A Tenet of Impunity - Tenet Settles Kickback Allegations for $514 Million, No Individual Suffers Any Negative Consequences

anechoic effect corporate integrity agreement crime fraud health care corruption impunity kickbacks legal settlements Tenet

A Tenet of Impunity - Tenet Settles Kickback Allegations for $514 Million, No Individual Suffers Any Negative Consequences

Unknown 8/05/2016 Komentar

Tramp, tramp, tramp.  The march of legal settlements continues.  The latest entry is a corporation that has had a 20 plus year history of legal misadventures, allegations of unethical behavior, and actual crimes.  Here are the basics from the Atlanta Business Chronicle:

Tenet Healthcare Corp. (NYSE: THC) said Monday that it believes it has reached an agreement in principle with the government to resolve a long-running criminal investigation and civil litigation about a kick-back scandal involving an Atlanta medical clinic and three of the company's Atlanta-area hospitals.

Dallas-based Tenet said it has agreed to pay $514 million, has agreed to the appointment by the U.S. Department of Justice of a corporate monitor for a period of three years, and has agreed for two wholly owned subsidiaries that previously operated Atlanta Medical Center and North Fulton Hospital to each plead guilty to a single-count indictment.

In particular, regarding kickbacks,

The company's two subsidiaries will plead guilty to a single count of conspiracy to violate the federal anti-kickback statute and defraud the United States, Tenet reported.

Four hospitals owned by Tenet -- Atlanta Medical Center, North Fulton Hospital, Spalding Regional Medical Center and Hilton Head Hospital -- allegedly paid kickbacks to a Georgia company called Clinica de la Mama for Medicaid patient referrals. Clinica de la Mama operated medical clinics that provided prenatal care to predominantly undocumented Hispanic women in metro Atlanta and Hilton Head, S.C.

The contracts were in effect for various periods from 2000 to 2013 between the four hospitals.

Like many such settlements, this one evoked almost no media coverage, and what coverage there was appeared in the business, not health care news.  For example, the brief Wall Street Journal story focused almost entirely on the financial implications for Tenet of the settlement.  Thus the anechoic effect continues.  

Unpacking the Settlement

Bad Patient Care

First of all, the settlement included guilty pleas to charges of "conspiracy to violate the federal anti-kickback strategy."  The allegations were that the kickbacks were paid "for Medicaid patient referrals."  That means that Tenet was alleged to have paid the operator of medical clinics to send patients to Tenet hospitals.  This goes beyond financial crime.

Physicians swear oathes to put the care of individual patients ahead of all other concerns.  The new American Medical Association Principles of Medical Ethics states:

A physician shall, while caring for a patient, regard responsibility to the patient as paramount.

That means that decisions by physicians to refer patients to specific hospitals, specialists, etc should be based on what referrals would be best for individual patients, and certainly not on payments to the physicians by such hospitals, specialists, etc.  Kickbacks like those described above could send patients to hospitals that were not the most suitable for the patients' needs, thus potentially harming patients.  So this case raises big concerns about bad patient care, not merely unethical money transfers.

Yet in the minimal media coverage of the Tenet settlement, I see nothing about medical ethics, potential harms to patients, etc. 

Impunity

As is typical of such settlements, no individual who might have authorized, directed or implemented the kickbacks suffered any consequences.  While top managers of Tenet might have gotten even bigger bonuses because of the additional revenues supplied by the sorts of behavior discussed above, they  would suffer no financial penalties as a result of this settlement.  In fact, in 2015, the current Tenet CEO,  Mr. Trevor Fetter, who was an officer of the company in 2013, the last year kickbacks covered by the settlement ocurred, received total compensation of $15,354,283 according to the company's 2016 proxy statement.

Although in this settlement there were at least some corporate guilty pleas, allowing this case to be considered criminal, these pleas were not made by Tenet.  Instead they were by its subisidiaries.  This would allow Tenet itself  to avoid any non-financial penalties, such as being barred from participating in US government programs.  While the monetary size of the settlement appeared to be large, it was trivial compared to Tenet's annual earnings, which last year were over $18.6 billion according to Google Finance.

This settlement, like many others, included a corporate integrity agreement.  Such agreements, and conceptually similar deferred prosecution agreements, were heavily promoted, in part through the use of a logical fallacy, by then US Attorney, now Governor of New Jersey Chris Christie.  However, there seems to be little evidence that they deter future bad behavior (look here).  

Recidivism

Tenet actually has a long, dark record of misbehavior.  In 2012, we published our last post on Tenet.  It was about a $42.7 million dollar settlement the company made then of charges it overbilled the Medicare program from 2005-07.  As we wrote then:

While this story appeared briefly and without context in a few business news outlet, it really is part of a much bigger picture.

National Medical Enterprises

Published in 2006, Maggie Mahar's Money Driven Medicine was one of the important early works on health care dysfunction (see post here, the web-site of the documentary film based on it here).  One of the striking cases it discussed was that of Nartional Medical Enterprises.  NME was charged not only with run of the mill offenses like over-billing, but more exotic ones like kidnapping patients. NME eventually settled with federal authorities in 1994 for $379 million, and pleaded guilty to a variety of charges. The results were similar to many more recent cases. No one went to jail, and the CEO walked away with a golden parachute.  Despite the seriousness of the offenses, NME did not go out of business.  It simply changed its name - to Tenet Healthcare.

Legal Problems in the 21st Century

The "new" Tenet continued to have legal issues.  These included a $395 million settlement of the Redding Medical Center unnecessary heart surgery scandal in 2004 (look here), and a $21 million settlement of US government charges of kickbacks (look here), a $7 million settlement with the government of Florida of charges of fraudulent billing (look here), and a $900 million settlement of federal over-billing complaints (look here, and see our post here), all in 2006.  There was an apparent lull, and then in 2011 the company settled a class action suit brought after the deaths of 34 patients in a Tenet facility in New Orleans after Hurricane Katrina (see Bloomberg story here.)

Yet this more than 20 year history of repeated allegations, settlements, and crime did not apparently affect the latest settlement.

Conclusions

Nearly every big US health care corporation now seems to now have a long history of bad behavior, sometimes criminal behavior, that has not stopped the revenues from flowing, and the top managers from becoming millionaires, or billionaires.  Is it any wonder that a few years ago, nearly a majority of US respondents to a Transparency International poll declared our health care system to tbe corrupt (look here)?

Their dark musings may be partially due to their awareness that health care corruption is a taboo topic.  As we wrote about it in 2016 (look here)...

 Essentially, there is so much money to be made through pharmaceutical (and by implication, other health care corruption) that the corrupt have the money, power, and resources to protect their wealth accumulation by keeping it obscure.  In the Transparency International 2016 Report on health care corruption in the pharmaceutical industry,

However, strong control over key processes combined with huge resources and big profits to be made make the pharmaceutical industry particularly vulnerable to corruption. Pharmaceutical companies have the opportunity to use their influence and resources to exploit weak governance structures and divert policy and institutions away from public health objectives and towards their own profit maximising interests.

Keep in mind that the money made from corruption does not just go to innocent peoples' retirement funds that are invested in pharmaceutical stocks.  It predominantly goes to top corporate executives and managers, and their cronies who preside over the corrupt practices.

I might as well repeat myself once again.  As I wrote in 2015,

If we are not willing to even talk about health care corruption, how will we ever challenge it? 

