Cordlife's affected clients have grounds for legal recourse but compensation may be limited based on contract, say lawyers
A Cordlife branch at Mount Elizabeth Novena Hospital on Dec 1, 2023.
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- Affected clients of Cordlife will have contractual grounds to seek recourse against the cord blood banking service, according to lawyers TODAY spoke to
- However, they added that the type and quantum of damages would depend very much on the terms of their contract with Cordlife
- A clause in a client service agreement seen by TODAY states that Cordlife’s liability to the client in some cases “will not exceed the amount of fees” the client has paid to the company
- One lawyer said those affected will have six years from the date of a breach of a contract to commence legal proceedings
- Another added that the courts may also award further damages as the nature of Cordlife’s service is to “provide a peace of mind” to its clients, and that this has now been affected
SINGAPORE — Affected clients of Cordlife will have contractual grounds to seek recourse against the cord blood banking service, lawyers said, but added that they should first take a wait-and-see approach on how the company addresses the situation before considering legal action.
This is due to the fact that investigations are ongoing and that those affected have a runway of six years from the date of a breach of a contract to commence legal proceedings according to the Limitation Act, one lawyer noted.
The Ministry of Health (MOH) said on Thursday (Nov 30) that seven of Cordlife’s tanks storing cord blood units were exposed to temperatures above acceptable limits — damaging some 2,200 cord blood units belonging to approximately 2,150 clients.
Storage of cord blood units is a private service offered to parents when their babies are first born. Cord blood contains stem cells which may be used in stem cell transplants to treat blood diseases and some cancers, should the baby develop these illnesses later in life.
“The people affected definitely have contractual grounds to seek recourse against Cordlife, but the type and quantum of damages would depend very much on the terms of their contract with them,” said Mr Darren Tan, deputy managing director of Invictus Law Corporation.
According to a clause in a client service agreement provided to TODAY by one of Cordlife’s affected clients, which was issued in January 2013 by the company, Cordlife would pay damages of US$25,000 (S$33,300) to the client under several conditions.
These conditions are that the cord blood unit is not viable for use for an approved stem cell transplant procedure, and that Cordlife is unable to find another suitable unit to match it.
TODAY understands that the damages outlined in newer contracts go up to S$50,000.
In a separate clause pertaining to “all other cases”, Cordlife’s liability to the client and their child “will not exceed the amount of fees” the client has paid to Cordlife.
Cordlife’s website states that parents may choose to make an annual payment of S$250 or pay a one-time upfront initial payment for the storage service.
Mr Steven Lam, founder and director of law firm Templars Law LLC, said that because the nature of Cordlife’s service is also to “provide a peace of mind” to its clients in the event of a medical emergency, the courts may award further damages upon assessing similar past cases or the “psychological impact” on the client.
Mr Tan said that while the courts are likely to uphold the terms of the contract, “there is nothing to stop the parties, Cordlife and its clients, from reaching a private settlement on terms agreeable to both sides for the breach”.
“Given that the breach affects a great number of parents, and the fact that they have six years from the breach to pursue any legal remedies, it may make sense for them to await an official response from Cordlife on how they intend to address the breach prior to considering any legal recourse,” he added.
Mr Lam said that affected parties may also choose to approach the Consumers Association of Singapore to “see whether the matter could be mediated”.
WHAT HAPPENED
Following a complaint from a member of the public on July 24 alleging that cord blood units stored in a tank at Cordlife had been exposed to temperatures above 0°C, the MOH conducted several unannounced audits in August and November.The audits revealed that seven of Cordlife's 22 storage tanks had exposed cryopreserved cord blood units to temperatures above acceptable limits at various times since November 2020.
In one of the tanks, approximately 2,200 cord blood units owned by around 2,150 clients were damaged. Experts appointed by MOH concluded that the units stored in that tank are unlikely to be suitable for stem cell transplant purposes.
Cordlife said in a media release on Thursday that the tank contained 2.66 per cent of all units.
MOH also found that Cordlife's temperature monitoring system did not alert Cordlife personnel about temperature excursions in two tanks from February to June 2022.
The ministry said that the company “has not taken adequate steps to expeditiously escalate, address and rectify the above issues, including the systemic problems which may have led or contributed to them”.
Following these findings, Cordlife, a company listed on the Singapore Exchange, was directed on Thursday to halt the collection, testing, processing and storage of new cord blood and human tissues.
They are also prohibited from providing new types of tests to patients for up to six months.
MOH said individuals who are concerned should contact Cordlife directly to enquire about the status of their cord blood unit, adding that it has instructed Cordlife to reach out to all its clients to address their concerns.
WHAT HAPPENS TO THE OTHER CORD BLOOD UNITS?
Investigations are ongoing for six remaining storage tanks containing approximately 17,300 units which belong to an estimated 17,050 clients.Pending the investigation outcome, MOH will consult experts to determine if similar tests should be performed for the units stored in these six tanks.
Commenting on concerns that Cordlife may become insolvent and hence unable to maintain the other stored cord blood units in its care, Mr Tan of Invictus said such a scenario is “possible” but unlikely.
“It is possible, but based on the fact that only 2 per cent of its storage is affected, it may not push Cordlife into insolvency. Further, I understand that Cordlife is a listed company, which means it may be able to raise capital or funds to deal with the current debacle,” he said.
“In the worst case, it may also be possible for other entities to take over the obligations of Cordlife in respect of the storage, even in the insolvency of Cordlife.”
When 38-year-old homemaker Bernice Ng first heard the news that Cordlife’s tanks were affected, she told TODAY that she felt “quite stressful” and was worried that the cord blood units of her three children would be affected as they had already been stored for some time.
Ms Ng said that she received an email late on Friday evening that the cord blood unit of her daughter, who was born in 2015, was not affected by the lapses. However, she had not received any news of the units for her other children born in 2013 and 2017.
Ms Ng, who has already paid more than S$6,000 to the company for its services thus far, added that she would much rather that the stem cells were unaffected than to receive any refunds from the company.
Another interviewee who wished to be known only as Mrs Tan said that Cordlife had informed her on Friday morning that they would terminate the contract she had signed with them in October for her child who is “due soon”.
Mrs Tan had not yet made any payments to Cordlife.
“I’m very disappointed that they were not forthcoming when they first discovered the lapses, because this involves business integrity,” said the 40-year-old who works in the finance industry.
“But I’m also relieved that I didn’t have to pay and store with them, as I can imagine how angry and helpless the affected parents are currently.”
