Health Care Professional Societies Whose Leadership Betrays Their Own Members - the APA Alleged to Have Supported Torture, and Deceived its Members to Collect Money

Health care professionals usually view their professional societies as allies, supporting their values and acting in their professional and their patients' interests.  Increasingly, however, these societies appear to be run more to support the interests of their top leaders. 

Allegations that the American Psychological Association (APA) Supported Torture

The latest example is the American Psychological Association.  As noted by a Washington Post article from May, 2015, "the APA ... represents more than 122,000 doctoral-level psychologists around the world...."  Of these, about 60,000 are licensed clinical psychologists, and the remainder are mainly research psychologists.

The most serious allegations that the APA had betrayed its members values were described in a New York Times article from late April, 2015. 

The American Psychological Association secretly collaborated with the administration of President George W. Bush to bolster a legal and ethical justification for the torture of prisoners swept up in the post-Sept. 11 war on terror, according to a new report by a group of dissident health professionals and human rights activists.

Furthermore,

The involvement of health professionals in the Bush-era interrogation program was significant because it enabled the Justice Department to argue in secret opinions that the program was legal and did not constitute torture, since the interrogations were being monitored by health professionals to make sure they were safe.

The interrogation program has since been shut down, and last year the Senate Intelligence Committee issued a detailed report that described the program as both ineffective and abusive.

In particular,

In early June 2004, a senior official with the association, the nation’s largest professional organization for psychologists, issued an invitation to a carefully selected group of psychologists and behavioral scientists inside the government to a private meeting to discuss the crisis and the role of psychologists in the interrogation program.

Psychologists from the C.I.A. and other agencies met with association officials in July, and by the next year the association issued guidelines that reaffirmed that it was acceptable for its members to be involved in the interrogation program.

To emphasize their argument that the association grew too close to the interrogation program, the critics’ new report cites a 2003 email from a senior psychologist at the C.I.A. to a senior official at the psychological association. In the email, the C.I.A. psychologist appears to be confiding in the association official about the work of James Mitchell and Bruce Jessen, the private contractors who developed and helped run the enhanced interrogation program at the C.I.A.’s secret prisons around the world.

In the email, written years before the involvement of the two contractors in the interrogation program was made public, the C.I.A. psychologist explains to the association official that the contractors 'are doing special things to special people in special places.'

These are very serious allegations.  In a Forbes blog post, Todd Essig wrote,

Starting after 9/11, and continuing to the present day, APA leadership has made a series of bad decisions, ones with appalling and destructive consequence. Significant numbers of people have been harmed. Opportunities to apply psychological knowledge to benefit society and improve people’s lives have been lost. The public trust in the profession of psychology has been undermined. Things are so bad that the only way forward now is for the involved leadership to resign.

Essig emphasized that the actions of APA leadership appeared to directly conflict with the organization's mission,

Every day without decisive action to redress the breach of the public trust further undermines the APA’s ability to fulfill its mission to 'advance the creation, communication and application of psychological knowledge to benefit society and improve people’s lives.'

Nonetheless, the APA leadership has made no move to resign, and appear to be waiting for the supposedly independent review they have commissioned of the society's actions regarding torture.

Legal Settlement that the APA Deceived its Members to Collect More Money

While less dramatic, another story appeared last month that further suggested that the APA has seemed to have gone rogue from the interests of its members and their patients.  The Washington Post reported,

The American Psychological Association (APA) has settled a class-action lawsuit that accused the organization of deceptively requiring many of its members to pay a large annual fee to fund the group's lobbying arm. The fee was actually optional.

Under the settlement, the APA, which represents more than 122,000 doctoral-level psychologists around the world, has agreed to refund a total of $9.02 million to members who paid the fee between 2000 and early 2015. The assessment, which changed from year to year, was about $140 annually and was charged only to licensed clinicians, not research scientists and others. It generated about $6 million a year, according to the lawsuit.

Note that...

