Long After the Start of the "War on Terror," a Conflict of Interest about an Anthrax Scare Comes to Light

In May, David Willman writing for the Los Angeles Times broke a story of a somewhat new variant on the conflict of interest theme, one that has not gotten a lot of attention, but should.

The issue was medical, with a twist, - how to best treat a bioterror attack with anthrax engineered to be resistant to multiple drugs, an event that luckily is not known to ever have occurred.  The story came from the bad old days of the "war on terror," but only has now come to light years later.

The Alarm Raiser

The story opened thus,

Over the last decade, former Navy Secretary Richard J. Danzig, a prominent lawyer, presidential advisor and biowarfare consultant to the Pentagon and the Department of Homeland Security, has urged the government to counter what he called a major threat to national security.

Terrorists, he warned, could easily engineer a devastating killer germ: a form of anthrax resistant to common antibiotics.

In particular,

Danzig began warning about antibiotic-resistant anthrax after the terrorist attacks of Sept. 11, 2001, and the mailings of anthrax-laced letters that fall.

The powdered anthrax in the letters killed five people but was not resistant to common antibiotics. Asked what gave rise to his concern about resistant strains, Danzig cited conversations with 'people whose technical skills exceed mine.' One of them, Dr. Robert P. Kadlec, a bioterrorism advisor in the Bush White House, said he and others were concerned that terrorists could develop such a weapon.

Danzig has sounded the alarm in published papers and in private briefings and seminars for biodefense and intelligence officials.

In a 2003 report funded by the Pentagon, "Catastrophic Bioterrorism — What Is To Be Done?" he wrote that it would be 'quite easy' for terrorists to produce antibiotic-resistant anthrax. He has expanded on that theme over the years, including in a 2009 paper for the Pentagon.

In the 2003 report, published while raxi [raxibacumab, an anthrax anti-toxin] was in development at Human Genome, Danzig said a drug to combat resistant strains of anthrax should be produced 'as soon as possible' and that stockpiling such a treatment, 'even if expensive and in limited supply' would deter an attack.

John Vitko Jr., a top Homeland Security official during the Bush and Obama administrations, said he turned frequently to Danzig for advice on biodefense matters — and read and 'paid attention to' his 'Catastrophic Bioterrorism' report.

Note that while Danzig is a lawyer, and certainly not a physician or biomedical researcher, he had major credibility in the defense field, particularly in anti-terrorism, so his recommendations had great influence.

He served as a Pentagon appointee during the Carter administration and as undersecretary and then secretary of the Navy under President Clinton. He has a long-standing interest in biowarfare.

During the 2008 presidential campaign, Danzig advised then-Sen. Barack Obama on national security and bioterrorism. After Obama's election, Danzig was named to the Pentagon's Defense Policy Board and the President's Intelligence Advisory Board, in addition to his consulting positions with the Defense Department and Homeland Security.

So apparently at least partly due to Mr Danzig's persistent warnings, the government took action,

 In 2004, President Bush signed into law Project BioShield, which provided billions of dollars for biodefense drugs.

The contracts are administered by the Department of Health and Human Services, based on advice from federal agencies and consultants. Homeland Security must certify the need for a drug before the government can buy it.

 Danzig, through his seminars, writings and consulting duties, has helped frame the discussion over whether a given biological threat is 'material' and whether the government should stockpile medicines to defend against it.

Also,

Speaking of Danzig's broader role as a government advisor, Vitko said: 'Richard's got incredible insights into this and I think has made major contributions'

He called Danzig one of 'the major bio player' and said his views had informed a range of policy considerations, including 'how many countermeasures do you need, of what kind.'

It was in response to advice from Vitko and his staff that Homeland Security Secretary Tom Ridge in 2004 declared anthrax a 'material threat,' the certification required for the government to buy drugs to fight it.

The drug the government bought was raxibacumab, or raxi, an anthrax anti-toxin made by Human Genome Sciences Inc.  

In 2006, the Department of Health and Human Services finalized its first order of raxi — 20,000 doses at a cost of $174 million.

That year, Ridge's successor, Michael Chertoff, signed a second, more specific declaration, adding 'multi-drug-resistant' anthrax to the government's list of material threats.

Asked the basis for the second declaration, Vitko said: 'I think the concern was more forward-looking, and saying, 'How could the threat evolve, and are we prepared for that?''

Since 2009, the Obama administration has ordered an additional 45,000 doses of raxi for $160 million.

There was just one catch.

The Undisclosed Conflict

Mr Danzig had a largely undisclosed conflict of interest.  He was on the board of directors of Human Genome Sciences Inc, the company whose drug his constant warnings and exhortations lead the government to buy.

When Human Genome named Danzig to its board on May 24, 2001, the company's chief executive said his high-level federal experience would 'serve us well.'

He thus was on the board on September 11, 2001, and later when the events on that day and soon after apparently induced him to start sounding the alarm about resistant anthrax, and he stayed on the board as he continued sounding alarms, and after the government started buying his company's drug.

During his 11-year tenure on the board, which ended in August, Danzig collected at least $1,054,255 in director's fees and by cashing in grants of Human Genome stock and stock options, according to Fred Whittlesey of Compensation Venture Group, who reviewed the company's Securities and Exchange Commission filings for The Times.

Nearly half of Danzig's compensation came from the stock options, of which he had been granted 184,000 by the end of 2011, Whittlesey said.

Danzig did not seem to think that serving on the board of the company which made the primary drug directed at the perhaps hypothetical disease about which Danzig was sounding the warning constituted any sort of conflict of interest.

Danzig said in an interview that he believed his position at Human Genome posed no conflict.

He said he had tried to improve policymakers' understanding of biodefense issues, including the threat of antibiotic-resistant anthrax, but never lobbied the government to purchase raxi.

'My view was I'm not going to get involved in selling that,' Danzig said. 'But at the same time now, should I not say what I think is right in the government circles with regard to this? And my answer was, 'If I have occasion to comment on this, it ought to be in general, as a policy matter, not as a particular procurement.'

'I feel that I've acted very properly with regard to this'' he said.

He also apparently did not feel he needed to disclose his board membership to most of the people he was trying to persuade to be alarmed about resistant anthrax, and to pursue a treatment, such as that made by the company on whose board he sat.

 A number of senior federal officials whom Danzig advised on the threat of bioterrorism and what to do about it said they were unaware of his role at Human Genome.

Dr. Philip K. Russell, a biodefense official in the George W. Bush administration who attended invitation-only seminars on bioterrorism led by Danzig, said he did not know about Danzig's tie to the biotech company until The Times asked him about it.

Also,

 Vitko said he knew nothing of Danzig's involvement with Human Genome until a Times reporter asked him about it.

'I'm surprised I didn't,' Vitko said. 'I'm not aware of it.'

Five other present or former biodefense officials who conferred with Danzig said they, too, had been unaware of his position with the company. Danzig, they said, made no mention of it in their presence during group discussions he led or in smaller meetings.

Furthermore,

A Times search found seven papers Danzig had written on bioterrorism since 2001. In only one of those did he disclose his tie to Human Genome.

As an advisor to the federal government, Danzig is required to file confidential forms annually, revealing any outside affiliations but not his related compensation. Danzig said he had noted his position with the biotech firm on the forms.

Asked whether he mentioned his corporate role during contacts with government officials, Danzig replied: 'If I thought any of it posed a potential conflict that might cause somebody who knew about it to discount my views, I would tell them.'

Some people disagreed with Danzig's failure to perceive a conflict of interest

 'Holy smoke—that was a horrible conflict of interest,' said Russell, a physician and retired Army major general who helped lead the government's efforts to prepare for biological attacks.

The Take-Over by a Familiar Corporation

By the way, Human Genome Science was eventually bought out by a bigger company which has had its own sets of issues regarding conflicts of interest, GlaxoSmithKline,

 Human Genome was acquired by GlaxoSmithKline in August [presumably 2012] for $3.6 billion.

It may yet stand to make even more money from raxi,

 Because raxi loses its potency after three years in storage, the government's supply will expire as of 2015, according to federal documents and people familiar with the matter. 