So to repeat an ending to one of my previous posts on health care corruption....  if we really want to reform health care, in the little time we may have before our health care bubble bursts, we will need to take strong action against health care corruption.  Such action will really disturb the insiders within large health care organizations who have gotten rich from their organizations' misbehavior, and thus taking such action will require some courage.  Yet such action cannot begin until we acknowledge and freely discuss the problem.  The first step against health care corruption is to be able to say or write the words, health care corruption.

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UnitedHealth's Optum Division Settles Case Alleging it Enrolled Non-Terminally Ill Patients in Hospice, Thus Risking Their Deaths Due to Treatable Illnesses

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UnitedHealth's Optum Division Settles Case Alleging it Enrolled Non-Terminally Ill Patients in Hospice, Thus Risking Their Deaths Due to Treatable Illnesses

Unknown 7/19/2016 Komentar

Fraudulant hospice enrollment is a uniquely dangerous practice, yet the latest cases of it have, as usual, attracted little attention.

Background

As we have discussed before, hospice care was initially designed to provide more humane treatment of the terminally ill, particularly patients with advanced cancer.  The idea was that rather than subjecting such patients to futile, but often painful or dangerous treatment, they would receive humane, palliative care.  Hospice care initally was provided in the US by small, local non-profit organizations.  But since Medicare pays for hospice care fairly well, for-profit corporations soon got into the act.  As we have discussed previously, some hospices, often but not always for-profit, began to admit patients who were not terminally ill.

The danger is that hospice care specifically excludes potentially curative care, such as antibiotics for infection or surgery for appendicitis.  So if a patient who is not terminal is in hospice and that patient develops severe bacterial pneumonia, that patient may not get antibiotics and thus may die of a potentially curable disease. 

We have been writing about this dangerous aspect of modern hospice care since 2011 (look here).  In various posts here we have detailed particular cases of non-terminal patients admitted to hospice who later died, seemingly of the neglect of treatable illness mandated by the concept of hospice care.  There have also been cases in which patients with chronic pain, but no terminal illness, may have died from hospice's overly aggressive use of narcotics .  For example, in a 2014 Wasthington Post story,

Clinard 'Bud' Coffey, 77, a retired corrections officer, did the crossword in The Charlotte Observer after breakfast every morning, pursued his hobby of drawing cartoons, talked seven or eight times a day to his son Jeff and, just two weeks before his death, told a pal that he still felt 'like a teenager.'

He did, however, have some chronic back pain, and in late March he was enrolled in hospice care 'essentially for pain management,' his doctor said. Over a two week period, he received rising doses of morphine and other powerful drugs, grew sleepy and disoriented, and stopped breathing, dying peacefully at home, according to his family and medical records they provided.

The Latest UnitedHealth/ Optum Case

The latest case of allegations of fraudulant hospice enrollment involved a very big, very profitable corporation.  As reported in detail only in the Minneapolis Star-Tribune,

A division at Minnetonka-based UnitedHealth Group is paying $18 million to settle allegations that it submitted false claims to Medicare for hospice patients who were not terminally ill.

The payment announced this week resolves a whistleblower lawsuit against Optum Palliative and Hospice Care that alleged the company tried to boost the number of patients for whom it could bill the federal Medicare program, without regard to whether they were eligible for and needed hospice services.

UnitedHealth Group's Optum subsidiary is a fairly big player in the commercial hospice world,

Optum/Evercare provides hospice care in 12 U.S. markets, including Arizona and Colorado. It does not operate in Minnesota.

The Strib provides a bit more detail about what seems to have happened.

The government alleged that false claims in the case were submitted to Medicare from Jan. 1, 2007, through Dec. 31, 2013. The lawsuit argued that Optum discouraged doctors from recommending that ineligible patients be discharged from hospice, and failed to ensure that nurses accurately and completely documented patients’ conditions.

The allegations were first raised by former employees in whistleblower lawsuits, which let private parties sue on behalf of the government and share in any recovery. The share to be awarded in the Optum case has not yet been determined, the Justice Department said in a news release.

As is now tediously typical in legal settlements involving large health care organizations, the government allowed the case to settle without any determination of guilt or innocence, and of course, without any individual who may have profited from the alleged bad behavior having to suffer any negative consequences.

'We are pleased to resolve this issue and are proud of our long record of providing high-quality, compassionate hospice care consistent with the needs of patients and supported by their doctors and family members,' Optum said in a statement. 'We believe Evercare Hospice acted properly and did not engage in wrongdoing.'

Also,

'The claims resolved by the settlement are allegations only, and there has been no determination of liability,' the Justice Department said in a news release.

As is also usual in these cases, the monetary value of the settlement, while it might appear large to a middle-class lay-person, is tiny compared to the revenue of UnitedHealth. For example, according to Google Finance, the corporation's 2015 total revenue exceeded $157 billion.

All that would be bad enough if the case only involved financial fraud.  Again, as noted above, it is possible that some patients without terminal disease who were enrolled in UnitedHealth's Optum hospice could have died of treatable conditions.  Yet this possiblility was not addressed by the limited press coverage of this case, or even by the US Department of Justice's news release about the settlement. 

Other Recent Cases

In 2016, there have been nearly anechoic media reports of cases of smaller hospices at least alleged to have deliberately enrolled non-terminal cases.  Perhaps because these organizations involved were not "too big to jail," some of these cases involved findings of guilt.

Home Care Hospice

In February, 2016, according to the Philadelphia Business Journal,

Nearly three years after fraud charges against a Philadelphia nurse first surfaced, a jury found 68-year-old Patricia McGill guilty for her role in scamming Medicare out of $9.32 million.

McGill was the director of professional services for Home Care Hospice for roughly three years beginning in 2005. During that time, she authorized and supervised the admission of patients for hospice services that they did not need or were not eligible for, according to court records.

This was not the first finding of guilt in this case involving a small, local for-profit hospice.

Alex Pugman and Matthew Kolodesh, the owners of the defunct Home Care Hospice – at one time located along Grant Avenue in Northeast Philly – were previously convicted for their part in the crime. Kolodesh, of Bucks County, was sentenced to 14 years in prison after being found guilty on more than 30 separate counts.

Note that the sentences were severe, but as far as I could tell, not based on the possible danger to patients without terminal illness created by their admission to hospice.

Horizon Hospice Subsidiairy of  JourneyCare

As reported by the Pittsburgh Post-Gazette in March, 2016,

The former top executive at Horizons Hospice in Monroeville is set to enter a guilty plea Friday in connection with charges of scheming to send patients to the center who weren’t terminal so she could bill Medicare and Medicaid.

She was not the first person to be found guilty in this case.

One of the key witnesses was expected to be Oliver Herndon of Peters, the medical director at Horizons from 2008 to 2012.

Herndon was sentenced in July to 33 months in prison after pleading guilty to certifying patients for hospice care who weren’t terminal and keeping them there longer so Horizons could continue billing the government.

Again, the possible danger to the fraudulantly enrolled patients was not discussed in the media accounts. Note that Horizons Hospice is a subsidiary of JourneyCare, which appears to be a non-profit organization.

Multiple Michigan Hospices

As reported in April, 2016, by the Washington Free Beacon,

Five individuals who have donated to Democratic politicians pleaded guilty to a scheme that drained Medicare out of $33 million dollars.

Two physicians and three owners of hospice and home care companies based out of Detroit, Mich., were charged on June 18, 2015 as part of the largest Medicare fraud case in history for submitting fraudulent claims for home health care and hospice services that were either not provided or deemed medically unnecessary.