The lawsuit claimed that in a variety of ways over the years, the APA 'deceptively created the impression that the fee was actually required as part of annual APA dues.' For example, an annual dues assessment said that members who provide health-related services “must pay" the fee that supports the lobbying arm, a separate group known as the APA Practice Organization (APAPO). It was established separately because tax laws restrict nonprofits like the APA from political work and other forms of advocacy.

In 2002, the APA’s Web site stated that members 'must pay the Special Assessment,' and in 2004, the APA announced that starting in 2005 'all APA members who are licensed psychologists will be billed the assessment,' the lawsuit claimed.

This was a legal settlement, so APA leadership did not have to

concede that its communications were misleading and acknowledged no wrongdoing in the settlement. In a news release sent out in January, when the settlement was announced, the organization said that 'APA/APAPO and the plaintiffs disagreed about whether the APA dues statement could mislead practice members concerning the annual practice assessment.'

How Did a Society's Leadership Become So Disconnected from its Members and their Values?

These allegations do raise the question of how the leadership of a health care professional society could become so profoundly disconnected from its members.  I briefly would suggest the hypothesis that many health care professional societies have functionally become more like publishing houses or marketing and public relations firms. 

Consider the most recent financial statement (US IRS form 990) available from the APA (for 2013, link here).    The APA had total revenue of over $127 million.  Of that, less than 10% came from membership dues ($10,802,967) and convention and conference fees ($2,742,353).  So the major sources of revenue of this supposed membership organization were not the members, but "licensing, royalties, and rights," "journal subscriptions," "publication sales," and "other program service."  Thus, the organization's finances were more that of a publishing house/ marketing and public relations firm than that of a membership organization. Presumably, leadership may have been more concerned about continuing to generate revenue from such activities than about their membership's wishes, or interests.


The revenue from these activities allowed the organization to accrue real estate valued at over $78 million, and investments valued at over $90 million.  Also, it allowed generous payments to the members who served as officers.  Twelve members who served as officers, on the board of directors, or otherwise in leadership got more than $10,000 a year.  The president got more than $38,000.  Traditionally, officers and board members of true membership organizations are unpaid.  In addition, the APA paid its hired managers very handsomely.  Sixteen received more than $225,000.  Of those, twelve received more than $300,000.  The executive vice president/ CEO received over $750,000. 

So the transformation of the APA from a membership organization to a publishing house/ marketing and public relations firm that allegedly ended up supporting torture, and deceiving its supposed members created a very cozy and remunerative environment for its leaders and those who ostensibly exercised stewardship over them.

Again, this is particularly egregious since this was supposed to be a membership organization that would support research and education in psychology, and psychological care of patients. 

Summary

In the bigger story from last month, very serious allegations surfaced about the American Psychological Association.  These included accusations that top society leaders collaborated with torture, which would seem to be a huge contradiction of the organization's supposed mission to help patients with psychological problems.  At the same time, the organization settled a lawsuit that had alleged organizational leaders had deceived their own members in order to collect money to support their lobbying efforts. 

We have frequently discussed how leaders of large nominally non-profit health care organizations, mainly hospitals and hospital systems, often seem to put revenue, and their own financial advancement, ahead of the organizations' missions.  Sometimes, their actions have been actively mission-hostile.  The takeover of hospitals and hospital systems by people with little concern for, or even hostility to those organizations' once noble missions appears to be a singularly bad problem that may be responsible for much health care dysfunction, rising costs, declining access, and ultimately bad patient outcomes. 

Now we see another example of a large health care organization, this time a health care professional society,  whose leadership seems to have trampled their members' values, supported mistreatment of human beings, and just incidentally deceived their members' to make more money.  An important difference in this case is that the organization's leadership is nominally supposed to represent its members.  So maybe its members can rise up to ensure leadership that would actually uphold their professional values and their and most importantly their patients' interests.


Maybe the members will still rise up and force the resignations of the officers and managers who profited so much from this mess.  At least, if they were to leave the organization, it could no longer pretend to be a membership organization.