Summary

This appears to be a variant on the "key opinion leader" (KOL) theme writ large.  Mr Danzig clearly functioned as a very major key opinion leader about bioterrorism.  Like many KOLs we have previously discussed, he had financial interests that favored the company whose drugs his key opinion leadership seemed to be favoring.  His influence seems to have lead to huge purchases of these drugs. Like many KOLs who are physicians or health care academics, Mr Danzig seems utterly blind to the possibility that his multiple efforts to emphasize the importance of the supposed disease for which his company made a drug could somehow be viewed as a conflict of interest, or to why failure to tell his audiences about his major relationship to this company might have appeared just a small bit dishonest.  We have seen many medical/ health care KOLs who deny that somehow their opinions could have been influenced by their financial relationships, or that their audiences deserved at least to be aware of these relationships.  Yet, of course, Mr Danzig is not a doctor, and he was trying to influence government purchasers of drugs, not physician prescribers of it.

It does seem that the leadership of health care organizations, particularly but certainly not limited to pharmaceutical and biotechnology companies, have no lack of imagination about how to construct financial relationships with influential people who could help sell their products, whether or not they acknowledge what amounts to their marketing roles.

Given that this story involved influencing the government, it will be interesting to see at this late date whether it results in any legal action.  After all, as David Willman pointed out,

 Federal law bars U.S. officials, including consultants, from giving advice on matters in which they or a company on whose board they serve have 'a financial interest.'

It will also be interesting to see if it gets any more attention.  Only a few blogs have noted it, but at least they included The Scientist.


Yet our country has an unfortunately very long history of corporate leaders getting close to political leaders who then may overlook the legal niceties when their friends' interests are at stake.  Nonetheless, true health care reform would require all those who have decision making power over patients, health policy, or the public health to be completely transparent about their conflicts of interest, and would ban the more serious variants of conflicts of interest, even if that might cost some already rich people a bit of money.  I am not holding my breath, however, about when this might happen.

Tales of the Wayfaring Generic Manager - from Ritz Carlton Hotels to Henry Ford West Bloomfield Hospital to Cancer Treatment Centers of America

In 2006, we wondered what a former hotel manager, Mr Gerard van Grinsven, admittedly known for putting the "wow" back in the Detroit Ritz-Carlton, would be doing as a hospital CEO.  This seemed at the time like a real "wow" example of how generic managers were taking over health care.  Mr Grinsven had extensive experience in the hospitality field, but no known background in health care. 

Organic Local Produce, "Wellbeing Centers," Gourmet Dining, Wedding Receptions, and Corporate Functions

Over the next few years, Mr van Grinsven's Henry Ford West Bloomfield hospital did make a name for itself.  In 2009, Becker's Hospital Review reported on some of Mr Van Grinsven's innovations. 

First, he lead an apparent change in the hospital's mission from acute care to recreating:

the hospital experience into one focused on promoting wellbeing and healthy living. The hospital has already begun to realize its mission statement, which reads 'to take health and healing beyond the boundaries of imagination.'

The new hospital apparently was designed to look like a luxury hotel:

The hospital is located on 160 acres of woodlands and is designed to resemble a Northern Michigan lodge. The facility also features a retail 'main street' which looks like an actual main street in a Northern Michigan town and includes stores focused on sleep, pregnancy, organic food and healthy cooking as well as a pharmacy.

Apparently it is now a favored site for weddings:

The hospital also holds free concerts for the community and has already received nine wedding inquiries. 

It had a "wellness center"

Henry Ford West Bloomfield also features a unique, integrated wellness center called Vita. Vita offers acupuncture, therapeutic message, yoga and relaxation classes, an aqua therapy suite, a spa and health coaches who provide lifestyle and exercise consultations. In addition to offering one-time services, the hospital offers memberships to community members to encourage frequent use of the center.

What really stood out was its food service:

Henry Ford brought in top Michigan chef Matt Prentice to transform traditional hospital food service. The hospital features 24-hour room service for patients, all of which is served by the hospital's on-site gourmet, organic restaurant, Henry's. All food served in the hospital is organic, promotes sustainable agriculture and, in many cases, is procured from local farmers.

A 2011 article in Fortune noted that

the hospital is on track to generate millions of dollars a year hosting and catering functions for companies and community groups.

It all sounds great, if it were describing a luxury hotel.

The Fortune article ended with the gushing summation:

While it will be years before anyone can say whether this model works, there's no question that it captures a spirit of innovation that just might be a cure for what ails so many organizations. We are living today through the age of disruption. You can't do big things if you're content with just doing things a little better than everyone else or a little differently from how you've done them in the past. In an era of intense competition and non-stop reinvention, the only way to stand out from the crowd is to stand for something special. Originality has become the acid test of strategy.

Neither it nor the Becker's rather uncritical discussions dealt with what any of this had to do with the fundamental mission of a hospital, to care for the sick, what it has to particularly do with quality of care, especially care of severely acutely or chronically ill patients, traditionally those whom hospitals were meant to serve.  Would a patient desperately sick from a myocardial infarction (heart attack), stroke, sepsis (bacterial blood stream infection) or the other major ills that bring people to hospitals really care that if he or she were to survive without major sequelae, organic, locally grown food would be served in the hospital's fancy restaurant?  Is there any evidence that provision of any of these fancy hotel amenities would affect important clinical outcomes for such patients?  Could the funds needed for all these fancy hotel services be better spent to improve patients' the the population's health?

On to a More Ethically Challenged Environment

We may never know.  But what we do know is that Mr van Grinsven, having brought "wellness" centers and organic, locally grown, gourmet food to an acute care hospital, is now moving on.

Crain's Detroit Business just reported:

Henry Ford West Bloomfield Hospital President and CEO Gerard van Grinsven has resigned from the position effective June 1, according to an internal email sent Friday to employees from Henry Ford Health System President and COO Bob Riney.

Van Grinsven is leaving the hospital to become the president and CEO of Chicago-based Cancer Treatment Centers of America, Riney said in the email. He will oversee the CTCA's five hospitals and medical centers in Illinois, Pennsylvania, Oklahoma, Arizona and Georgia. The CTCA is expected to announce van Grinsven's new position later today.

Henry Ford Health System CEO Bob Riney saluted van Grinsven thus,

'Gerard's leadership talents and his tremendous global experience made the transformation of this innovation and distinctive vision a reality,' Riney told employees in the email.

He did not apparently mention anything about the quality of care for acutely and chronically ill patients.  The press release from CTCA proclaimed

'Gerard's arrival is an exciting and dramatic step in the evolution of our leadership that will herald new opportunities for all of our talented Stakeholders and the thousands of patients we serve,' said [executive chairman and former CEO Stephen B] Bonner. 'Our expertise in Patient Empowerment Medicine® and track record implementing change is unparalleled. Nothing we do today is the same as we did two years ago. Gerard is uniquely qualified to provide the leadership required to advance our commitment to patient-centered care in all we do,' concluded Bonner.

Of course, there was nothing about how van Grinsven's expertise in wellness centers and organic produce would be useful to an organization supposedly devoted to cancer patients, whose care may involve risky treatment choices and who may become desperately ill.

There was also nothing about how van Grinsven's background would help CTCA to avoid new ethical misadventures.  Earlier this year, we posted about issues involving CTCA making unsubstantiated survival claims; promoting "integrative" treatments that are unsupported by evidence; and manipulating survival statistics, in part by turning away patients with poor prognoses.  Of course, it is not clear that given van Grinsven's background he would even understand why such behavior is unethical. 

Summary

As a physician, it is hard not to laugh at all this, at least to keep from crying.  As we have noted frequently, health care has been taken over by generic hired managers.  At best, while well meaning, many of them seem clueless about the nature and context of health care, and health care professionals' values.  At worst, the manager's coup d'etat has turned managers into manager-kings, queens and nobles, while driving up health care costs, and sacrificing the health of patients and the public.  The depth of this phenomenon is demonstrated by the absolute lack of skepticism about the worthiness of a former Ritz-Carlton executive to run either a community hospital or a system of cancer treatment centers.

I say once again that true health care reform would put in place leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty.

Minimizing Legal Liability or Upholding the Mission? - the Markingson Case Redux

There are new, and troubling developments in the long running case of Dan Markingson, the psychiatric patient and research subject who committed suicide while enrolled in a trial of anti-psychotic drugs at the University of Minnesota nearly 10 years ago.