The elaborate operation revolved around Muhammad Tariq, Shahid Tahir, and Manawar Javed—the owners of the home health care and hospice companies—paying kickbacks and bribes to physicians for referrals to their companies that included A Plus Hospice and Palliative Care, At Home Hospice, and At Home Network Inc.

While the reporting of this case focused on the apparent political leanings of the individuals involved, it also ignored any danger to non-terminal patients.


Discussion

The problem of fraudulant enrollment of non-terminal patients in hospice continues, despite our efforts over five years to make the problem more public.  The latest case involved a very big, very wealthy for-profit health care corporation which has had its share of troubles in the past.  Yet the latest case is as anechoic as earlier ones, including smaller cases this year.

These enrollments may be motivated by the desire for more money, but they put patients at risk.  Nonetheless, such abuses by hospices get little press coverage, seemingly are ignored by health care regulators and law enforcement, and are almost completely anechoic in the health care, medical and health policy literature.

If a measure of society is how it cares for the most vulnerable patients, the US laissez faire approach to for-profit hospices suggests a society in decline.

To repeat what I wrote the last time for-profit hospices were (barely) in the news for enrolling the wrong patients,...

 In my humble opinion, we should return control of direct patient care, especially of the most vulnerable patients, to health care professionals and if necessary small non-profit community organizations.  We ought to give strong consideration to banning corporate hospices, and banning all forms of the corporate practice of medicine and corporate health care "delivery."

Given how many insiders make so much money from the current version of laissez faire capitalism in health care, however, I would expect strong resistance should such apparently "radical," but actually conservative proposals actually get any mainstream attention.

But in an election season now often dominated by ridiculous hyperbole and outlandish statements, maybe such vitally (literally) important issues should start getting some attention.     

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Their Cheating Hearts - Latest Allergan Settlement Is a Reminder of Merger Participants' Sketchy Pasts

Allergan crime deception fraud impunity kickbacks legal settlements obstruction of justice Pfizer RICO

Their Cheating Hearts - Latest Allergan Settlement Is a Reminder of Merger Participants' Sketchy Pasts

Unknown 11/25/2015 Komentar

A Huge, but Sketchy Merger

The announced merger and "tax inversion" of Pfizer and Allergan would be one of the largest corporate marriages in US history.  It has drawn more than its share of criticism.  For example, per the Los Angeles Times, former US Senator and Secretary of State, and current presidential candidate Hilary Clinton said "this proposed merger, and so-called inversions by other companies, will leave U.S. taxpayers holding the bag."

By creating the world's largest drug company, it could certainly further consolidate the US and global pharmaceutical market and raise already high drug prices.  While Pfizer in particular has benefited from US funding of biomedical research, including training of researchers and development of research infrastructure, (see this New Yorker article by John Cassidy) making the company pseudo-Irish may be "unpatriotic," as President Obama said with regard to tax inversions in general (per the Washington Post).

The nature of the merger, creating a company that would be Irish for tax purposes, but effectively run out of the US seems at least intellectually dishonest.  (Note that the CEO of its supposedly Irish component, Allergan, works out of Parsippany, NJ (per Bloomberg, here.)

The main beneficiaries of the merger appear not to be patients, or health care providers, or US taxpayers, but top company executives.  As John Cassidy wrote,

It's hard to avoid seeing the merger as a cynical move designed to boost Pfizer's stock price and generate a windfall for the company's senior managers....

But the latest settlement by Allergan, which I was just about to write about before the merger was officially announced, is a reminder that the companies are a good fit in one sense.  Both have long histories of shady behavior as marked by many legal settlements, and in some cases corporate guilty pleas and convictions.

The Latest Allergan Settlement

The beginnings of the latest Allergan settlement were noted back in July, 2015, but first not even connected to Allergan.  According to the US Federal Bureau of Investigation (FBI),

A former district manager of Warner Chilcott Sales U.S., LLC (Warner Chilcott), a pharmaceutical company based in Rockaway, N.J., pleaded guilty today in U.S. District Court in Boston in connection with a scheme to deceive insurance companies and Medicare so that they would cover the costs of Warner Chilcott’s osteoporosis medications, Actonel and Atelvia.

The idea was to promote two of Warner-Chilcott's products, osteoporosis medicines Actonel and Atelvia, by evading insurance company requirements for physicians to justify their use, given questions about their benefits versus harms, and availability of generic treatments for osteoporosis.

Beginning in 2010 and throughout 2011, Podolsky directed the sales representatives in his district to fill out prior authorizations for physicians who prescribed Actonel and Atelvia using false clinical justifications as to why the patient needed Warner Chilcott drugs and submit them to health insurance companies. In some instances, Podolsky’s sales representatives reviewed patients’ medical charts to get the information necessary to fill out the prior authorizations, in violation of the Health Insurance Portability and Accountability Act (HIPAA). Podolsky also directed sales representatives to utilize a website to submit prior authorizations to insurance companies to disguise their identity as pharmaceutical sales representatives. Podolsky and the sales representatives that he supervised knew that they should not be involved in the preparation or submission of prior authorizations.

But Podolsky was not a lone wolf. At the end of October, 2015, the Boston Globe reported more fully on the scheme, and the large settlement made by Allergan, of which Warner-Chilcott was merely a subsidiary. US Department of Justice allegations involved top leaders of Allergan.

The drug reps bought the doctors lunches, dinners, drinks. They paid for speeches the doctors never made. And in exchange, the doctors prescribed drugs that boosted their sales.

Warner Chilcott, a unit of pharmaceutical giant Allergan PLC, will pay $125 million to settle these and other charges in an agreement announced Thursday by US Attorney Carmen M. Ortiz in Boston.

Ortiz said the company ran an elaborate scheme to prod doctors — including in Massachusetts — to prescribe its drugs in exchange for kickbacks.

Warner Chilcott’s former president, W. Carl Reichel, was charged in federal court for allegedly conspiring to pay kickbacks to physicians, and a Massachusetts physician, Dr. Rita Luthra of Longmeadow, was indicted for allegedly accepting payments.

Warner Chilcott illegally promoted at least seven drugs, including the osteoporosis treatments Actonel and Atelvia.

Court documents show that Warner Chilcott representatives promoted their drugs by wining and dining physicians and giving them money and gifts for participating in medical education events. These events often were held at 'upscale restaurants' and contained 'minimal or no educational component.'

The company made fraudulent requests to the federal government and to insurance companies to boost sales of their drugs, the US attorney’s office said, and employees also made unsubstantiated claims about the drugs’ benefits.

Note that the charges were of actions that went well beyond financial fraud. They included dishonest marketing and kickbacks to physicians. The alleged actions could have harmed patients, by inducing physicians to prescribe unneeded drugs with known adverse effects.

Note further that unlike many other legal settlements about which we have written in the past, this one did not allow the company to escape by just paying some money and then claim that it did not confirm or deny the charges.  In this case, the company pleaded guilty.

Warner Chilcott has agreed to plead guilty to health care fraud. It will pay a $23 million criminal fine and $102 million to resolve false claims with state and federal governments. The case was brought by two whistle-blowers.

And as noted above, unlike many other legal settlements which did not entail any negative consequences for those who authorized, directed, or implemented the bad behavior, in this case a top executive (although not the highest executive in the overall corporate structure, and not a current executve) was charged with a crime and apparently actually physically arrested (although he has not been convicted of it, yet.)