As we have said until blue in the face, true health care reform requires leadership of health care organizations that understand health care, cares about its mission, and is willing to be held accountable.  A good place to start such reform would be the organizations that are supposed to represent health care professionals. 

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

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.  

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

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.  

The Troubles at Cooper Continue, Lately Gruesomely, But Will Its Leadership and Governance Change This Time? - Part II: the History since 2005

In our most recent post, we noted the latest tragic, and gruesome development at Cooper Health System, the largest hospital system in southern New Jersey.  Months after the system CEO, John F Sheridan, and his wife Joyce were found dead after a fire in their home, local law enforcement concluded that Mr Sheridan murdered his wife, set fire to the house, then committed suicide.  It turns out this is just the latest, albeit possibly most tragic and grisly, troubling news from that health care system.

Our last post summarized the history from 1978, including:
-  Seven people, including the hospital system chief financial officer, confessed to and/or found guilty of participating in an embezzlement scheme that cost the hospital more than $21 million
-  An internal investigation was suppressed for years, but later revealed several severe management problems
-  The media revealed multiple conflicts of interest affecting the system's board of trustees, including members of the committee that performed the investigation
-  One member of the board of trustees who participated in the internal investigation was later convicted of arranging his wife's murder
-  Resulting financial losses caused layoffs and service reductions, some of which affected the hospital system's charitable mission
-  The stories received little attention outside the region, and apparently did not result in any fundamental changes in governance or the structure of leadership.

Since 2005, there have been other troubles at Cooper.

Conflicts of Interest Involving Local and State Politics

Board Chairman George E Norcross III

In 2006, the Philadelphia Inquirer found close ties between NJ politicians and hospital leaders (see this post).  In particular, the story noted "the board of South Jersey's major hospital, Cooper University Hospital in Camden, is chaired by the region's most powerful political figure, Democratic power broker George E. Norcross III."

In 2012, as we posted here, Mr Norcross' relationships became more evident.   The New York Times reported that a story about his conflicts of interest had been held from publication by the Inquirer because Mr Norcross was part of a business group seeking to purchase that newspaper.  When the Inquirer story finally came out, it stated firms with financial relationships to the hospital under Norcross had donated generously to Norcross' political allies, and that Norcross had influenced the creation of relationships with these firms.  It suggested that Norcross' political influence had resulted in an unusual level of state financial support for the hospital system.  It noted that the law firm for which Cooper CEO John F Sheridan had previously worked did lobbying for the hospital.  It noted that the hospital did millions of dollars of business with firms tied to hospital trustees, including Mr Norcross.

Trustee Emeritus Peter Driscoll

Recent reporting after Mr Sheridan's death suggested the rehabilitation of former board chairman Peter Driscoll under Chairman Norcross.  Mr Driscoll was the former board chair who resigned in 1999 after the embezzlement scandal report and revelations about conflicts of interest affecting the board were finally made public, and the hospital system was in financial difficulty.  However, by 2014, he was identified by the board as a "trustee emeritus."  Per the Philadelphia Inquirer, after the fire at the Sheridan house was attributed to arson,

'If they had died because the house was on fire, that would be a terrible, terrible tragedy,' said Cooper Health System trustee Peter E. Driscoll, a senior member of the Haddonfield law firm of Archer & Greiner. '. . .I don't know what to make of it. I can't imagine anybody that would want to do something like this.'

New Vice President Kevin O'Dowd and his Family

Also after Mr Sheridan's death, the hospital system hired a new top manager with his own extensive political connections and conflicts of interest.  Per the Inquirer,

Gov. Christie's chief of staff, Kevin O'Dowd, will step down this month to work for Cooper University Hospital in Camden, nearly a year after the governor named O'Dowd his pick for attorney general.

O'Dowd, whose selection as attorney general never moved forward after controversy arose over lane closures on the George Washington Bridge, will serve as senior executive vice president and chief administrative officer at Cooper, where he will focus on business development, Christie officials said. He will start at Cooper in January.