Summary of the Case

A good quick summary of this case just appeared in the Center for Law and Bioscience blob out of the Stanford Law School. 

Dan Markingson – a vulnerable, psychotic young man – was forced to choose between enrolling in a Pharma-funded drug study or being involuntarily committed (in other words, locked up).  A UMN [University of Minnesota]  doctor enrolled him in the study despite having just determined that Dan 'lack[ed] the capacity to make decisions regarding [his] treatment,' rendering it highly unlikely that Dan could have given valid informed consent to participate.  As Dan's mother, Mary Weiss, observed his mental condition deteriorating, she repeatedly tried to have Dan removed from the trial – at one point asking  'Do we have to wait until he kills himself or someone else before anyone does anything?'  But the UMN co-investigators in the drug study refused to terminate his participation.  Shortly after Ms. Weiss made her desperate plea, Dan Markingson killed himself by cutting his own throat.

Our most recent (2011) post on the case was here.  In it we also noted that there was reason to think:
-  The design of the controlled trial was flawed.
-  Financial conflicts of interests may have influenced the trial investigators' actions, particularly their questionable enrollment of Mr Markingson in the trial and their retention of him in it despite his apparent clinical deterioration.
Despite that, when bioethicists and the University of Minnesota called for a new investigation of the trial and what happened to Mr Markingson, the university rebuffed them.

Worse, as detailed in a 2012 post in the Center for Law and Bioscience blog, not only did university officials rebuff this call, but the university general counsel, who had been operating at the heart of this case, appeared to threaten the leading bioethicist dissident, Dr Carl Elliott:

 After Carl Elliott, the University of Minnesota bioethicist, refused to drop the matter, Rotenberg asked the university’s Academic Freedom and Tenure Committee to take up the question of '[w]hat is the faculty[’s] collective role in addressing factually incorrect attacks on particular university faculty research activities?' – a question that appeared both to accuse Elliott of 'factually incorrect attacks' and to call for some unspecified action to 'address' them.  Other faculty, including the president of the Minnesota chapter of the American Association of University Professors, viewed this as an attempt to intimidate Elliott into silence.  If so, it backfired.  The story ended up in the press, putting the Markingson case back in the public eye and once again making the University of Minnesota look really bad.

New Evidence Unearthed

In 2013, Dr Elliott made public what may be important new evidence in the case.  As summarized by the Minneapolis Star-Tribune,

The professor, Carl Elliott, says he has obtained consent documents for two separate schizophrenic patients that appear to be exact copies — not just in the subjects’ apparent replies, but in the positions of the lettering on the pages.

Elliott said it is improbable that separate patients would provide identical responses to the questionnaire, which includes open-ended questions about the risks and requirements of clinical research. And that, he said, raises questions about whether the university was really examining patients to determine their ability to consent to research.

 One crucial question about the case is how a patient who was actively psychotic - out of touch with reality - could give true informed consent to participation in a drug trial.  These new documents suggest major irregularities in the process used in the trial to assure that patients did give informed consent. 

Furthermore, as reported by the Minnesota Daily, other documents that Dr Elliott found suggested problems with records that related to whether study investigators would have had legal authority to access Mr Markingson's medical records, also suggesting major problems with trial administration. 

These documents, unknown until recently, suggest new concerns with how the study in which Mr Markingson was enrolled, and during which he died, was run.  Yet, the University of Minnesota's official response to them, once again orchestrated by university counsel Mark Rotenberg, attacked the legitimacy of the documents (and indirectly, attacked Prof Elliott again), as reported by the Star-Tribune,

the university’s general counsel, Mark Rotenberg, challenged the authenticity of the documents and disagreed that study recruiters failed to obtain proper and independent consent from mentally ill patients.

'I am challenging these allegations directly,' he said. 'We have no reason to believe the consent forms were prepared inappropriately.'

As Matt Lamkin wrote in the Stanford Law and Bioscience blog,  the University's responses all through this case have been focused  not on the welfare of patients, maintaining the trust of research participants, or the integrity of clinical trials, but on the legal defense of  the University and its leaders

Despite all this (and much more), the University has never acknowledged any errors or taken any disciplinary action related to the Markingson case and has repeatedly rejected calls for an independent investigation.  That’s probably because from the start the University has handled this case as a litigation matter.  Rather than trying to determine whether there were problems with the way its personnel treated Markingson, the University has focused on minimizing its potential liability.  Accordingly, the University appears to run every inquiry related to the case through the office of its General Counsel, Mr. Rotenberg.  When Carl Elliott (my mentor as a grad student at UMN) wrote a damning article about the case in Mother Jones, the University’s response came from Rotenberg.  When UMN bioethicists called on the University’s Board of Regents to launch an independent investigation, the Regents deferred to Rotenberg.  Not surprisingly, he declined.

When you turn to your lawyer, you’re going to get a particular kind of response.  The GC isn’t in a position to take an objective look at the circumstances.  He’s an advocate.  His role is not to make sure the client has conducted itself ethically, but to minimize the client’s risk.  Asking your lawyer to respond to allegations of wrongdoing is like asking your PR flacks to do so.  Their job is to make their clients look good, not to make sure they’ve acted properly.

Note that this still begs the question of who the client is.  Is it the university, or the university's leaders?

Furthermore, as Mr Lamkin pointed out, the general counsel would appear to have a conflict of interest.  It may be he has an interest in defending his own actions, as well as those of his client(s), whether they are the university, its leaders, or both. 

In addition to Mr. Rotenberg’s role as the University’s top defender and advocate, there is another reason he cannot impartially consider requests for an investigation: the General Counsel’s Office is an important player in some of the disturbing events at issue.  As noted above, Rotenberg himself has been accused of attempting to intimidate and silence the bioethicist who has most doggedly sought an investigation.  The University’s lawyers are also responsible for the disgraceful silencing of Markingson’s mother, Mary Weiss.  After avoiding liability by arguing the University was immune from suit, these lawyers then threatened to force Weiss – whose son had died in a University doctor’s 'care – to pay the University’s legal costs of some $57,000.  The University used that threat as leverage to get Weiss to forgo an appeal of the trial court’s decision.

So as the University continues to refuse any new consideration of this this seemingly never-ending case, Dr Elliott has posted an online petition calling for an outside investigation.   We will see how Mr Rotenberg reacts to this.

Summary


A very troubling aspect of this case is that it has shown that the university leadership has seemed to care, at best, more about fending off litigation than upholding the university's mission.  The mission of the university is supposed to be discovering and disseminating the truth in a spirit of free inquiry.  Added to the mission of medical schools and university teaching hospitals is taking good care of patients, and putting the patients' interests ahead of all other concerns.  Yet, in this case, university leaders have not seemed to care whether in their haste to push back legal liability they were stepping on their faculty's academic freedom and free speech, the integrity of the medical research done at the university, and most importantly the rights of their patients and research subjects.  Furthermore, it is not clear whether they mainly feared the impact of litigation on the university, or how litigation might actually end up holding them accountable.

As Dr Judy Stone wrote in her Scientific American blog,

  it appears that UMN believes, as do many other institutions, that protecting itself from scandal and its consequences comes first and foremost and that, like the big banks, that it is too big to be punished.

Again, note that UMN cannot itself believe or protect.  People acting ostensibly on its behalf may have been protecting themselves from scandal, and believing that the size and status of their institution gave them, the leaders, impunity.

The case of Mr Dan Markingson is a continuing reminder that to reform health care, health care organizations need to be lead by people who put the health care mission first and are willing to be accountable for that mission.   I hope that eventually there is an honest investigation of this case, and a commitment to reform based on its conclusions.

See additional thoughts from Dr Howard Brody on the Hooked: Ethics, Medicine and Pharma blog, on the 1BoringOldMan blog, on the Periodic Table blog, and last but certainly not least, many comments by Dr Carl Elliott on the Fear and Loathing in Bioethics blog. 

The Dangers of Big Corporate Health Care: Deceptive Marketing of Cancer Treatments

A series of articles over the last few months, culminating in an investigative report by Reuters, provided the newest example of what can go wrong when corporations provide direct care to vulnerable patients.  In this case, the vulnerable patients had cancer, and the corporation that provided them care was the Cancer Treatment Centers of America (CTCA).  I will try to go through the case chronologically.