Meanwhile, Reichel, the former Warner Chilcott president, was arrested in Boston on Thursday.

Prosecutors say in their indictment that Reichel designed a sales and marketing strategy to entice doctors to prescribe his company’s drugs with free dinners and bogus speaking fees. The physicians paid to give speeches often did not speak at all, and instead enjoyed expensive dinners with sales representatives, the indictment says.

Reichel left Warner Chilcott in 2011, according to a news release.

Furthermore, per a Forbes column, Mr Reichel was allegedly involved up to his proverbial eyeballs.

The Reichel indictment says that, while president of Warner Chilcott’s pharmaceuticals divisions from 2009 to 2011, he directed company sales staff to push physicians’ to prescribe its drugs by throwing money at doctors’ in various ways, such as expensive dinners for doctors and their spouses and 'speaker' fees to attend informal dinners without educational content.

Reichel also allegedly provided sales reps with a separate expense account to buy food and drinks for employees of physicians who prepared prior authorization forms certain insurers required to pay for patients’ drugs.

Reichel hired 'Type A crazy' sales representatives, as he called them, who were provided with 'limited training concerning compliance with health care laws and otherwise de-emphasized the importance of compliance to the sales force,' the indictment says.

Of course, the top executive in the overall corporate structure said the usual, as likely written by his public relations spin doctors,

Brent Saunders, the chief executive of Dublin-based Allergan, said in a statement: 'We take seriously our responsibility and commitment to abide by all US and international laws that govern the sales, marketing, education, and promotion of our products, and recognize the tremendous impact that this responsibility has on the customers and patients we serve.'

Finally, two other middle managers involved in the case entered guilty pleas, according to the Department of Justice.

Thus this settlement may be regarded as much tougher than many previous legal settlements involving big health care organizations.

However, its bearing on the huge Prizer-Allergan merger has apparently not so far been publicly discussed.

Allergan's Previous Track Record

It is not that the new Allergan settlement is a one-off.   It needs to be viewed in the context of Allergan's previous history of misbehavior.

That history may be a bit obscure, especially because of Allergan's complex corporate structure.  However, a Wall Street Journal article on the merger provided a bit of Allergan's corporate back story,

Allergan itself is the result of a number of mergers in quick succession. It started off as a generic-drug company called Watson Pharmaceuticals Inc. In 2012, Watson acquired Swiss rival Actavis Group and adopted that name. It also absorbed Warner Chilcott PLC and Forest Laboratories Inc. in multibillion-dollar deals.

Mr. Saunders was CEO of Forest Labs, and became CEO of Actavis after that deal. Shortly after, Allergan’s predecessor was put into play when Valeant Pharmaceuticals International Inc. made an unsolicited offer to buy the California company.

Actavis then stepped in as a white knight and bought Allergan, taking the company’s name.

Allergan and its predecessor companies have an interesting record of misbehavior.  Just perusing Health Care Renewal one can find:

-  Actavis was convicted and fined more than $170 million in 2011 by a Texas jury of misrepresenting prices to the state's Medicaid program (see this post.)

-  In 2010, in case which included allegations that it paid kickbacks to physicians to promote its product, Allergan pleaded guilty to to federal charges of misbranding of Botox and agreed to penalties of about $600 million (see this post).

-  In 2010, Forest Laboratories settled allegations that it deceptively promoted drugs, particularly that it promoted anti-depressant Celexa for children by partially by covering up negative trial results about it.  This likely hurt patients, since anti-depressants like Celexa have been shown to have severe adverse effects, including suicidal ideation, for children.  The company also was charged with giving kickbacks to physicians to promote drugs.  The company pleaded guilty to a felony charge of obstructing justice, and two misdemeanors, including misbranding Celexa and illegal distribution of Synthroid.  The company paid over $300 million in penalties and submitted to a corporate integrity agreement.  (See this post)  The Department of Justice threatened to disbar the CEO of Forest Laboratories, but then inexplicably backed off (see this post). 

So the latest settlement by Allergan subsidiary Warner Chilcott is the fourth major settlement since 2010.  The company and its predecessors have pleaded guilty to crimes, at least once to a felony, and settled cases involving allegations of kickbacks and deceptive marketing practices. 

Pfizer's Previous Track Record

And things really get interesting when one considers Pfizer's track record, which seems much sorrier than Allergan's.  Our latest post, about Pfizer misbehavior was only one month ago (October, 2015).  A  UK judge found that the company threatened health care professionals for using a generic competitor.

Many posts on Pfizer can be found here.   The latest update of Pfizer's troubles since 2000 follows.

In the beginning of the 21st century, according to the Philadelphia Inquirer, Pfizer made three major settlements,
- In 2002, Pfizer and subsidiaries Warner-Lambert and Parke-Davis agreed to pay $49 million to settle allegations that the company fraudulently avoided paying fully rebates owed to the state and federal governments under the national Medicaid Rebate program for the cholesterol-lowering drug Lipitor.
- In 2004, Pfizer agreed to pay $430 million to settle DOJ claims involving the off-label promotion of the epilepsy drug Neurontin by subsidiary Warner-Lambert. The promotions included flying doctors to lavish resorts and paying them hefty speakers' fees to tout the drug. The company said the activity took place years before it bought Warner-Lambert in 2000.
- In 2007, Pfizer agreed to pay $34.7 million in fines to settle Department of Justice allegations that it improperly promoted the human growth hormone product Genotropin. The drugmaker's Pharmacia & Upjohn Co. subsidiary pleaded guilty to offering a kickback to a pharmacy-benefits manager to sell more of the drug.

Thereafter,
- Pfizer paid a $2.3 billion settlement in 2009 of civil and criminal allegations and a Pfizer subsidiary entered a guilty plea to charges it violated federal law regarding its marketing of Bextra (see post here).
- Pfizer was involved in two other major cases from then to early 2010, including one in which a jury found the company guilty of violating the RICO (racketeer-influenced corrupt organization) statute (see post here).
- The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).
- Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York in early 2011 (see post here).
- In March, 2011, a settlement was announced in a long-running class action case which involved allegations that another Pfizer subsidiary had exposed many people to asbestos (see this story in Bloomberg).
- In October, 2011, Pfizer settled allegations that it illegally marketed bladder control drug Detrol (see this post).
- In August, 2012, Pfizer settled allegations that its subsidiaries bribed foreign (that is, with respect to the US) government officials, including government-employed doctors (see this post).
- In December, 2012, Pfizer settled federal charges that its Wyeth subsidiary deceptively marketed the proton pump inhibitor drug Protonix, using systematic efforts to deceive approved by top management, and settled charges by multiple states' Attorneys' General that it deceptively marketed Zyvox and Lyrica (see this post).
- In January, 2013, Pfizer settled Texas charges that it had misreported information to and over-billed Medicaid (see this post).
- In July, 2013, Pfizer settled charges of illegal marketing of Rapamune (see this post.)
- In April, 2014, Pfizer settled allegations of anti-trust law violations for delaying generic versions of Neurontin( see this post).
- In June, 2014, Pfizer settled another lawsuit alleging illegal marketing of Neurontin (see this post).
- In 2015, a settlement by Pfizer of a shareholders' lawsuit stemming from charges of illegal marketing was announced (see this post).