The conflict was

 O'Dowd's wife, Mary, serves as commissioner of the state Department of Health.

A NJ.com story made that more explicit,

 State Health Commissioner Mary O’Dowd will refrain from making decisions that would directly affect Cooper University Hospital in Camden after her husband accepted a senior management job there, officials said Friday night.

The move was made to avoid any conflicts of interest as the state Department of Health licenses and inspects hospitals, and doles out money to compensate them for treating uninsured charity care patients. Cooper will receive $37.3 million in charity care payments from the state this year, the fifth highest amount in the state.

A story in the NJ Spotlight suggested that would not solve the problem,

The question that the O’Dowds will have to face is whether they can overcome even the perception of a conflict of interest when their jobs so pervasively present opportunities for such a situation.

'It’s a very, very tenuous situation,' said William Schluter, a former longtime member of the State Ethics Commission and state senator.

He noted that nearly everything that senior hospital executives do in their jobs is influenced by state regulations.

'It’s a situation that I sure as heck wouldn’t want to be in,' said Schluter, adding that he expects second-guessing in the media and by elected officials as the state handles issues affecting Cooper.

Just to ice the cake for Mr O'Dowd, the Courier-Post noted that Mr O'Dowd's job at Cooper could be considered an example of the revolving door, albeit delayed,

O'Dowd, previously the governor's deputy chief counsel, also worked under Christie at the U.S. Attorney's Office for New Jersey.

During seven years as an assistant United States attorney, O'Dowd oversaw a securities and healthcare fraud unit. He also prosecuted cases ranging from child pornography distribution, cybercrime and drug trafficking.

O'Dowd served earlier as a state Deputy Attorney General, where his responsibilities included providing legal counsel to the state Department of Health.

As US Attorney, Christie, possibly with the aid of Mr O'Dowd, pursued a deferred prosecution agreement for UMDNJ, then Cooper's primary academic affiliation, for a complicated set of allegations that we discussed extensively in the past (look at this post and follow links backward).  

Late CEO John F Sheridan and Family


Apparently only after Mr Sheridan's death did the media report extensively on his political connections.  The earliest report I found was in the Philadelphia Inquirer from September 28, 2014.  He served

on Gov. Christie's health-care transition subcommittee in 2010.

The statement said he was New Jersey commissioner of transportation under Gov. Thomas H. Kean and served as New Jersey deputy attorney general and assistant counsel for the New Jersey Turnpike Authority, and was counsel for the New Jersey Senate majority.

Also,

 his son Mark - a prominent lawyer ... has represented Christie in the Bridgegate scandal 

NJ.com added,

John Sheridan Jr., the CEO of Cooper University Health System ... previously spent 40 years in New Jersey government

Also,

He has held positions on Gov. Thomas Kean's cabinet as transportation commissioner and chairman of the New Jersey Transit board, as well as held roles on transition teams for Gov. Chris Christie and Gov. Christine Todd Whitman. 

Furthermore,

 Earlier in his career, he served as Deputy Attorney General of the State of New Jersey, Assistant Counsel to Gov. William T. Cahill, General Counsel to the New Jersey Turnpike Authority and Counsel to the New Jersey Senate Majority.

Finally, his son

Mark Sheridan, a partner at Squire Patton Boggs, acts as general counsel for the New Jersey Republican State Committee.

 So, in the years since conflicts of interest at the board of trustees level were noted as part of the investigation after the management embezzlement scandal at Cooper, many more apparent conflicts affecting top managers and board members have appeared, most recently in late 2014. 


Settlement of Allegations of Kickbacks

In 2013, the media reported that Cooper settled federal allegations that it gave kickbacks to doctors to induce referrals.  As reported by the Inquirer,

The Cooper Health System in Camden has agreed to pay $12.6 million to settle a whistle-blower lawsuit alleging that it made improper payments to doctors in an effort to build its cardiology business, the U.S. attorney for the District of New Jersey said Thursday.