As Rueters reported, CTCA "was founded in 1988 by Richard J. Stephenson, who has been chairman ever since."

The Founder's Checkered Past

A Misdemeanor

As Reuters noted,

A graduate of Northwestern University Law School, Stephenson started out as an investment banker. In 1966 he became a trustee of Americans Building Constitutionally, an organization that helped wealthy individuals set up not-for-profit corporations and personal trusts to avoid paying federal income and inheritance taxes.

In 1969, a California state court found the group's top official and six others guilty of grand theft or conspiring to commit grand theft. Stephenson had pleaded no contest to false advertising, a misdemeanor, and testified for the state, according to media reports at the time.

Allegations of Use of Unproven Cancer Treatments

Stephenson seemingly stayed out of trouble until 1975, but

Stephenson ventured into healthcare in 1975, when he and partners bought Zion-Benton Hospital in Zion, Illinois, renaming it American International Hospital. By the late 1980s, American International was facing financial problems and its 'reputation had been severely damaged' by local press reports about its use of unproven cancer treatments, according to a 2004 court opinion on a successful petition by a former CTCA president seeking an increased valuation for his share of the company.

CTCA: No More Unsubstantiated Claims

Apparently around the time American International Hospital starting having major troubles, Stephenson branched out,

In 1988, Stephenson founded CTCA. He was motivated, said CEO Bonner, by the difficulty he had identifying and obtaining the best therapies for his mother after she developed bladder cancer. She died in 1982.

By 1996, CTCA got into trouble too,

 

Cancer Treatment Centers of America got in trouble with regulators in 1996, when the Federal Trade Commission accused it of, among other things, presenting survival claims it couldn't support. The company entered into a consent decree with the FTC and, without admitting any of the allegations, agreed not to make unsubstantiated outcomes claims.

"Unscientific Therapies"

As far as I can tell, all was then quiet until 2012.  Late that year, a Forbes columnist wrote,

 Alongside standard, science-based cancer therapies, CTCA also offers an array of questionable, unscientific therapies, which it proudly labels as part of its 'integrative cancer treatment.'  CTCA advertises many such treatments, including:

* Acupuncture
* Acupressure
* Chiropractic
* Naturopathy
* Homeopathy
* Mind-Body medicine (including Reiki and Qi Gong)

None of the treatments in this list has any scientific support showing that they provide a benefit to cancer patients.  Some of them carry a real risk of harm, as I’ve written about previously.

He further charged,

CTCA makes multiple unsupported, unscientific claims for its alternative treatments, such as:

• 'Naturopathic medicine can help reduce these [cancer-related] symptoms, strengthen the immune system and support the healing process throughout your brain cancer treatment.'
• 'Acupuncture may help to alleviate [cancer] treatment-related side effects, such as nausea and vomiting.'
• 'When used during your leukemia treatment, our chiropractic care services can help correct bone, muscle and joint problems and restore nerve function.'

These are just a few examples. These claims, and CTCA’s marketing of the therapies involved, present a huge ethical problem.

Manipulated Survival Statistics

Then, in March 2012, the Reuters investigative reporters charged that CTCA manipulated its survival statistics to make its results look better.

CTCA reports on its website that the percentage of its patients who are alive after six months, a year, 18 months and longer regularly tops national figures. For instance, 60 percent of its non-small-cell lung cancer patients are alive at six months, CTCA says, compared to 38 percent nationally. And 64 percent of its prostate cancer patients are alive at three years, versus 38 percent nationally.

Such claims are misleading, according to nine experts in cancer and medical statistics whom Reuters asked to review CTCA's survival numbers and its statistical methodology.

The experts were unanimous that CTCA's patients are different from the patients the company compares them to, in a way that skews their survival data. It has relatively few elderly patients, even though cancer is a disease of the aged. It has almost none who are uninsured or covered by Medicaid - patients who tend to die sooner if they develop cancer and who are comparatively numerous in national statistics.

Carolyn Holmes, a former CTCA oncology information specialist in Tulsa, Oklahoma, said she and others routinely tried to turn away people who 'were the wrong demographic' because they were less likely to have an insurance policy that CTCA preferred. Holmes said she would try to 'let those people down easy.'

Equally significant, CTCA includes in its outcomes data only those patients 'who received treatment at CTCA for the duration of their illness' - patients who have the ability to travel to CTCA locations from the get-go, without seeking local treatment first. That means excluding, for example, those who have exhausted treatment options closer to home and arrive at a CTCA facility with advanced disease.

Accepting only selected patients and calculating survival outcomes from only some of them 'is a huge bias and gives an enormous advantage to CTCA,' said biostatistician Donald Berry of MD Anderson Cancer Center in Houston.

Furthermore,

CTCA also appears to exclude the vast majority of its patients when it calculates survival data. In survival results from 2004 to 2008 posted on its website, CTCA reported 61 patients with advanced prostate cancer, 97 with advanced breast cancer, 434 with advanced lung cancer, and 165 with advanced colon or rectal cancer. These are the four most common solid tumors. In the same period, CTCA treated thousands of patients at its Zion facility alone, according to filings with state regulators.

'We agree that some of our sample sizes' are small 'and have always stated this as a limitation of our study,' said Xiong, the consultant to CTCA.

'I'd have some concerns about why and wonder if some cherry-picking was going on,' said Spectrum Health's Campbell.

Moreover, while the standard reporting period for cancer survival is five years after diagnosis, CTCA on its website doesn't go that far; for the four most common tumors, it reports survival up to four years at most. And as Reuters found, the company's advantage often diminishes as the five-year mark approaches

 
The Founder's Checkered Present

By the way, also in the last few months, watchdog groups have asked for an investigation of CTCA's founder for possible deceptive actions that might have violated US election laws.  In December, 2012, the Washington Post reported

In the weeks before the election, more than $12 million in donations was funneled through two Tennessee corporations to the FreedomWorks super PAC after negotiations with [CTCA Founder Richard J] Stephenson over a preelection gift of the same size, according to three current and former employees with knowledge of the arrangement.

Then,

 Two watchdog groups last week asked the Federal Election Commission and the Justice Department to investigate the donations from the two Tennessee companies. The groups, Democracy 21 and the Campaign Legal Center, say the arrangement could violate federal laws that prohibit attempting to hide the true source of a political contribution by giving it under another name.

Summary

In summary, there are now charges in the media that Cancer Treatment Centers of America manipulated its survival data to makes its advertised results appear better, while it also advertises unproven complementary and alternative medicine treatments  as effective.  In the past the company had signed a consent decree not to make (presumably any more) unsubstantiated claims.  Meanwhile, the company's founder, who has a past history of a no contest plea to false advertising, and who had previously run a hospital system also charged with making unsupported survival claims, has been accused of hiding political donations.

Thus this organization, run by someone who has his own history of deception, has been found to make exaggerated and/or unsubstantiated advertising claims of several types and at different times.  These claims could attract vulnerable patients who perhaps could get better care elsewhere, possibly leading to excess morbidity and even early mortality. 

So Cancer Treatment Centers of America seems to be the latest reason to worry about the laissez faire US system which allows lightly regulated for-profit corporations to provide direct "care" to our most vulnerable patients.   We have recently discussed how a for-profit hospital chain may have been over treating some patients and under treating others, possibly risking patients' health to increase revenues (look here);  how for-profit hospice corporations by enrolling patients who do not actually have terminal illness for palliative care only  could be denying potentially curative treatment to curable patients (look here); and how for-profit mental health clinics and drug treatment centers could be providing shoddy, and potentially dangerous care to boost revenues (look here and here).

We will see if the newest part of the pattern of news reports about CTCA and its founder, coupled with reports about other for-profit health care corporations that provide direct care to vulnerable patients provoke any official action.  However, the pattern is substantial enough so that it should make all health care professionals and all patients  reconsider whether ever to trust a for-profit hospital system, hospital, clinic or other site providing direct health care to patients.

On a policy level, as I have said before,....   In my humble opinion, before the health care bubble bursts, we need to challenge the notion that direct health care should ever be provided, or that medicine ought to be practiced by for-profit corporations. Before market fundamentalism became so prominent, many states prohibited the corporate practice of medicine, and the American Medical Association forbade the commercialization of medicine.