Summary

So the proposed merger of Pfizer and Allergan would truly create a behemouth of bad behavior.  The combined company would have a staggering record of legal settlements, guilty pleas and convictions involving deceptive marketing, fraud, kickbacks, bribes and anti-trust violations, and even an obstruction of justice plea and a RICO conviction.  Yet the managers in charge of the two companies when the bad behavior occurred never had to suffer any negative consequences (although in one current case there is the possibility one executive might be convicted).  Many of these managers have become amazingly rich during the course of their leadership.  Is there any reason to think, absent any unexpected increase in the courage and resolve of government law enforcement, or any unexpected public protest, that the new company will not continue to misbehave as long as its executives are making money from the process?

The Pfizer Allergan merger is the true poster child for the amorality, and consequent dysfunction and decline of modern US and now global health care. As long as top managers of big health care organizations can act with impunity, can avoid all responsibility for their organizations' bad behaviors, and can personally profit wildly from their companies actions, the health care death spiral will continue.  Will we continue to cry out in the wilderness, or will anyone else see the writing on the wall?

A musical moment to partially alleviate the gloom. "Your Cheatin Heart" sung by Hank Williams Jr.



 

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DaVita Settles Another Lawsuit Amidst Accusations of "Managing Witnesses to Provide False Testimony," After Justice Department Lost Interest in Participating

DaVita fraud impunity legal settlements

DaVita Settles Another Lawsuit Amidst Accusations of "Managing Witnesses to Provide False Testimony," After Justice Department Lost Interest in Participating

Unknown 5/08/2015 Komentar

The Latest Case

Less than a year since its last big settlement (look here), DaVita HealthCare Partners, the big for-profit dialysis provider, has to settle again.  The basics, according to the Denver Post, were:

DaVita HealthCare Partners said Monday it will pay up to $495 million to settle a whistle-blower lawsuit accusing the Denver company of defrauding the federal Medicare program of millions of dollars. 

The company, which said it does not admit any wrongdoing, has now settled its third whistle-blower lawsuit since 2012, with payouts totaling nearly $1 billion.

The civil suit, filed in Atlanta in 2011, revolves around a claim by Dr. Alon J. Vainer and nurse Daniel D. Barbir, who both worked for DaVita. They noticed that DaVita was throwing out good medicine that it then billed Medicare and Medicaid for, according to the lawsuit.

The details of the allegations about how the government was defrauded were:

The lawsuit cited DaVita's inefficient use and costly waste of the drugs Zemplar, or vitamin D, and Venofer, an iron supplement. If a patient, for example, needed 25 milligrams of Venofer, the physician would use that much and toss the rest of the 100 mg vial. Medicare would be billed for the 100 mg.

In other instances, if a patient needed 8 mg of Zemplar, DaVita doctors were instructed to a use a 10 mg vial, instead of four 2 mg vials.

According to the lawsuit, the National Centers for Disease Control and Prevention recommended against allowing multiple uses of the same vial in 2001, based on infection outbreaks caused by the re-entry of another drug, Epogen. But a year later, CDC changed its policy and allowed re-entry of single-use vials Epogen, Zemplar and Venofer if procedures were followed.

DaVita did not do this but 'should have,' according to the lawsuit, 'but they (DaVita) intentionally did not do so in order to purposefully create and maximize their waste and receive significantly higher reimbursements and revenue for Venofer and Zemplar usage.'

The US Department of Justice did not seem interested.

The case began as a sealed lawsuit filed with the federal government in 2007. But, after two years of investigating, the government decided not to join the lawsuit, according to The New York Times.

As is de rigeur in such cases, a company spokesperson proclaimed that the company only settled to avoid the expense and uncertainty of a trial,

'Although we believe strongly in the merits of our case, we decided it was in our stakeholders' best interests to resolve it,' DaVita's chief legal officer Kim Rivera said in a statement Monday. 'The potential mandatory penalties for being found in the wrong in even a small percentage of instances were simply too large.'

As best as I can tell, the penalties were only monetary, and accrued only to the company as a whole, not to any individuals who authorized, directed, or implemented the alleged misbehavior.

Meanwhile, as reported by Forbes this week,  DaVita CEO Kent Thiry's most recent yearly compensation was $17,099,257, and he continues to feel comfortable pontificating

'They don’t care how much you know,' he tells FORBES, 'until they know how much you care.'

The Forbes piece's timing may have not been coincidental, perhaps designed to put a smiling face on the company after yet more evidence of ethical problems.  If only Mr Thiry would show how much he cares about the ethics of his company's operations.

The company's integrity is particularly an issue since vulnerable patients entrust it with their care.  For example, the company's kidney care division claims it cares for 174,000 dialysis patients.  

However, there is still more to the story.


DaVita's Past Record 

We have often noted that big health care organizations get relatively lenient treatment from law enforcement compared to, say, small time Medicare and Medicaid fraudsters (e.g., look here.)  In this case, law enforcement was not just lenient.  The government law enforcers simply stepped away from the case, leaving it to proceed privately.  

What makes this particularly striking is DaVita's past record.  The Denver Post article included,

Since the case was filed, DaVita has settled on two other lawsuits brought on by whistle-blowers. In 2012, DaVita agreed to pay $55 million to the federal government and others over fraud claims that it medically overused and double-billed the government for Epogen, an anemia drug. The suit was filed by Ivey Woodard, a former employee of Epogen-maker Amgen, in 2002.

In October, the company paid $389 million to settle criminal and civil investigations into whether DaVita offered kickbacks to kidney doctors for patient referrals. David Barbetta, a DaVita senior financial analyst, filed the suit in 2009. The company in January paid an additional $22 million to settle related claims by five states, including Colorado. 

In fact, as we noted in a post last year, Gambro Inc, a company with which DaVita had a joint venture, and which was later acquired by DaVita, made multiple settlements, of alleged kickbacks and health care fraud, from 2000 - 2004.  And the proposed acquisition by DaVita of Gambro provoked charges by the Federal Trade Commission of anti-competitive practices.  

The federal authorities ought to have known about at least the 2000 - 2005 settlements and allegations, and the case filed in 2002 that was settled in 2012, at the time it decided not to pursue the current case.  So their conduct here seemed even more lenient than usual.

Questions of Witness Manipulation

Despite the company's protestations that it settled as a matter of expediency, there is reason to think there might have been other motivation.  A blog post on Reuters by Alison Frankel stated

[Plaintiffs' attorneys] Wood, Wilbanks and their team persuaded the judge overseeing the case, U.S. District Judge Charles Pannell of Atlanta, that DaVita had orchestrated what Judge Pannell called 'a disturbing pattern of alterations in witness testimony.'

At the time the case settled, the judge was contemplating a motion by the whistleblowers to lift attorney-client privilege under the crime-fraud exception. Even DaVita, in a post-hearing brief filed on March 31, conceded that 'regrettable mistakes have been made in this case.'

Those mistakes began to emerge in November 2013, when Wood and the other whistleblower lawyers filed a motion for sanctions against DaVita. They claimed, among many other things, that the witness DaVita designated as its expert on a computerized dosage system gave false testimony at his deposition in October 2012 and only admitted his mistakes when plaintiffs’ lawyers confronted him with contradictions a year later. According to the sanctions motion, DaVita’s lawyers also improperly coached witnesses to change their deposition testimony about the dosage system. DaVita responded that its expert witness had corrected his testimony as soon as he realized his mistake, long before plaintiffs threatened sanctions. The company called the plaintiffs’ coaching and conspiracy theories 'facially incredible and a complete fiction.'