From October 2004 through 2010, local doctors were paid $18,000 to attend four meetings of the Cooper Heart Institute Advisory Board in any given year under 'consulting' and 'compensation' agreements, in possible violation of antikickback laws, state and federal law enforcement officials contended.

The whistle-blower was South Jersey cardiologist Nicholas L. DePace. He attended an advisory board meeting in 2007 and was convinced that the board's purpose was not to provide advice to Cooper, but to be a source of patient referrals to the Heart Institute, according to a lawsuit he filed in 2008.

'He was invited to be a member of the advisory board. He attended a meeting and it quickly became apparent to him what the advisory board really was. It was sitting and listening to lectures and not providing advisory services,' said Michael A. Morse, a partner in Pietragallo, Gordon, Alfano, Bosick & Raspanti L.L.P. in Philadelphia, one of DePace's lawyers.

As is typical of legal settlements involving prominent health care organizations,

Cooper admitted no liability.

'After more than three years of extended discussions with government lawyers, we decided, in the best interests of Cooper, to settle our dispute without the admission of wrongdoing to avoid the burdens and uncertainties of a protracted litigation,' Cooper president and chief executive officer John P. Sheridan Jr. said. 'This allows us to focus our full energies on serving our community.'

In a note to Cooper employees, Sheridan said the board was established to 'improve the quality and responsiveness of our cardiac programs' and 'was reviewed by outside legal counsel before it began operations.

However, given that the Inquirer reported that "the $12.6 million penalty is financially significant for Cooper," one wonders why it was made if hospital leadership felt that the case against it was poor.  

So years after the embezzlement scandal, another scandal involving allegations of illegal behavior was settled.  This time, there was no trial, but since the settlement was financially burdensome for the hospital, it is plausible that it resulted from managers' realization that they would not have a good defense against the charges at trial. 

The Death of the Sheridans

Mr Sheridan became CEO of Cooper in 2008.  As noted in the Gloucester County Times,

On Feb. 7 John P. Sheridan Jr., was appointed president and chief executive officer of The Cooper Health System by the Cooper Board of Trustees. Sheridan joined Cooper as senior executive vice president in July 2005 and has served as president of Cooper University Hospital since September of 2007.

'Cooper has grown dramatically in recent years and is positioned as the academic medical leader of South Jersey,' said George E. Norcross III, chairman of the Board of Trustees at Cooper.  'John Sheridan is a proven leader. He has the skills required to build-out our $500 million health care campus in Camden, implement our suburban strategy and achieve our vision of creating the premier academic health care system in South Jersey and the Delaware Valley.'

As of early 2014, he was getting substantial compensation typical for a hospital system CEO, per NJBiz, "John T. Sheridan Jr. (of the $913 million Cooper Health System) received $963,433."

In late September, 2014, Mr Sheridan and his wife were found dead in a house fire.  Initial reports suggested the fire was accidental.  Then it was declared to be arson.  Then Joyce Sheridan's death was found to be the result of a homicide.  Finally, as we posted here, law enforcement declared that Mr Sheridan killed his wife, set the fire, and then committed suicide.

That news was so horrendous that it dumbfounded Cooper insiders.  As reported by the Inquirer,

 'It's not something I can imagine,' said Peter Driscoll, a Cooper Health System trustee emeritus and a senior member of the Haddonfield law firm Archer & Greiner. 

Also,

In a brief statement, Cooper University Health Care called the prosecutor's findings 'unfathomable to us.'

I can only hope that they will get over their shock and realize that the institution really has some big problems. 

Summary

Since 1978, there have been multiple stories about mismanagement, conflicts of interest affecting managers and board members, and crimes committed or alleged to have been committed by management and at least one trustee at Cooper Hospital/UMC which then became Cooper Health System.  Despite these often lurid stories, there is no indication that there has been a fundamental change in the governance of the institution.  While managers have come and gone, sometimes under difficult circumstances, there is no indication that how managers were hired has changed.  Since the early 1990s, there has been no obvious effort made by management or board members to change, at least not one announced publicly.  There has been no outside investigation.