 It is time to heed that wisdom. I submit that we will not be able to have good quality, accessible health care at an affordable price until we restore physicians as independent, ethical health care professionals, and until we restore small, independent, community responsible, non-profit hospitals as the locus for inpatient care.

Broken Promises: Latest HCA Settlement Suggests Skepticism about the Next Big Thing in Health Care

A long time ago in the US, most people got care from physicians who were self-employed, or part of physician partnerships.  If they had to be hospitalized, it was at hospitals that were community or academic non-profit organizations.   If they had health insurance, it was likely from a non-profit Blue Cross Blue Shield affiliate.  However, with the rise of market fundamentalism, we have heard the promises of increased efficiency and innovation from for-profit health care.  So hospitals, insurance companies, and now increasingly physicians' practices have been bought up by for profit corporations.

Many politicians and policy-makers seemed to believe the promises, and often joined the cheering sections for the latest and greatest for-profit conversions.  Should they have done so?  Let us look at a case that recently hit the news again and think about it..

Background - HCA Acquired Health Midwest

Way back in 2002, large for-profit hospital chain HCA, formerly Columbia/HCA, acquired a sizable non-profit hospital system, Health Midwest.  As the Los Angeles Times then reported,

In a setback for Tenet Healthcare Corp., rival hospital giant HCA Inc. said Wednesday that it has agreed to buy Health Midwest, a 14-hospital chain based in Kansas City, Mo., for $1.13 billion.

Santa Barbara-based Tenet and HCA were the two finalists in a rare opportunity to acquire, in one swoop, a dominant hospital system in a growing urban market. The 20-member board of Health Midwest, a nonprofit company that has been struggling financially, said it voted unanimously to go with HCA.

The biggest factor in the decision by the Health Midwest board to accept the HCA offer was apparently the almighty dollar.

 'HCA's bid was much higher,' [Tenet spokesperson Harry] Anderson said, noting that he could not disclose Tenet's offer because of a confidentiality agreement.

But in addition to cash, HCA made some promises that sounded attractive to the board.

 In addition to the cash price, HCA said it would spend $450 million for capital improvements over the next five years.

That promise came from the top of HCA, as reported by the Nashville post,

 HCA Chief Executive Jack Bovender said: 'This has been a comprehensive, thorough process with a lot of community participation. We are ready to get to work to improve these hospitals through significant capital infusion and by making long term operational improvements.'

 Furthermore, as the Los Angeles Times also reported

Health Midwest spokesman Chris Whitley said price was not the only factor in the decision.

'As important to the board was to find a party that would offer a strong commitment to maintain and honor the various religious, cultural and charitable traditions,' he said.

There were objections by people who did not have decision making authority, but they apparently did not carry much weight

Labor and community activists in Kansas City have opposed a takeover of a nonprofit health system by an investor-owned corporation, raising concerns that such a conversion would lead to cuts, hurting employees and consumers.

In retrospect, why Health Midwest was so trusting of HCA at the time was unclear.  HCA, after all, did not have a track record then that should have inspired trust.  The HCA acquisition of Health Midwest was approved only a few years after what was then Columbia/ HCA settled allegations of extensive Medicare fraud.  the $1.7 billion the company paid made it the largest Medicare fraud case settled up to that time (and was larger than the amount it later spent on this acquisition.    See this post for some details and sources.)  This certainly could have raised a "red flag" before the deal was concluded.  But it did not. 

This deal was typical of many deals in which for-profit corporations, some backed by private equity firms, took over sometimes struggling non-profit hospitals, while promising great things for their communities.  For example, see our posts about the take-over of a health care system called Caritas Christi, by Cerberus Capital Management.  Caritas Christi was given the reassuring name of Steward Health Care, and then proceeded to take over, or try to take over additional hospitals. (Click the links for this long story.)  

Broken Promises - the New HCA Settlement

A new legal settlement by HCA suggests that such takeovers of non-profit hospitals by for-profit corporations ought to be regarded with much greater skepticism.  This time, per the New York Times,

HCA, the nation’s largest profit-making hospital chain, was ordered on Thursday to pay $162 million after a judge in Missouri ruled that it had failed to abide by an agreement to make improvements to dilapidated hospitals that it bought in the Kansas City area several years ago. 

Thus the new HCA settlement suggested that those fine promises made by HCA executives and their cheer leaders when HCA was seeking to take over Health Midwest were broken.

The trouble in the Kansas City area began a year after HCA acquired a dozen hospitals from Health Midwest in 2003 for $1.125 billion. As part of the deal, HCA agreed to make $300 million in capital improvements in the first two years and an additional $150 million in the following three. The hospital chain also agreed to maintain the levels of care that had been provided to low-income individuals and families in the area for 10 years. 

But when the members of the Health Care Foundation of Greater Kansas City, a nonprofit created from the proceeds of the sale of the hospital, received their first report from HCA in 2004 they discovered the hospital was already way behind.

Of the $300 million it was supposed to spend in the first two years, its own documents showed it had spent only about $50 million, according to Mark G. Flaherty, one of the founding members of the foundation and its general counsel.

HCA’s reports to the foundation also indicated that the level of charitable care it provided at the system’s large inner-city hospital had fallen while charitable care provided at the more affluent suburban hospital had risen sharply, Mr. Flaherty said.

'That was a big red flag to us,' he said.

After repeatedly asking HCA executives for explanations but receiving none, the foundation sued HCA in 2009. The case went to trial for several weeks in 2011.

 Note that there were alleged violations of two key provisions of the original deal, improvements to existing hospitals and guarantees of charitable care.  So here is at least one case, involving the largest US for-profit hospital corporation, showing violation of the sorts of promises that those promoting for-profit take-overs tout as showing at least the goodwill of the new corporate owners.

Should the HCA Track Record Have Led to Questions About Trustworthiness?

It is unclear how often anyone has bothered to check whether similar promises made in other deals were fulfilled.  It appears that such inquiries might actually involve a lot of bother.  Note that in this case it took almost six years for the community foundation to obtain enough information to conclude that HCA had not met its obligations and file a lawsuit, and another almost four years to get the case resolved.

The New York Times hinted that there was at least one other inquiry about a contemporaneous HCA deal.  While "a judge ruled in HCA's favor, deciding that Portsmouth Regional Hospital [in New Hampshire] would remain part of HCA after community leaders tried to regain control," the court proceedings did produce

 testimony in a 2011 trial, [in which] a former hospital official claimed he had difficulties getting HCA to pay for what he and others described as critical equipment and facility upgrades.

Meanwhile, there have been other recent events that should raise further questions about the trustworthiness of HCA going forward.  Last year extensive reporting suggested that HCA hospitals put short-term revenue ahead of patients' welfare through overuse of lucrative cardiac procedures and and undertreatment of poor patients in emergency departments and debilitated patients with bed sores (see this post).   Also last year HCA settled allegations it provided kickbacks to physicians at some of its hospitals to refer patients to its hospitals (see this post).     

Moreover, the record over the long term raises a big question as to why the good people of Missouri, the "show me" state, trusted HCA sufficiently for hospital acquisition deal to go forward in 2003.  As we wrote above, HCA was only a few years out of making the biggest settlement for federal health care fraud known at that time. 

Summary

 In 2010, we suggested that the take-over of non-profit hospitals by for-profit firms owned by private equity ought to be viewed with extreme skepticism.  In 2010, in Deadly Spin, former CIGNA public relations chief Wendell Potter showed how the conversions of non-profit Blue Cross Blue Shield health insurance plans to for-profit corporations were justified by the need to gather more capital to provide services comparable to new for-profit competitors, but were really motivated by the greed of executives who "would earn bigger pay packages for managing larger businesses, and if they could convert them to for-profit companies, they stood to earn even more." 

I submit that if anyone were able to look carefully at the results of the various deals that allowed for-profit corporations to take over hospitals, other organizations that directly take care of patients, health insurance companies, and now even physicians' practices, they would likely find that a lot of fine sounding promises made were broken and assurances made were false.  