Nevertheless, after discovery that Judge Pannell called 'a series of protracted fights resulting in furious rounds of briefing, hearings, and accusations' and a three-day hearing before the judge in July 2014, Pannell concluded the evidence of forgetfulness and changed testimony from several witnesses was 'highly suspect.' At best, he said, DaVita tacitly led the whistleblower lawyers astray by letting erroneous testimony from its computer expert stand for a year.

At worst, Pannell wrote, 'the defendants purposely manipulated the evidence and witnesses to hide the truth from the (plaintiffs) and the court.' He ordered discovery to be reopened and instructed DaVita to pay plaintiffs’ lawyers their fees and costs for the sanctions litigation and the newly ordered discovery.

DaVita’s troubles still weren’t over, however. According to a November 2014 motion by the whistleblowers’ lawyers, a former DaVita clinical services specialist admitted in a post-sanctions deposition that she lied under oath at one of her previous depositions. She said she couldn’t say why without revealing privileged communications, which prompted plaintiffs’ lawyers to ask Judge Pannell to lift the privilege. 'DaVita’s scheme of managing witnesses to provide false testimony,' they wrote, 'will now collapse like a house of cards.'

The judge was sufficiently concerned to order an in camera review of communications between DaVita lawyers and three DaVita witnesses who changed their deposition testimony about the computer dosage system through errata filings or cited privilege in refusing to answer questions about it. He also held four days of hearings on the whistleblowers’ crime-fraud motion, including in camera testimony from those three witnesses and from two DaVita defense lawyers.

So the judge in this case thought there were serious suspicions that DaVita lawyers manipulated witnesses.  If true, this would be a whole other order of unethical behavior. Yet again this case was not considered big enough to become a "federal case."

Summary

So yet again we see a large health care company settling a lawsuit that alleged unethical acts, and in this case, generated further allegations of unethical acts during the litigation itself.  The settlement was for what seemed a lot of money, but actually little money compared to the corporation's revenues.  The settlement did not take into account previous legal and ethical allegations against the company.  The settlement did not involve any negative consequences for any individual who might have authorized, directed or implemented any of the apparent bad behavior.

We have seen such settlements again and again in the US health care sphere, and indeed in other spheres, such as finance.  They appear, as I have said before, to be part of a larger, mannered Kabuki play, in which rituals are performed to show some symbolic acceptance of ethics and morality, but without any true deterrent effect on bad behavior.

Perhaps the origin of the script was in some neoliberal fantasy that big corporations and their leaders ought to be exempt from even slightly harsh justice because of their economic importance, e.g., that they are Too Big to Jail.  A recent review of the book "Too Big to Jail" in the Washington Monthly noted that Mr Eric Holder, the current US Attorney General has urged leniency for big, and hence economically powerful corporations,

a memo written by Holder in 1999, during his stint as deputy U.S. attorney general. The document, 'Bringing Criminal Charges Against Corporations,' urged prosecutors to take into account 'collateral consequences' when pursuing cases against companies, lest they topple and take the economy down with them. Holder also raised the possibility of deferring prosecution against corporations in an effort to spur greater cooperation and reforms—a policy, unsurprisingly, later supported by the Bush administration.

The attorney general angered many last year when he reiterated those concerns at a congressional hearing, admitting 'that the size of some of these institutions becomes so large that it does become difficult for us to prosecute' because of the potential nasty economic effects of a major company failure.

Relieving large corporations and their leaders from the need to follow the law is a recipe for impunity, if not oligarch, and goes against the fundamental spirit of the US Constitution.  But, hey, who's counting?

The impunity of large corporations and their leaders has become so routine as not to even be news anymore.  I cannot find any coverage of the current DaVita settlement so far beyond a few regional news outlets, and one business wire service.  The national media and as been as blase as was the Justice Department.  A short version of the story, similar to that in the Denver Post, did appear in a nephrology news service, but I saw nothing in the national medical news media.  Legal settlements like this remain relatively anechoic. 

So yet another marcher in the parade of legal settlements could inspire boredom.  However, the cumulative procession of demonstrations that neither the US government, the news media, the medical and health care literature, nor any medical societies, patient advocacy groups, accrediting organizations, health care foundations and the like seem to care about continuing, repeated unethical behavior by large health care organizations should chill the hearts of patients and health care professionals.  If we do not stand up for ethical, honest health care, what kind of swamp will health care become?

As I have said again, again, again,...  Leadership that cares not for honesty, transparency, or accountability, and that puts short term revenue, and usually personal enrichment ahead of patients' and the public's health may be the single most important reason that US health care is so dysfunctional.  Yet hardly anyone even dares discuss the damning facts about health care leadership, much less propose solutions.  If we do not reform our health care leadership so that it is transparent, honest, accountable, unconflicted, and it puts patients' and the public's health over personal enrichment, our health care system will continue to founder.  

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Three More Settlements by Medtronic of Allegations of Deceptive Behavior, but No Umpire Says "You're Out"

anechoic effect deception fraud impunity kickbacks legal settlements Mark Leavitt Medtronic Victor Dzau

Three More Settlements by Medtronic of Allegations of Deceptive Behavior, but No Umpire Says "You're Out"

Unknown 4/09/2015 Komentar

Medtronic, the giant, previously US based device maker settled three lawsuits, all alleging deceptive practices, over three months in early 2015.  I will summarize the settlements in chronological order.

Medtronic Subsidiary EV3 Settled Suit Alleging it Coached Hospitals about How to Overbill Medicare

This was actually an old case, originally against a company that Medtronic bought out, but only settled this year, in February.  As reported by the Minneapolis Star-Tribune,

A Plymouth medical device company owned by Medtronic has agreed to pay $1.25 million to settle a federal lawsuit alleging that it wasted Medicare dollars.

The medical device company EV3 is settling a whistleblower’s claims that in 2006 and 2007, a company it acquired improperly coached hospitals across the country on how to overbill Medicare for minimally invasive procedures to remove hardened plaque from patients’ arteries using one of its devices, called the Silver Hawk.

Specifically, former sales representative Amanda Cashi alleged that the company told hospitals that 80 percent of their patients for the Silver Hawk procedure should stay overnight in the hospital following an atherectomy, leading to higher Medicare payments. The promises of higher reimbursement were intended to drive sales of Silver Hawk devices. Cashi and federal prosecutors who joined her lawsuit said most of the patients should have gotten lower-paying same-day procedures in an outpatient setting.

As is standard operating procedure for such litigation,

[Irish Medtronic subsidiary] Covidien, which negotiated the settlement agreement, is not admitting wrongdoing and specifically denies the allegations in the six-year-old lawsuit, the settlement agreement says.

'Medtronic is committed to the highest standards of ethical conduct, and we take responsibility for delivering outstanding results to our partners, patients and colleagues,' a company statement said. 'The case relates to historical conduct that took place under Fox Hollow. … We are pleased to have the matter resolved.'

Of course, there may be a bit of irony there, since I doubt that the original manufacturer of Silver Hawk, FoxHollow, or its successors were pushing to get the case resolved quickly, and Medtronic likely ultimately financially benefited from the prolonged delay. 

