting federal money that would otherwise go to struggling small companies, the provision obliges borrowers to certify that, “current economic uncertainty made the loan request necessary to support the ongoing operations of the applicant.”

Since the program began doling out cash earlier this year, the Small Business Administration has declared that borrowers with loans under $2 million “will be deemed” to have made the “necessity” certification, and the agency has said it will not verify or audit compliance.

But of the nearly 30 more organ procurement organizations cited in public records as small business relief loan recipients, 18 have borrowed $2 million or more. And a significant number of those borrowers possess large financial reserves—whether held by the organization itself, or by foundations they have established.

To Borrow, or Not to Borrow?

Public filings show that OneLegacy, a big Los Angeles organ procurement organization, applied and was approved for a Paycheck Protection Program loan of between $150,000 and $350,000. As of 2018, it had cash reserves of some $85 million, and $36 million in foundation assets. Other public records show its CEO, Tom Mone, is paid more than $904,000.

POGO obtained a screenshot of April 9, 2020, deliberations involving Mone on the issue of taking such federal money. When Mone asked colleagues at other organ procurement organizations for their thoughts on a group message board, Susan Stuart, the CEO of a Pittsburgh-based OPO, responded that her organization had decided not to ask for federal money.

Stuart said her organization’s “financial situation” would probably not justify such a loan, and that “morally” she wouldn’t want to accept federal funds that might be more needed for others to “survive.”

Then she told Mone that, “when all of this is over and we return to some form of normalcy, OPOs are again going to be under the spotlight based on the President’s executive order to investigate the finances of OPOs.”

She warned, “If it is uncovered that some OPOs with large reserves have taken this loan/grant, the newspapers and lawmakers could turn this into a negative public hearing which we want to avoid.”

OneLegacy may have taken Stuart’s advice to heart.

In response to POGO, OneLegacy said that, in the end, it was decided federal money was no longer necessary, and it was refused. In fact, the funds were never intended for OneLegacy itself, but were applied for by its legally separate foundation, an entity not subject to UNOS or federal oversight.

OneLegacy told POGO that, “due to our rapid adoption of donor testing and identifying active transplant centers, we were able to continue organ donation as usual … without taking a PPP loan or any other additional federal or private financial support.”

Yet the OneLegacy Foundation, where federal money would have actually gone, does not engage in organ recovery directly. According to its website, its function is, “to support the mission of OneLegacy,” by various other means. And some of that support has drawn critical scrutiny from Congress because it can cost hundreds of thousands of dollars annually, spent on everything from sponsorship of a float in the Rose Bowl parade, to outreach to Hollywood, so “film companies, television programs, entertainment studios, producers and writers have access to a network of experts,” according to a OneLegacy press release. Such projects, OneLegacy says, help it promote support and understanding for organ-donation, and raise money.

As it happens, OneLegacy is also one of the 32 organ procurement organizations that Health and Human Services has found would be non-compliant with proposed regulations on both donation and transplantation rates, and in an October 2019 oversight letter, Porter (in whose district OneLegacy is located) labeled the contractor as “one of the worst performing OPOs in the country.”

In the same letter, Porter also pointed to the results of a 2010 Health and Human Services inspector general audit of OneLegacy. The audit found, among other things, that the group spent $327,000 on a Rose Bowl game and parade, “including float design and framework, football tickets, hotel rooms, limousines and flowers.” She also wrote that, “OneLegacy has continued to spend money on the Rose Bowl and submit a portion of its $75,000 per year float-sponsorship expenses to Medicare.”

An inspector general audit found, among other things, that OneLegacy spent $327,000 on a Rose Bowl game and parade, including float design and framework, football tickets, hotel rooms, limousines and flowers.

But according to Porter, little or no remedial action was taken by Health and Human Services or OneLegacy in response to the inspector general’s revelations. “Rather than take steps to boost its clinical performance or strengthen its financial management and controls, OneLegacy established a foundation in order to use private donations to pay for the majority of the costs related to the Rose Bowl,” Porter wrote.

Recent tax filings indicate that OneLegacy funneled between $20 million and $30 million to the foundation, the same entity that slated to receive a Paycheck Protection Program loan.

In response, OneLegacy said Porter’s characterization of the group as “one of the worst OPOs in the country” is “entirely inaccurate.” It said the salary of its CEO is fully in line with comparable pay in health care, and that the size of its other assets allows an organization of its size to operate effectively. It noted that a federal hearing officer ultimately found that funds it allocated for the Rose Bowl float were “appropriate,” and that it has “continued to include Donate Life Rose Parade Float expenses in our annual cost report” to the federal government.

Then there’s the Massachusetts-based New England Organ Bank, also identified as non-compliant by the government, which took a $5 million to $10 million Paycheck Protection Program loan. The group has combined financial assets of $35 million, plus more than $32 million in the affiliated New England Donor Services (NEDS).

A spokesman for the organization responded that, “Upon realizing that the economic impact of the pandemic on NEDS was less severe than expected, our board subsequently voted in early September to return the PPP funds to the U.S. Government, with interest.”

Another loan recipient with significant financial resources is the Gift of Hope Organ and Tissue Donor Network based near Chicago. According to public filings, it received between $5 million and $10 million in Paycheck Protection Program loans, and sits on $113 million in various assets, with a $23.7 million investment in another, unspecified affiliate, according to public filings.

A Gift of Hope spokesperson told POGO that it, “like thousands of non-profits across the nation,” applied for and received its federal loan, “in the early days of the pandemic because we were unaware of the financial impact the crisis would have on our organization.” As for its other assets, it added that, “For a healthcare organization with $70MM [million] in annual expenses, this reserve is not inappropriate.”

Gift of Hope’s spokesperson offered no reason why, with such large reserves, appropriate or not, the group still took federal loans, which it said were returned in August. 

“Best in the World”

For their part, the United Network for Organ Sharing and the organ-procurement industry it coordinates say they are doing a great job under difficult circumstances.

UNOS rejects most of the increasingly outraged criticism that has come its way, and the contention of critics that many of the transplant organizations it oversees are financially mismanaged, lack transparency, or currently fail to obtain as many organs as they would be required to under Trump’s proposed rule reforms.

Instead, UNOS’s president, Dr. David Mulligan, who is also a transplant surgeon, used a recent op-ed to blast the changes likely to accompany Trump’s plan as “shortsighted.”

“Yes, our organ donation system can and should improve,” he wrote, adding that the proposed rule “fails to acknowledge that, despite its imperfections, the U.S organ donation system is ranked the best in the world.”

UNOS stresses that organ donations have actually increased for the last nine years. Overall donations are up more than 38% since 2014. Forty-one of the organ procurement groups set their all-time organ donation record in 2019, the organization says.

Pushing back are Abe Sutton, a former top organ donation expert in the Trump White House, and Jennifer Erickson, a counterpart in Obama’s. In their own recent op-ed, they cite an article in the journal Clinical Transplantation, which said it is “indisputable that nationally the increased number of donors is almost wholly attributable to the drug [opioid] epidemic, and reflects the byproduct of a national tragedy, rather than an improved system to be celebrated.”

The Trump administration recently announced it would formally finalize rules for the president’s executive order by the end of the year. But if those standards are delayed or watered down under pressure from industry lobbying, thousands more patients may die.

Disclosure: POGO received support from Arnold Ventures in the amount of $400,000 per year for two years, to create a database for tracking COVID-19 spending and oversight. In 2017, the Laura and John Arnold Foundation (whose giving is managed by Arnold Ventures) supported peer-reviewed research into the performance of organ procurement organizations (OPOs).