From now on, I can only hope that health care professionals, policy-makers, politicians, but mainly the public at large will be appropriately skeptical of the fluffy promises made by those who stand to personally gain from the latest big thing in health care.  In particular, we all should be acutely skeptical the next time someone promises lower costs, better care, innovation, etc, etc by converting a community non-profit hospital to a subsidiary of a big for profit corporation.  

How the "Revolving Door" and Other Aspects of Corporatism Benefited Amgen Just After its Settlement and Guilty Plea

At least here in these United States, our health care corporatism is bipartisan.  Here we present a sorry story of how a company that should have been shamed by dishonest behavior that likely harmed patients instead apparently was awarded special treatment through its cozy relationships with top government leaders
 
Accusations of Kickbacks and Deceptive Marketing of Aranesp 

Last month, biotechnology giant pleaded guilty to a charge of misbranding and settled civil charges with the US government for $762 million (look here).  Soon after, New York Times article described the unethical practices the company was alleged to have performed.  It opened with a vivid anecdote:

'I hope no one is taping this,' the Amgen manager remarked at a company sales meeting in 2005.

The manager then boasted of how she had given a $10,000 unrestricted grant to a pet project of a doctor who was an adviser to the local  Medicare contractor. In turn, she said, the doctor would help persuade the contractor to provide reimbursement for an unapproved use of Amgen’s anemia drug, Aranesp. 

Since that account appeared to be of a quid pro quo, it did sound like some a kickback or bribery.  In addition,

Amgen is also accused of offering kickbacks to doctors and clinics to induce them to use its drugs. These reportedly came as cash, rebates, free samples, educational and research grants, dinners and travel, and other inducements.   

Of course, since this was the usual sort of settlement we see of health care corporate wrongdoing, in which the reason the company is paying what appears to be a large fine remains ambiguous,

Except for those in the criminal count, Amgen denied the other accusations, though it did issue a statement on Wednesday acknowledging the settlement.

'The government raised important concerns in the criminal prosecution,' Cynthia M. Patton, chief compliance officer at Amgen, said in the statement. 'Amgen acknowledges that mistakes were made, and we did not live up to our standards.'

"Mistakes were made," what a handy phrase to avoid acknowledging that a real person or person made those mistakes.  Why government prosecutors did not leverage instances in which the mistakes were made by an identifiable person, for example, the manager in the anecdote above, to find out who ultimately authorized and directed the kickbacks and deceptive marketing, and then seek to indict them is a mystery.  The US Department of Justice now seems to be disinclined to ever pursue top  health care corporate executives who may have done wrong, while they exuberantly pursue fines from the companies they direct, fines which have almost no personal impact on those who authorized, directed or implemented the bad behavior.
  
The Times article also included a telling allegation that behind this apparent misbehavior was a changed corporate culture that put short-term revenue ahead of all other considerations.  

the corporate culture changed starting around 2000. That was when new management came in and Aranesp was approved, setting up a fierce marketing battle with Johnson & Johnson and its rival anemia drug, Procrit.

'It was more important to make your numbers than to follow the rules,' said [former Amgen sales representative and now whistle-blower Jill] ...Osiecki, who was based in Milwaukee and sold Aranesp. 

We have discussed how the "make your numbers" culture seems to have resulted from an over-generalization of the prevalent belief in business schools that "maximizing shareholder value," which usually seems to mean maximizing short-term revenue and/or doing whatever it takes to boost stock prices in the short-term (look here).  In companies which make potentially beneficial but also potentially hazardous drugs, the risks of "make your numbers" are obvious.

Shameful Consequences for Patients 

These were disconcerting revelations.  They showed that some unidentified employees, probably including top leaders of a major health care corporation seemed to use kickbacks and lies to deceptively market a drug just to "make their numbers," and thus most likely score healthy bonuses.  Yet this drug is clearly dangerous.  The official Aranesp label states (in a black box warning, in capital letters):

 ESAs INCREASE THE RISK OF DEATH, MYOCARDIAL INFARCTION, STROKE, VENOUS THROMBOEMBOLISM, THROMBOSIS OF VASCULAR ACCESS AND TUMOR PROGRESSION OR RECURRENCE

Thus deceptive and unethical marketing practices likely lead to overuse of the drug, and overuse of the drug likely lead to sick (via myocardial infarction [heart attack], stroke, venous thromboembolism or thrombosis of vascular access [drug clots], or tumor progression) or dead patients.

One would think that the consequences of the particular bad behavior alleged in this case would have lead to more zealous prosecution and to the pursuit of actual people who authorized, directed or implemented the bad behavior.  However, it did not.


One would also think that the nature and consequences of this bad behavior would harm the reputation of the company and its leadership.  Instead, it appears that soon after the settlement was announced, top US elected leaders were fawning over this company and its leadership, and rushing to legislate special treatment for it.

Special Treatment from Legislators

Yet soon after these disconcerting revelations that should have shamed Amgen and its leadership, it appears that the company benefited from legislation narrowly crafted mainly just for to suit its interests, and with the aid of allies from both parties within the US government.  That story was again just reported by the New York Times.  The basics are:

Just two weeks after pleading guilty in a major federal fraud case, Amgen, the world’s largest biotechnology firm, scored a largely unnoticed coup on Capitol Hill: Lawmakers inserted a paragraph into the "fiscal cliff"  bill that did not mention the company by name but strongly favored one of its drugs. 

 

The language buried in Section 632 of the law delays a set of Medicare price restraints on a class of drugs that includes Sensipar, a lucrative Amgen pill used by kidney dialysis patients.

The provision gives Amgen an additional two years to sell Sensipar without government controls. The news was so welcome that the company’s chief executive quickly relayed it to investment analysts.  But it is projected to cost Medicare up to $500 million over that period.[That would almost make up for the fine the company had to pay for illegal marketing and to settle kickback charges - Ed]

Amgen, which has a small army of 74 lobbyists in the capital, was the only company to argue aggressively for the delay, according to several Congressional aides of both parties. 

But the Times article noted that it was not just the size of its army of lobbyists that did it.  

 Amgen has deep financial and political ties to lawmakers like Senate Minority Leader Mitch McConnell, Republican of Kentucky, and Senators Max Baucus, Democrat of Montana, and Orrin G Hatch, Republican of Utah, who hold heavy sway over Medicare payment policy as the leaders of the Finance Committee. 

In particular, Amgen

has a deep bench of Washington lobbyists that includes Jeff Forbes, the former chief of staff to Mr. Baucus; Hunter Bates, the former chief of staff for Mr. McConnell; and Tony Podesta, whose fast-growing lobbying firm has unusually close ties to the White House.

Amgen’s employees and political action committee have distributed nearly $5 million in contributions to political candidates and committees since 2007, including $67,750 to Mr. Baucus, the Finance Committee chairman, and $59,000 to Mr. Hatch, the committee’s ranking Republican. They gave an additional $73,000 to Mr. McConnell, some of it at a fund-raising event for him that it helped sponsor in December while the debate over the fiscal legislation was under way. More than $141,000 has also gone from Amgen employees to President Obama’s campaigns.

What distinguishes the company’s efforts in Washington is the diversity and intensity of its public policy campaigns. Amgen and its foundation have directed hundreds of thousands of dollars in charitable contributions to influential groups like the Congressional Black Caucus and to lesser-known groups like the Utah Families Foundation, which was founded by Mr. Hatch and brings the senator positive coverage in his state’s news media.

Amgen has sent large donations to Glacier PAC, sponsored by Mr. Baucus in Montana, and OrrinPAc, a political action committee controlled by Mr. Hatch in Utah.

And when Mr. Hatch faced a rare primary challenge last year, a nonprofit group calling itself Freedom Path sponsored advertisements in Utah that attacked his opponent, an effort that tax records released in November show was financed in large part by the Pharmaceutical Research and Manufacturers of America, a trade group that includes Amgen.

In some cases, the company’s former employees have found important posts inside the Capitol. They include Dan Todd, one of Mr. Hatch’s top Finance Committee staff members on health and Medicare policy, who worked as a health policy analyst for Amgen’s government affairs office from 2005 to 2009. Mr. Todd, who joined Mr. Hatch’s staff in 2011, was directly involved in negotiating the dialysis components of the fiscal bill, and he met with 'all the stakeholders,' Mr. Hatch’s spokeswoman said, not disputing when asked that this included Amgen lobbyists.