Given that the hospital system has long enjoyed a cozy relationship with state government, including both the legislative and executive branch, maybe it has been easy to go along to get along.  More cozy relationships, including some with ownership of the news media, may have helped to keep this story anechoic outside of the region.

Yet the cumulative story is so striking that it should prompt national attention, and inspire some real hard thought about how health care leadership and governance has gotten so bad.

To repeat what I have said all too often, and I admit with little impact so far....

True health care reform requires governance that is accountable, transparent, true to the organization's mission, and honest, ethical, and without conflicts of interest; and leadership that understands health care, upholds its values, is honest, ethical, and without conflicts of interest, is transparent and open, and is willing to be accountable and subject to appropriate incentives. 

Same Old, Same Old - Johnson and Johnson Settles Charges it Concealed Adverse Effects of Risperdal, Vaginal Mesh Device, Pleads Guilty to Selling Adulterated Tylenol, Announces CEO Got 48% Raise to $25 Million

We have devoted a lot of bytes over the years to the stream of allegations and ethical questions about Johnson and Johnson, the giant pharmaceutical/ biotechnology/ device company, and resulting legal actions.  Meanwhile, the company has bestowed a gushing stream of money on its top executives.  Its almost spring, 2015, and it seems nothing has changed.

Johnson and Johnson's Latest Legal Misadventures

Jury Verdict that Company Concealed Harms of Risperdal

Let us start with the latest legal news about J&J.  In late February, 2015, as reported on the PharmaLot blog by Ed Silverman,

In a setback to Johnson & Johnson , a Philadelphia jury decided the health care giant must pay $2.5 million in damages for failing to warn that its Risperdal antipsychotic could cause gynecomastia, which is abnormal development of breasts in males. The lawsuit was brought by the family of an autistic boy who took the drug in 2002 and later developed size 46 DD breasts, according to a lawyer for the family.

The case has drawn attention for a few reasons. For one, this was the first lawsuit claiming J&J hid the risks of gynecomastia to go to trial after a handful of cases were settled in recent years. The trial also served as a reminder that J&J paid $2.2 billion two years ago to resolve criminal and civil allegations of illegally marketing Risperdal to children and the elderly.

Moreover, former FDA commissioner David Kessler served as a paid expert witness for the family and testified that J&J knew about the risks associated with Risperdal, but failed to disclose the data showing the extent to which youngsters may develop gynecomastia. In a report prepared for a 2012 case that was settled, Kessler wrote that J&J’s Janssen unit, which marketed the drug, had violated the law.

Note that the central allegation in this case was not simply that the drug had adverse effects, but that the company knew about these effects, and hid them.  In my humble opinion, since we entrust pharmaceutical companies to provide safe and effective products, withholding information about adverse effects is a fundamental violation of this trust. 

As noted above, this follows on another case with a much bigger financial settlement about questionable marketing of Risperdal. In addition, as the PharmaLot post noted, there are many more individual cases like this one waiting in the wings, "J&J says there are about 1,200 such lawsuits filed in courts around the country,..."

Jury Verdict that Company Concealed Harms of  Vaginal Mesh Device

Similarly, as reported by Reuters in early March, 2015,

A California jury on Thursday ordered Johnson & Johnson's Ethicon Inc unit to pay $5.7 million in the first trial over injuries blamed on the TVT Abbrevo, one of numerous transvaginal mesh products that are the subject of thousands of lawsuits.

Following more than three days of deliberations in Kern County, California, jurors found Ethicon liable for problems with the TVT Abbrevo's design and for failing to warn about its risks, according to a lawyer for plaintiff Coleen Perry.