Note that in 2005 we first posted about the questionable clinical research data that FoxHollow used to promote the device

Medtronic Settled Suit Alleging it Gave Kickbacks to Doctors to Promote Unjustified Procedure that Used Medtronic Neuromodulation Device

Just two days later, the Star-Tribune reported,

Medtronic PLC will pay $2.8 million to the U.S. Justice Department to settle a false-claims case that alleged that the Minnesota devicemaker made illegal payments to doctors to recommend a medical procedure that was neither safe nor effective.

In particular,

The case surrounds allegations of corporate promotion of uses of a neurostimulation device that were not approved by the U.S. Food and Drug Administration. The Justice Department said Medtronic paid doctors in 20 states 'tens of thousands of dollars' to encourage health providers to use the device off-label.

This 'created a new, rapidly expanding market for their devices and a potentially huge source of profit for themselves at the expense of the federal Treasury,' the government said in a federal lawsuit.

As in the previous case, the settlement allowed Medtronic to deny "it did anything wrong."

Medtronic Settled Suit that Alleged it Sold Chinese or Malaysian Spinal Surgery Devices as Made in the USA

Finally, in April, 2015, the Star-Tribune again reported,

In its third federal settlement in two months, Medtronic PLC has agreed to pay $4.4 million to settle allegations that it deliberately violated U.S. law requiring that devices sold to the military be manufactured in the United States or its international trading partners.

The False Claims Act lawsuit, handled by Minnesota U.S. Attorney Andrew Luger’s office, alleged among other things that the formerly Fridley-based med-tech company brought spinal surgery devices in from China and then relabeled them 'Manufactured in Memphis, TN,' where its spinal division is based, before selling them to the government.

Of course,

Medtronic spokeswoman Cindy Resman said that although the company has since improved its country-of-origin disclosures in government contracts, it 'makes no admission that any of its activities were improper or unlawful.'

The settlement focused on 'a limited number of accessories and surgical instruments used in spinal surgeries that were provided to Medtronic by third-party suppliers and were manufactured in China or Malaysia. The overwhelming majority of Medtronic’s products are manufactured in the United States or its trading partners, such as Mexico or Ireland,' she said in an e-mail.

But can you believe them now?

Discussion

Medtronic made three settlements over three months, all of allegations that it deceived, directly or indirectly, doctors, patients, or the government.  These settlements were not isolated events.  In June, 2014 we discussed a settlement Medtronic made of allegations that  Medtronic gave kickbacks (that is, bribes) to doctors to get them to use its cardiac devices.  Previously, as we noted then, ...   As Bloomberg summarized,

 Medtronic agreed in 2007 to pay about $130 million to settle consumer suits accusing the device maker of hiding defects in its defibrillators. The company agreed to a $268 million settlement of suits in 2010 over allegations that fractured wires in another line of defibrillators caused at least 13 patient deaths.

In fact, Medtronic has provided our blog with lots of material.  We first discussed detailed and vivid allegations that Medtronic had been paying off doctors starting in 2003 here in 2006.  Medtronic has been involved in other lawsuits alleging various kinds of deception.
-  In 2011, it settled for $23.5 million two other federal lawsuits alleging it paid kickbacks to encourage physicians to implant its devices (look here).  
- In 2008, Medtronic subsidiary Kyphon settled a suit for $75 million and signed a corporate integrity agreement for allegations that it defrauded Medicare through a scheme that lead to excessive hospitalization for patients who received the company's spine surgery device (link here)
- In 2006, Medtronic subsidiary Sofamor Danek settled for $40 million allegations that it gave kickbacks to doctors in the form of sham consulting fees and lavish trips (look here).

One loses count of all the settlements and cases in which Medtronic was accused of deceptive practices.  Some settlements were for larger amounts, some for smaller.  Yet none of the settlements were large enough to really affect a company which reported earnings of just under $1 billion in 2014 (per this WSJ article.)   None of the later legal settlements seem to have taken into account the company's previous record.

But this is typical of how legal settlements made by large health care corporations are handled.  Almost never is the settlement big enough to have deterrent value.   

The revenues of the company could very well have been increased by the activities alleged to have occurred in the course of this litigation, and these revenues were likely used to justify outsize compensation for top corporate managers.  According to the company's 2014 proxy statement, in fiscal 2014, CEO Omar Ishrak got $12,118,846 in total compensation.  All other listed executives got at least $3.5 million.  In none of these cases did anyone at the company who might have authorized, directed, or implemented bad, and particularly deceptive behavior suffer any negative consequences.   

But this is typical of the impunity seemingly granted to top health care organizational managers.

In baseball, it's three strikes and you're out.  For the leaders of big health care corporations, however, no matter how many strikes your company makes, you never seem to be out.  Despite a continuing stream of ethical issues occurring on their watch, management usually succeeds in becoming filthy rich.


Maybe that would change if the public, or health care professionals, knew all about such things.  However, these settlements remain anechoic.  Although the latest Star-Tribune article did note that the latest 2015 settlement occurred after two previous settlements this year, none of the reporting about these settlements seems to have noted all the previous settlements.  Finally, the discussion of these cases involving a prominent device company and multiple allegations of deceptive, dishonest, unethical behavior never seems to go beyond business sections of media outlets.  Even though such continuing dishonest behavior could have corrosive cumulative effects on health care ethics, the morale of health professionals who have to deal with such deception, and patients' and the public's health, discussion of it never makes it into the medical and health care literature, a striking example of the anechoic effect.

Maybe if more health care professionals, and the public at large, knew the story better, they might ask what sort of stewardship was exerted by the Medtronic board of directors? Maybe they could ask current Medtronic board members, like Rensellaer Polytechnic Institute President Shirley Ann Jackson, and  former US Secretary of Health and Human Services Michael O Levitt,  and former board members, like Dr Victor J Dzau, who was pressured to leave the Medtronic board after he became President of the Institute of Medicine and this membership was noticed (look here)  These board members were making over $200,000 a year, and piling up Medtronic stock, supposedly for exerting stewardship over the company.

But typically board members of big health care organizations remain unaccountable.  

There seems to be increasing recognition that the continuing rise in US health care costs is unsustainable, and that these costs are not buying us good health care.  There are calls to avoid unnecessary, and sometimes harmful care.  Yet there is a persistent disconnect between how continuing dishonest behavior by health care organizations, impunity of their leaders, and lack of accountability by their board members fuel rising costs, shrinking access, and bad outcomes for patients.

To truly reform health care, we will have to at least recognize the causes of the current dysfunction.  Recognizing how health care dysfunction is created by unaccountable, dishonest leadership should lead to true reform that would promote well-informed, honest, accountable leadership that puts patients' and the public's health ahead of personal gain.  

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None Dare Call It Health Care Corruption

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None Dare Call It Health Care Corruption

Unknown 1/29/2015 Komentar

... even when allegedly a prominent academic physician's traded referrals of cancer patients to a law firm, resulting in referral fees to a prominent politician who worked for the firm, for government research grants to the physician's foundation and another foundation on whose board he sat, and a job for his son at yet another non-profit organization.
***

Health care corruption, remains a largely taboo topic, especially when it occurs in developed countries like the US.  Searching PubMed or major medical and health care journals at best will reveal a few articles on health care corruption, nearly all about corruption in less developed countries far away from where the authors live.  When the media may publish stories about issues related to health care corruption, they are almost never labelled as such.

