U.S. to Audit Medical Foundation : Health care: Some families involved with bone marrow donor group complain of withheld funds. Five senators requested action.

A Covina-based bone marrow donor organization, set up to save the lives of cancer patients, will be subjected to a federal audit in the wake of complaints that the group withheld funds raised in donor drives, authorities said.

The U.S. Health and Human Services Department ordered the audit of the Life-Savers Foundation of America at the request of five U.S. senators.

Families of some cancer patients complained to the lawmakers that thousands of dollars donated to the foundation could not be accounted for.

Officials from the foundation, which has drawn national attention through its aggressive efforts to recruit donors by publicizing the stories of cancer victims, vigorously denied any financial wrongdoing Tuesday.

“We’re very comfortable with the notion that the whole system is going to be looked at,” said Dr. Rudolf Brutoco, founder of Life-Savers, adding that the audit raises the issue of bone marrow donations “to a higher level of awareness. And for that we’re grateful.”

About a dozen families claim that thousands of dollars raised through their efforts were donated to Life-Savers and could not be accounted for, said Jerold Mande, an aide to Sen. Albert Gore (D-Tenn.), one of the senators requesting the audit.

Life-Savers had promised the families that all the money they raised in the names of individual patients would be used to test potential donors recruited by the families with the foundation’s assistance.

Usually, potential donors who step forward are asked to contribute $75. Out of that, Life-Savers pays lab fees for tissue typing--testing bone marrow to see if it matches that of a cancer patient.

But the families question whether all of the funds were used for testing donors. They claim that, in some cases, volunteers waiting to be tested were turned away, even though there was money left from fund-raising drives, Mande said. In addition, families who wanted to end their association with Life-Savers were unable to transfer funds donated to Life-Savers in a patient’s name to another organization, he said.

The 2-year-old, nonprofit Life-Savers Foundation severed ties with the National Marrow Donor Program--a federally funded data bank that matches donors with recipients--in June after the groups accused each other of using improper procedures.

Life-Savers had been under contract to recruit donors for the national registry, and credited itself with bringing to the registry 100,000 volunteers since May, 1989.

Brutoco said in June that he terminated the contract because the national program was inefficient and suffered from a paralyzing backlog of donor information that made it extremely difficult to link patients and donors. But national registry officials said the split occurred because of “hostile action” taken by Life-Savers against a Bethesda, Md., family that had led an aggressive donor recruitment effort.

The family of leukemia patient Allison Atlas, which raised $2.2 million, helped add 20,000 names to the national registry. The Atlases had grown dissatisfied with Life-Savers and wanted control of $220,000 donated to the foundation in Allison’s name so that the family could conduct donor drives apart from the foundation.

Life-Savers refused to turn over the money, and filed suit to prevent the family from taking control of the funds. An undisclosed settlement was later reached out of court. One of the cases brought to the senators’ attention involved the Atlas family.

After it broke with the larger organization, Life-Savers decided to form its own data bank and became embroiled in another legal dispute--this time with the national registry over rights to donor information.

To start his own registry, Brutoco wanted to keep a list of about 100,000 potential donors and their medical histories that had been collected while Life-Savers was still under the national program.

National registry officials sued the foundation to get the list. In July, a federal judge in Minnesota ordered Life-Savers to turn over the entire list of names collected before the two groups separated.

Responding to the families’ charges, Brutoco said the foundation is steadfast in its policy of setting aside money raised by families or groups specifically for testing donors they recruited.

Potential donors are turned away only when there is not enough money in the foundation’s general fund to cover the costs of tissue typing, he said.

Joining Gore in asking for the review were Sens. Edward M. Kennedy (D-Mass.), Orrin Hatch (R-Utah), Dave Durenberger (R-Minn.) and Barbara Mikulski (D-Md.)

The senators asked Louis Sullivan, secretary of Health and Human Services, to examine the organization’s books from May, 1989, through June, 1990, when the group received about $500,000 in federal funds as a subcontractor of the American Red Cross.

The Health and Human Services Department’s office of the inspector general is scheduled to finish its review of the foundation’s books by June, 1991, audit manager Douglas Szucs said in San Francisco. It may be expanded to include other bone marrow donor organizations, he said.