Perry was awarded $700,000 in compensatory damages and an additional $5 million in punitive damages after jurors in the Bakersfield court found Ethicon's conduct amounted to 'malice,' her lawyer said.

Again, note that this lawsuit was not merely about the adverse effects of, in this case, a device, but about allegations that the company knew about these effects, but hid them.  My comments about violation of a fundamental trust above apply. 

Again, this is but one of the earlier cases of a cohort that may number 36,000.

Company Pleads Guilty to Selling Adulterated Tylenol

Finally, as reported in mid-March, 2015, by Reuters,

A Johnson & Johnson subsidiary pleaded guilty on Tuesday to selling liquid medicine contaminated with metal and agreed to pay $25 million to resolve the case, the U.S. Department of Justice said on Tuesday.

The subsidiary, McNeil Consumer Healthcare, pleaded guilty to one federal criminal charge in the case.

In 2010, the company launched mass recalls of certain children's over-the-counter-medicines, including Infants' Tylenol and Children's Motrin, made at its Fort Washington, Pennsylvania plant.

It was the latest in a series of recalls at the time. There were far-reaching multiple recalls from 2008 to 2010 involving hundreds of millions of bottles and packages of consumer brands such as Tylenol, Motrin, Rolaids, Benadryl and other products due to faulty manufacturing. The recalls kept widely used products such as Children's Tylenol off pharmacy shelves and seriously tarnished J&J's once-sterling reputation.

In addition to metal particles getting into liquid medicines, there were moldy odors and labeling problems.

Furthermore, as emphasized in a report in the Philadelphia Business Journal, this case also involved allegations that the company seemed to conceal the problem.

McNeil, after receiving the consumer complaint, did not initiate or complete a 'corrective action preventive action' plan as required by the federal government.

The federal government also alleged other instances in which McNeil found metal particles in bottles of infants' Tylenol at its Fort Washington facility, but failed to initiate or complete a corrective action plan.

Note that in this case, the company pleaded guilty and so could not claim it was merely settling to put the case behind it.  Furthermore, note that this was not the first case arising from charges that the company sold adulterated products made in the Pennsylvania and other factories (for example, see this post.)   We posted frequently about a long string of recalls of presumed defective or adulterated Johnson and Johnson products (here, here, here and here).  Again, in my humble opinion, we we trust drug companies to sell pure, unadulterated products.  Selling adulterated products again fundamentally violates this trust.

Unfortunately, these three cases, like many of the legal settlements we discuss, involved relatively small penalties that only accrued to the company as a whole.  The monetary penalties, while they may seem large to regular citizens, could appear as relatively trivial costs of doing business to company management.  Furthermore, no individual who authorized, directed, or implemented the behavior identified in these cases suffered any kind of penalty.  So these cases added to the many examples of the impunity of managers of large corporations who almost never seem to bear any legal responsibility for their actions.  In the case of Johnson and Johnson managers, this is all the more striking, since the current cases are just the latest in a very long string.  (See Appendix below for a list of Johnson and Johnson legal misadventures we have discussed since 2010.)


Johnson and Johnson CEO's Latest Raise


Finally, a day later, the Wall Street Journal reported on the continuing good fortune of the Johnson and Johnson CEO, to be contrasted with the company's poor fortunes in the courts of law.

Johnson & Johnson said Chairman and Chief Executive Alex Gorsky’s total compensation jumped 48% to $25 million last year, lifted by an increase in stock and option awards. Mr. Gorsky’s stock and option awards rose to a total value of $13.6 million from $8.7 million a year earlier. The board also raised Mr. Gorsky’s base salary to $1.5 million from $1.45 million in 2013, and the CEO also benefited from a jump in pension value.

In a filing Wednesday, the pharmaceutical giant said Mr. Gorsky’s compensation increase was based on the board’s conclusion that J&J successfully executed near-term priorities, exceeded financial goals and built on momentum in its pharmaceutical business.

As a result, J&J awarded Mr. Gorsky an annual performance bonus of 135% of target and long-term incentives at 130% of target. Awards at J&J are capped at 200% of target.