For example, last year we discussed two widely reported cases of alleged political corruption.  One included allegations that a company producing a supposedly anti-inflammatory dietary supplement bribed Robert McDonnell, the former Governor of Virginia.  Mr McDonnell was later convicted and sentenced to two years in jail for public corruption (look here).  Another included allegations that Rick Perry, the former Governor of Texas abused his power by cutting funding of the state anti-corruption unit, which was investigating whether the Texas Cancer Research and Prevention Institute was awarding grants based on political influence rather than clinical and methodological merit. The reporting of both cases underplayed the health care aspects, and never mentioned health care corruption, or words to that effect.


Yet Transparency International's report on global health care corruption suggested health care corruption occurs in all countries.  A recent TI survey showed that 43% of US citizens believe the country has a health care corruption problem (look here).  Perhaps some US citizens have been reading between the lines, or have personal experiences with health care corruption. However, as long as we cannot talk about this problem openly, there is no chance it will be solved.

In January, 2015, a case of apparent political corruption made headlines.  It turns out to also be a case of apparent health care corruption.  

New York Assembly Speaker Sheldon Silver Charged with Fraud, Extortion, and Receiving Bribes


In late January, 2015, from early reporting  by the Capital New York,

The federal corruption case against Assembly Speaker Sheldon Silver rests in part on his alleged scheme with a doctor who referred asbestos cases to the Weitz & Luxenberg law firm where Silver is of counsel.

A criminal complaint from U.S. Attorney Preet Bharara alleges that Silver obtained referrals of asbestos
cases from a doctor affiliated with a university in Manhattan, referred to as 'Doctor-1,' by using his position as speaker to quietly direct $500,000 in state funds to the doctor's research and give 'additional benefits' to the doctor and the doctor's family.

The Doctor-1 described in the criminal complaint appears to be Dr. Robert Taub of Columbia University, based on details outlined in the criminal complaint, and confirmed by a secretary at his office and separately by a knowledgeable source. Taub specializes in mesothelioma research, for which it is hard to find research funding.

Regarding the advantages gained by Mr Silver,

Silver allegedly received millions of dollars in referral fees from Weitz & Luxenberg, and was credited with referring more than 100 clients, many of whom were referred for asbestos cases, according to the complaint.

The firm paid Silver $3.2 million for referrals related to asbestos cases between 2003 and 2014, according to the complaint. Prosecutors claim that several of those asbestos clients said they had been referred to Doctor-1 for treatment, and said the doctor had also recommended they retain Weitz & Luxenberg as their counsel.

Regarding the benefits to Dr Taub,

The complaints say the scheme began when the doctor allegedly asked Silver if his firm would help fund mesothelioma research and Silver declined. But prosecutors claim the doctor became aware that Silver wanted him to refer asbestos patients to Silver and the law firm for counsel, in exchange for funding for his medical research.

Doctor-1 started referring patients to Silver, and Silver began directing state funding to the doctor's research, the complaint alleges.

In December 2003, Doctor-1 requested a $250,000 grant from Silver to establish a Mesothelioma center at a university, according to the complaint. The complaint also says that the request was granted, and Silver approved payment from a pool of discretionary funds paid for by health care-related assessments that was under Silver's sole control until the year 2007.

Silver later directed another grant from the same pool of funds, also worth $250,000, to the Mesothelioma Center.

In 2008, the speaker directed a further $25,000 discretionary member item grant to a not-for-profit where the doctor was a board member, according to the complaint.

In 2012, the complaint alleges that Doctor-1 asked Silver for help in finding a family member a job with a nonprofit organization that 'received millions of dollars in member items and capital funding from Silver.'

A New York Times article verified that "Doctor-1" was Dr Robert N Taub, a previously highly reputed academic.  

In the criminal complaint against Sheldon Silver, he is identified simply as “Doctor-1.”

But Dr. Robert N. Taub, who headed a Columbia University center dedicated to curing a rare form of cancer caused by asbestos, is no ordinary doctor.

Also,

In 2002, Dr. Taub created one of the nation’s few mesothelioma research hubs, the Columbia University Mesothelioma Center. He was also active in an organization that raised money for research, sitting on the scientific advisory board of one of the few nonprofits created to help victims, the Mesothelioma Applied Research Foundation. The foundation, which awards research grants, relies heavily on gifts from law firms.

Finally, the NY Times story identified Dr Taub's family member who got a job through Mr Silver's intervention,

 According to the complaint and people briefed on the investigation, Dr. Taub also asked Mr. Silver in 2012 to help his son, Jonathan, find a job. The speaker arranged for an interview at OHEL Children’s Home and Family Services, a social services organization based in Brooklyn that had received millions of dollars in state funds from Mr. Silver.

After the allegations were made public, the NY Times also reported that Dr Taub "is leaving his position as head of a Columbia University cancer center, and the center is being disbanded," and the New York Post reported that Mr Silver is stepping down from his position as Speaker of the NY Assembly.

Political Corruption Highlighted, Health Care Corruption Ignored 


Corruption as defined by Transparency International is abuse of entrusted power for private gain.  Thus TI does not limit the term to cases involving politicians or government. Clearly, the allegations above were for corruption in this sense, and that corruption involved health care.

Furthermore, the alleged facts in the case implied,
-  Dr Taub abused his patients' trust in him by directing them to Mr Silver's firm, whether or not that was the best choice for these patients
-  Dr Taub abused the trust he inspired as a medical researcher by trading referral of his patients for government research grants
-  Dr Taub personally profited from these arrangements by obtaining a job for his family member, and a grant for another (non medical research) foundation on whose board he sat.
-  By directing grants to Dr Taub's research foundation, and the foundation on whose board Dr Taub sat, Mr Silver allocated scarce research funding for private gain, rather than for clinical, public health, or scientific reasons.


However, the coverage of the charges against Mr Silver, and particularly those relating to Dr Taub, was solely in terms of political corruption.  While the media reported the facts related to health care, there was no mention of health care corruption.

Even the pithy op-ed on the case by Prof Zephyr Teachout, now widely known for her expertise in corruption, and for increasing awareness of the importance of corruption in modern US society, did not mention health care corruption.  Her op-ed did note the earlier case of former Virginia Governor McDonnell,

As with the recent conviction of the former Virginia governor Bob McDonnell for receiving improper gifts and loans, a fixation on plain graft misses the more pernicious poison that has entered our system.

However, Professor Teachout did not note that these gifts and loans resulted from Governor McDonnell using his influence to market a supposed anti-inflammatory nutritional supplement.

Summary

Professor Teachout has decried how the definition of corruption has narrowed.

A fixation on plain graft misses the more pernicious poison that has entered our system.

However, our system is poisoned not only by political, but by health care corruption.  

However, when health care corruption is clearly the issue, the news media will not use that term.  Only when the corruption is occurring far away, usually in a supposedly benighted less developed country, will the news media or the scholarly medical, health care, and health policy literature discuss it as such.  So the anechoic nature of health care corruption has not changed since my post of August, 2014.

If we are not willing to even talk about health care corruption, how will we ever challenge it? 

So to repeat an ending to one of my previous posts on health care corruption....  if we really want to reform health care, in the little time we may have before our health care bubble bursts, we will need to take strong action against health care corruption.  Such action will really disturb the insiders within large health care organizations who have gotten rich from their organizations' misbehavior, and thus taking such action will require some courage.  Yet such action cannot begin until we acknowledge and freely discuss the problem.  The first step against health care corruption is to be able to say or write the words, health care corruption.

ADDENDUM (29 January, 2015) - This post was reposted on Naked Capitalism.  

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