In addition, a NY Times editorial today pointed out that Mitch McConnell, the Senate Minority Leader, (Republican - Kentucky) who "exerted great influence over the fiscal negotiations and praised the Medicare provisions" presumably including the specific provision that helped Amgen, also has "political and financial ties to Amgen."  Furthermore, Senator McConnell's willingness to use taxpayer's money to pay Amgen more seemed to contradict his "public statements [which] usually emphasize the need to cut federal spending on entitlement programs, as they did in Lexington Friday," as reported by WEKU (the National Public Radio Station at Eastern Kentucky University ).  

Can We Reform Health Care in the Corporatist States of America?  

 In summary, Amgen seems to have leveraged its use of former legislative aides affiliated with both political parties as lobbyists, and its presumed influence over former employees who are currently legislative aides, that is, to people who have transited revolving doors in both directions, to influence policy in its corporate favor.  It has also leveraged its contributions directly to politicians, to political action committees (PACs), and to non-profit advocacy groups to influence policy in its direction for this purpose.  All this leverage apparently resulted in continuing government favoritism to a company the government had just convicted of a crime, and to a company whose actions likely led to sick and dead patients.  Furthermore, legislators who publicly deplore excess government spending and enlarging government deficits supported spending more taxpayer money to favor a particular company that they ought to have shunned. 


The New York Times editorial deplored this case first as

a disheartening example of how intense lobbying and financial contributions can distort the legislative process in Washington

and second as

a classic example of the power of special interests to shape legislation and shows how hard it may be to carry out the reforms needed to cut health care costs. 

But it was really much worse than that.   This case certainly shows the ongoing coziness between big health care organizations and government (this time, mainly legislative) leaders, facilitated by the apparently very common "revolving door" interchange of influential people between corporate management and government.  Note that this coziness has now become bipartisan.  However, this was not merely expensive favoritism.  It was hypocritical expensive favoritism that benefited a corporation that ought to have been shamed and shunned for behavior that did not merely cost the government money, but likely harmed patients, sometimes even fatally. 

President Theodore Roosevelt condemned malefactors of great wealth.  Our current political leaders in both parties seem to put their ties to corporate insiders who work for executives of great wealth ahead of any consideration of what might be good for patients, public health, or the citizenry at large.  

So the US now seems to be run by a soft, informal version of corporatism, the system in which government and big corporations overlap and jointly rule the people.  Since these days big corporations are run largely without accountability by increasingly rich executives, this ends up meaning government by the oligarchs, for the oligarchs, and of the oligarchs.  President Lincoln and President Theodore Roosevelt might be rolling in their graves.  

To meaningfully reform health care, it seems like we need to meaningfully reform our entire political system, and both make leaders of health care organizations accountable, and make government again of the people, by the people, and for the people. 

"Slap on the Wrist" for a "Too Big to Fail" Hospital - Judge Rejects WakeMed Settlement

Maybe we are reaching an inflection point in how misbehavior by big health care organizations is handled in the US legal system. 

We have frequently discussed the march of legal settlements made by big health care organizations.  Many of these settlements indicated severely bad behavior, often behavior that seemed overtly dishonest, sometimes criminal, and had the potential to harm patients.  Yet most of these settlements involved only fines, and sometimes written agreements that pledge the organization will do better in the future, often in the form of deferred prosecution or corporate integrity agreements.  Yet the fines were often small compared to the amount the organization stood to make from the bad behavior.  It is not clear that any written agreements were enforced, or caused major penalties if the organization did not fulfill them.  And almost never did any individual within the accused organization suffer any negative consequences for authorizing, directing or implementing the bad behavior, even if such individuals may have personally profited from high compensation partially fueled by the bad behavior.

Now and then, though, there are cases that are different.  Perhaps one has just come along that may signal things are going to change.

The Basics of the Case

The case was first reported by the Raleigh (NC)  News & Observer in December, 2012.  Here are the basics:

WakeMed has agreed to pay $8 million to settle an investigation into its practice of billing Medicare for expensive overnight care when the patients had been treated and discharged the same day.

The settlement came after a lengthy criminal investigation into Medicare billing procedures used by nurses at the private, not-for-profit hospital’s Heart Center Observation Area.

Nurses there, according to federal court documents, routinely ignored physicians’ orders for how a patient should be classified. Their actions resulted in the hospital receiving millions of unwarranted Medicare dollars for outpatients who were classified wrongly as inpatients.

Though some WakeMed managers were aware of the billing practices, according to court documents, investigators found no evidence of anyone personally benefiting from the system.

No one, according to WakeMed officials, lost their job or was disciplined because of the investigation. 

The US Attorney made the usual sort of announcement:

'This case will serve as a reminder that hospitals, just like individual health care providers, will be held accountable for their actions,' [Thomas] Walker, the U.S. Attorney for the Eastern District of North Carolina, said in a statement.

Read more here: http://www.newsobserver.com/2012/12/19/2555092/wakemed-admits-to-false-medicare.html#storylink=cpy

So far, this is pretty usual.  There were accusations of inflated billing, a monetary fine that might look big to the average citizen, but that pales next to the revenue of the offending organization (over $943 million in the 2010-2011 fiscal year according to the WakeMed 2011 US form 990),a stern statement by the US Attorney, but again no penalties for any individual, and here, a rather implausible statement that no one benefited from the deceptive practices.

However, there were also some immediately appreciable atypical elements to this case.

Atypical Elements

In addition to the fine to be paid, the case was to be settled using a deferred prosecution agreement:

The hospital faces two criminal charges – making material false statements relating to health care matters and aiding and abetting, but under the settlement reached Wednesday, prosecution will be deferred. If the hospital complies with provisions in the settlement agreement, such as paying $8 million and allowing further monitoring, the charges will be dismissed in two years, according to court documents.

As part of the agreement, which has yet to be approved in court, [Wakemed CEO Bill] Atkinson acknowledged the wrongdoing described by prosecutors. He further acknowledged that WakeMed was responsible for the acts of the health-care organization’s employees and officers.

Read more here: http://www.newsobserver.com/2012/12/19/2555092/wakemed-admits-to-false-medicare.html#storylink=cpy

Read more here: http://www.newsobserver.com/2012/12/19/2555092/wakemed-admits-to-false-medicare.html#storylink=cpy

Read more here: http://www.newsobserver.com/2012/12/19/2555092/wakemed-admits-to-false-medicare.html#storylink=cpy

While we have sometimes seen deferred prosecution agreements used in cases in which for-profit health care corporations were accused of violating the law, they are rarely used in cases involving non-profit hospitals.  (The biggest one I recall was that of the University of Medicine and Dentistry of New Jersey, a complex case we started discussing in 2005.  See relevant posts here.)  Criminal charges against a non-profit hospital are also unusual.  Note also that as stated above the hospital system CEO seemed to admit that the hospital did wrong, raising further doubt about the conclusion above that no individual personally profited.

The plot further thickened when the CEO seemed to contradict his own statement within the deferred prosecution agreement that acknowledged wrong-doing.

In an interview Wednesday, Bill Atkinson, WakeMed’s president and CEO, wavered between accepting the charges – saying repeatedly  'I don’t want to minimize it, and I don’t want you to hear me doing that' – and being adamant that the hospital’s actions were simply a misinterpretation of complicated federal Medicare guidelines.

Even though he endorsed a settlement agreement in which prosecutors contend two crimes occurred, Atkinson said he doesn’t believe the hospital’s actions were criminal.

'I don’t think so, but the federal government thinks they could certainly turn it that way,' he said. That description differs vastly from what prosecutors contend. 'They’re not going to minimize the media effect,' Atkinson said.

Read more here: http://www.newsobserver.com/2012/12/19/2555092/wakemed-admits-to-false-medicare.html#storylink=cpy

The plot thickened further when in the same interview Atkinson seemed to deny that any individual did anything wrong:

Heidi McAfee, who retired earlier this year, was director of Patient Access during much of the period when the problematic billing occurred. Efforts to reach McAfee on Wednesday were unsuccessful, but Atkinson praised her years of work with WakeMed.

'Do I think anybody intentionally did anything wrong?' Atkinson said. 'No, I don’t.'