The article noted that at least one other top Johnson and Johnson manager also was raking it in.

Paulus Stoffels, world-wide chairman of Pharmaceuticals, made $18.3 million last year, more than double his 2013 total compensation, boosted by a stock award of $10.7 million.

Funny, the board's rosy view of Mr Gorsky's performance seemed totally uninformed by the company's latest legal misadventures.

(By the way, to anyone who would argue that many of these misadventures were the results of behavior that occurred before Mr Gorsky became CEO, note that his official company biography stated that he joined the company's Executive Committee in 2009, implying some shared responsibility for overall company management since then.)

Same Old, Same Old

A few weeks back, one of our commentators complained that our posts have a certain sameness.  Unfortunately, we agree.  We keep seeing variants of the same sorts of outrageous stories in the news media that we began to post about in 2004.   The problems are not getting better.  Perhaps they are getting worse.

In particular, we have previously contrasted this particular company's recurrent legal and ethical problems with its top managers' accumulating wealth.  In 2011 we posted about the contrast between previous Johnson and Johnson CEO William Weldon's enlarging fortune and political influence with some of the earlier legal cases that raised questions about the trustworthiness of the company.

But the point of this blog is not to come up with titillating stories to make people chuckle.  The point is to challenge the continuing, severe problems afflicting the leadership and governance of health care, the resulting incompetent, unethical, and sometimes criminal behavior, and the downstream effects on patients' and the public's health.  Do not blame the messenger for the sameness of the problem.  Blame those who are getting wealthy and powerful from the ongoing decline in health care. 

If we truly want to see more accessible, more effective, less costly health care in our life times, we need to first call out the bad leadership that has kept such aspirations at bay for so long, and second start to hold current leadership accountable for the mess they have made.


Appendix - Johnson and Johnson Legal Record since 2010-
2010
- Convictions in two different states for misleading marketing of Risperdal
- A guilty plea for misbranding Topamax
2011
- Guilty pleas to bribery in Europe  by Johnson and Johnson's DePuy subsidiary
- A guilty plea for marketing Risperdal for unapproved uses  (see this link for all of the above)
- A guilty plea to misbranding Natrecor by J+J subsidiary Scios (see post here)
2012 
 - Testimony in a trial of allegations of unethical marketing of the drug Risperdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers. After these revelations, the company abruptly settled the case (see post here).
-  Johnson & Johnson was fined $1.1 billion by a judge in Arkansas for deceiving patients and physicians again about Risperdal (look here).
-  Johnson & Johnson announced it would pay $181 million to resolve claims of deceptive advertising again about Risperdal (see this post).
2013
-  Johnson & Johnson settled case by shareholders alleging that management made misleading statements and withheld material information about manufacturing problems (see this post)
-  Johnson & Johnson Janssen subsidiary pleaded guilty to a charge of misbranding Risperdal, and settled for a total of $2.2 billion allegations that it promoted the drug for elderly demented patients and adolescents without an indication, and despite evidence of its harms (see this post).
 -  Johnson & Johnson DePuy subsidiary agreed to settle with multiple plaintiffs for $2.5 billion allegations that it sold defective mental-on-metal artificial hip, and hid evidence of its harms .
- Johnson & Johnsonn Janssen subsidiary was found by two juries to have concealed harms of its drug Topamax (see this post for this and above case).
- Johnson & Johnson Ethicon subsidiary's Advanced Surgical Products and two of its executives agreed to settle charges by US FDA that is sold mislabeled products used to sterilize equipment such as endoscopes (see this post).
- Johnson & Johnson fined by European Commission for anticompetitive practices, that is, collusion with Novartis to delay marketing generic version of Fentanyl (see this post).
2014 
- Johnson & Johnson DePuy subsidiary settled Oregan state charges that it marketed the ASR XL metal-on-metal hip joint prosthesis without disclosing its high failure rate (see this post).