Red Cross fines are counter productive

by Jim Longworth

Our government loves to tax and spend. It also likes to tax and fine. Just try turning in your form 1040 a few days late, and watch the penalties mount.

It’s enough to make you want to join the Tea Party movement. Given our flawed system, however, the levy of fines against tax cheats and deadbeats is understandable, but for the life of me, I cannot get my head wrapped around Washington’s latest money grab.

Earlier this month, federal health regulators fined the American Red Cross $16 million for “sloppy screening of donated blood”. The fine included $10 million for mismanagement of blood products and $6 million for faulty manufacturing practices. This is not the first time the feds have slapped the Red Cross with fines. According to, the FDA has cited the organization no less than 12 times since 2003, with fines amounting to more than $20 million.

No doubt, mishandling of our nation’s blood supply is a serious matter, but the Red Cross claims that 98 percent of the violations occurred prior to 2008, and that most of them have been corrected. Moreover, the recalls cited by the government represent less than one-half of one percent of all blood products. The ARC released a statement which included the following language: ”We are disappointed that the FDA believed it necessary to fine us for prior violations dating back several years. The FDA knew there was no evidence that Red Cross violations endangered any patients.”

Here’s my problem: We all depend upon the Red Cross, not just for distribution of blood, but for assistance during times of crisis, such as in the aftermath of Hurricane Katrina. As such, it is counterproductive for the feds to reduce the limited financial resources which are used for disaster relief and other vital services. And so, in the wake of the recent fine, I made several phone calls to try and understand the logic of penalizing an organization that can ill afford to pay fines and still serve its mission.

I first spoke with Stephanie Millian of the ARC and asked her how the fines would impact on the Red Cross’ ability to serve the public. I also wanted to know how it might impact on monetary donations. Said Millian, “It’s important for people to know that the money for this fine does not come out of the generous donations people make to the Red Cross.”

“Then where does it come from?” I asked. “From our Bio Medical Services operating budget,” she replied.

“And how does that fine impact on the BMS budget?” I asked.

Said Millian, “These fines make it more difficult to invest in our operations.”

So there you have it. Catch 22. The feds are fining the ARC for a few operational errors, but now because of those fines, the Red Cross has less money with which to improve those operations.

I then contacted the FDA and spoke with public affairs specialist Shelly Burgess. I asked her two questions. Where do the fines go? and, Do you think it is counterproductive to fine the Red Cross in that manner? During our telephone conversation Burgess was, like myself, conflicted, but in her official e-mail response, she would only state the following: “[F]ines are paid to the US Treasury Department through electronic transfer in accordance with instructions provided by the Department of Justice.” It was a non response to my second question, but I expected no less from a nice person trying to keep her job.

My final call was to the Treasury Department where I left a message and an e-mail for Marty Adam, who works in the division that collects fines from organizations like the ARC. On the voice mail, I posed the same question to Adam as I had to Burgess at the FDA. Not surprisingly, Marty never returned my call.

Nevertheless, the Red Cross is still $16 million in the hole, and the monies the feds put into ARC’s operating budget to begin with has been siphoned off and returned to Timothy Geithner, who is now free to spend the funds for bailouts, or for sending soldiers overseas to die for oil.

Here’s my solution. President Obama should sign an executive order returning the fines to the ARC, where the money will go for improving operations, which is what the feds wanted in the first place. But that won’t happen because it makes too much sense. At the end of the day, it is ironic that the Red Cross, which provides relief during disasters, now needs relief from one of its own.

Jim Longworth is the host of “Triad Today,” airing on Fridays at 6:30 a.m. on ABC 45 (cable channel 7) and Sundays at 10 p.m. on WMYV (cable channel 15).