He said WakeMed had not reported McAfee or any of the nurses to the N.C. Board of Nursing for ignoring doctor’s orders. 

So did the hospital acknowledge wrongdoing, or did it not?  If wrongdoing did occur, did any individual do it, or was it done by ghosts or spirits?  From this account, it was unclear.

This Time the Inconsistencies and Ambiguities are not Ignored

Many of the settlements we have discussed seem to have been based on similar illogic.  For example, they often involved accusations of bad behavior, often bad enough to put patients at danger, yet the settlements may included ritualistic statements by defendant organizations that they neither admitted nor denied wrongdoing.  Thus, the settlements left ambiguous and unknown what really happened, and their own appropriateness.  (Note that similar settlements are made all the time by big financial firms, and one intrepid judge did point out how little sense they make, see this post.)

Yet in most cases, the illogic is rapidly swept under the rug, noticed, if at all, by lowly outsiders like your humble bloggers on Health Care Renewal.

This time, though, it was different.

Why Would the Nurses Ignore Doctors' Orders?

An important part of the argument by the US Department of Justice in this case was that nurses "routinely ignored doctors' orders."  If it were true, this would be very unusual and would threaten the integrity of health care at the particular institution, since every hospital operates on the assumption that the doctors make management decisions and order tests, treatments, etc, and then the nurses, as well as technicians and therapists carry out these orders.

However, In this case, a local nurse immediately and publicly disputed the notion that the nurses were independently flouting the doctors' orders.  As reported again by the News & Observer in December, 2012,

When Vicki Hewitt-McNeil read about WakeMed’s $8 million settlement for wrong Medicare billing, the Raleigh nurse didn’t buy the story.

According to the settlement, a nursing director instructed her staff to admit patients as inpatients and ignore doctors’ orders to treat them on the less expensive outpatient basis.

With two decades of nursing experience, Hewitt-McNeil didn’t like that the blame was shifted down the totem pole to nurses, who don’t wield the power of administrators and doctors.

'I honestly cannot believe this was the nursing department that did this,' Hewitt-McNeil said. 'That’s just not possible.'

 Furthermore,

[Ms Hewitt-McNeil]  also worked shifts at WakeMed as a pool nurse, similar to working as a substitute teacher. 'Nurses at WakeMed don’t have the autonomy to do anything,' Hewitt-McNeil said. 'You have to call a doctor for everything.'

Read more here: http://www.newsobserver.com/2012/12/22/2561738/nurse-rejects-wakemeds-claim-that.html#storylink=cpy

Again, the contention that the nurses systematically disobeyed doctors or pretended to be following non-existent orders implied a fundamental break-down of the system and widespread unprofessional, unethical behavior by the nurses.  In addition, the charges did not suggest why the nurses would do something so bad, especially since they were in no position to personally benefit from their actions.

 What Did the Hospital Leadership Actually Admit?

Read more here: http://www.newsobserver.com/2012/12/22/2561738/nurse-rejects-wakemeds-claim-that.html#storylink=cpy

Read more here: http://www.newsobserver.com/2012/12/22/2561738/nurse-rejects-wakemeds-claim-that.html#storylink=cpy

It took a few weeks, but someone - it is not clear who it was - noticed that while the Department of Justice asserted that the hospital CEO had admitted wrongdoing, the CEO's public statement seemed to equivocate.  So in mid January, 2013, as reported again by the News & Observer,

Deb Laughery, a spokeswoman for the hospital, issued a clarification on Monday.

'In an abundance of caution, WakeMed confirms that it has agreed to a settlement with the United States as set forth in the Deferred Prosecution Agreement,' the statement said, adding further that statements of fact laid out in the agreement were 'true and accurate.'

In the clarification, WakeMed officials acknowledged that the hospital formally faced federal criminal charges. The hospital also retracted any suggestions that the settlement only involved a small number of cases.

The hospital public relations person apparently could not bring herself to say that the hospital admitted wrongdoing, but by acknowledging that statements of fact in the deferred prosecution agreement were "true and accurate," she seemed to be indirectly admitting again that wrongdoing occurred, and that the hospital was responsible for the actions of its employees.

The Judge Notices the Emperor Has No Clothes

Despite their internal inconsistencies and illogic, most legal settlements of accusations of wrongdoing by big health care organizations are accepted by judges.  In this case, again things were different.  As reported yesterday, on 17 January, 2013 again by the News & Observer,

 WakeMed officials and federal prosecutors spent two years hammering out an $8 million proposal to settle a Medicare fraud investigation.

A federal judge shredded the 116-page agreement in less than 30 minutes on Thursday.

U.S. District Judge Terrence Boyle ticked off a list of his grievances about the proposal, forcing federal prosecutors into the unusual position of defending the defendants.

Read more here: http://www.newsobserver.com/2013/01/17/2614178/judge-refuses-to-accept-wakemed.html#storylink=cpy

Quelle surprise!  The judge took particular offense that the settlement seemed disproportionately lenient,

 The agreement, Boyle said, appeared to be a 'slap on the hand' for a 'too big to fail' corporate giant. Only the day before, Boyle told the lawyers, he sentenced a woman to a year in prison in a $235,000 insurance fraud case.

Furthermore, 

Read more here: http://www.newsobserver.com/2013/01/17/2614178/judge-refuses-to-accept-wakemed.html#storylink=cpy

Boyle was irked that no criminal charges had been filed in the case. He ended the hearing by telling the prosecutor either to fold his briefcase or take it to a federal grand jury for official indictments.

'There are lots of corporations that steal from the government,' Boyle said. 'Most of them are convicted, fined and banished.'

Also,

'Why are you coming to court if you tell me you don’t need me?' Boyle asked Gilmore, the prosecutor who rose before him Thursday. 'I’m just window dressing in this case.'

'Why not take a guilty plea, defer imposition of the judgment and sentence, and come back in two years later and take a post hoc dismissal?' Boyle asked later.

Boyle lamented the increased number of health care fraud cases across the country.

'Who are the victims in this case?' Boyle asked before answering his own question. 'Every American wage earner and every American citizen.'

Boyle continued: 'It’s very difficult for society and the court to differentiate between the everyday working Joe or Jane who goes to prison and the nonprofit corporate giant who doesn’t go to jail, who gets a slap on the hand and doesn’t miss a beat.'

Exactly.   And finally, just to demonstrate the sense of impunity of the leadership of this particular nonprofit corporate giant

Boyle, who’s been a federal judge for 28 years, also criticized WakeMed for failing to send a top administrator or a board member to answer his questions. It’s rare for a criminal case to be resolved without a defendant at the defense table.

Deb Laughery, a WakeMed spokeswoman, said after the hearing that none attended because the board approved a resolution earlier in the week supporting the proposed settlement.

Summary

For years now the leadership of large health care organizations have grown rich while denying accountability for their actions that made this so.  This denial has been largely abetted by governmental regulators and law enforcers, who while often recognizing that corporate misbehavior has occurred, have seemed unable or unwilling to pursue anything but the most lenient resolutions of such cases.  These resolutions are often fines that might appear big to gullible members of the public, but are actually small in comparison to the money to be made; sometimes deferred prosecution and corporate integrity agreements that rarely are enforced; and almost never any negative consequences for the people who authorized, directed, or implemented the bad behavior.  Thus the leaders of health care organizations have enjoyed impunity, have become the new untouchables, and thus health care organizations become ever better at raking in money and ever worse at providing good health care.

As I have said again and again,  until the people responsible for the bad behavior experience negative consequences from that behavior, they will continue to perform, direct, and condone bad behavior. We will not achieve real health care reform in the US until we effectively deter unethical, self-serving behavior by leaders of health care organizations.

Read more here: http://www.newsobserver.com/2013/01/17/2614178/judge-refuses-to-accept-wakemed.html#storylink=cpy

Read more here: http://www.newsobserver.com/2013/01/17/2614178/judge-refuses-to-accept-wakemed.html#storylink=cpy

Read more here: http://www.newsobserver.com/2013/01/17/2614178/judge-refuses-to-accept-wakemed.html#storylink=cpy

Read more here: http://www.newsobserver.com/2013/01/15/2607671/wakemed-clarifies-statements-on.html#storylink=cpy