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Merck Settles Another Vioxx Case

All the shenanigans that went on in the course of Merck's marketing of the now withdrawn Cox-2 inhibitor non-steroidal anti-inflammatory drug Vioxx have provided grist for the <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a> mill since 2005.  For example, see these posts: - <a href="http://hcrenewal.blogspot.com/2005/04/more-evidence-of-ghostwriting.html">here</a> about ghost-writing of a Vioxx research publication; - <a href="http://hcrenewal.blogspot.com/2005/06/allegations-that-merck-threatened.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2005/12/more-allegations-that-merck-executives.html">here</a> about allegations that Merck executives tried to intimidate Vioxx critics; - <a href="http://hcrenewal.blogspot.com/2007/03/drug-crazy.html">here </a>about how advocates of an extreme laissez faire approach to regulation of health care corporations used illogical arguments about the Vioxx case; - <a href="http://hcrenewal.blogspot.com/2008/08/article-in-annals-of-internal-medicine.html">here</a> about how an apparently major clinical trial of Vioxx turned out to be a "seeding trial," that is, a study really meant to recruit supposed physician-researchers as prescribers; and - <a href="http://hcrenewal.blogspot.com/2010/01/physician-pleads-guilty-to-fraud-for.html">here</a> about how one once prominent Vioxx researcher pleaded guilty to fraud in connection with his research on other drugs.  Thus, the Vioxx case provides a good lesson about some of the tactics used to deceptively and unethically promote health care products (pharmaceuticals in this case). Merck just announced just the latest settlement of Vioxx related legal actions, as <a href="http://www.businessweek.com/news/2010-02-10/merck-changes-safety-procedures-pays-in-vioxx-suits-update1-.html">reported by Business Week</a>: <blockquote>Merck & Co. agreed to settle shareholder lawsuits over the withdrawn Vioxx painkiller by strengthening its drug-safety procedures, appointing a new chief medical officer and paying $12.2 million in legal fees. Merck would appoint one committee to address risks that require immediate action and another to monitor the safety of drugs, the company said in a regulatory filing. Merck would also amend its code of conduct to promote scientific and academic integrity as well 'honest communication' with doctors. 'In all research endeavors that are sponsored by Merck, we will refrain from attempting to influence inappropriately the results and conclusions of such research,' according to the amended code. 'We strive for all communications with the medical community to be accurate, truthful and consistent with labeling.'</blockquote> Also, <blockquote>The company will be required to make corporate governance changes and “supplement existing policies and procedures,” ... [a Merck spokesperson] said.</blockquote><blockquote>Merck would submit results of clinical trials to a public registry, with its compliance overseen by an independent third party. The chief medical officer will have an 'executive voice' on product safety issues independent of Merck Research Laboratories. </blockquote>Note that this settlement is only of one type of lawsuit, as described in <a href="http://online.wsj.com/article/SB10001424052748704140104575057231552987908.html">a Wall Street Journal article</a>, <blockquote>The pact, which is pending final court approval, would resolve state and federal shareholder 'derivative' complaints (which are brought by shareholders on behalf of a company) alleging that current and former Merck officers and directors breached their fiduciary duties in handling Vioxx. </blockquote>Merck had already settled thousands of lawsuits, <blockquote>Since the Vioxx controversy erupted, about 27,000 personal-injury lawsuits have been filed, the company says. Merck has been challenging all of the cases and settled many of them. Most notably, it agreed to a pay $4.85 billion to settle personal-injury claims of more than 40,000 people. In another settlement, the company will pay $80 million to resolve 190 claims filed by drug-benefit plans seeking to recover costs of paying for Vioxx use.</blockquote>Merck has lots of other legal actions to go through, <blockquote>The Vioxx litigation remains far from over. The U.S. Supreme Court is weighing a separate shareholder case, seeking billions of dollars in damages from the company. Merck disclosed last year the U.S. Attorney's office in Boston was conducting a grand-jury investigation of Merck's handling of Vioxx. The claims of some 310 plaintiff groups are outstanding in courts in the U.S., according to the securities filing. There are also cases overseas, including Australia and Turkey.</blockquote>So the parade of legal actions and settlements thereof continues.  We believe that the scope of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">this parade</a> provides some sort of index of bad behavior by the health care organizations needing to make such settlements.  Most of these legal results are reported on in the business media, and rarely appear in any medical, health care research, or health policy journals.  I submit that were health care professionals, health care researchers, and health policy makers more systematically aware of these cases, they might realize that unethical and sometimes illegal behavior, often generated by bad leadership unrestrained by poor organizational governance, is a major cause of the current, seemingly intractable health care crisis. One notable attribute of the current Vioxx settlement is that it does mandate some changes in Merck's governance and leadership meant to prevent future cases similar to this one.  These include developing leadership structures and changing the company's code of conduct to emphasize the need for "truthful" communication, and the need to refrain from "inappropriately" influencing research.  On <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a> we have discussed numerous examples of deceptive practices by health care organizations, often affecting marketing, and of <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulation</a> and <a href="http://hcrenewal.blogspot.com/search/label/suppression%20of%20medical%20research">suppression</a> of research.  It is a small step forward for one company to commit to honest communications and to not manipulate research.  A better code of conduct may at least be a start towards an <a href="http://hcrenewal.blogspot.com/2009/10/organisational-ethics-policies-primer.html">organizational ethics policy</a>, which in turn may have the potential to actually improve behavior.  On the other hand, typical settlements that involve only monetary damages paid by the organization seem to have little deterrent effect on future bad behavior. Usually, the companies involved only need to pay fines, and no individual who performed, directed or approved unethical or illegal acts suffers any negative consequences. I submit once again that such fines are viewed merely as costs of doing business by the affected companies, and do not deter future bad behavior. Until the people who approve, direct, and perform unethical or illegal acts pay some penalties, expect such acts to continue, at best deterred only slightly by written policies that condemn them. I again suggest that to truly reform health care, we need rigorous regulation of health care organizations that has the power to deter unethical behavior that may risk patients' health

Merck Settles Another Vioxx Case

All the shenanigans that went on in the course of Merck's marketing of the now withdrawn Cox-2 inhibitor non-steroidal anti-inflammatory...

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Green Ketchup for Novartis?

We recently <a href="http://hcrenewal.blogspot.com/2010/01/drowning-our-sorrows-in-ketchup.html">commented</a> on the challenges facing the large, Swiss based multinational pharmaceutical company Novartis.  <a href="http://www.businessweek.com/magazine/content/10_07/b4166058305717.htm">From Business Week</a> came an interview with the new CEO of Novartis, in which he revealed why he thinks he is especially qualified for the job: <blockquote>Joe Jimenez says that more than 20 years selling Clorox (CLX) bleach and Heinz ketchup taught him to make decisions quickly. Now, as CEO of Novartis (NVS), Europe's second-largest drugmaker, he'll try to prove that speed can also make a difference in the pharmaceutical business. Jimenez, an American with degrees from Stanford and the University of California at Berkeley, believes his consumer-products background will help. He started his career at Clorox, the world's largest maker of bleach, ran two divisions of ConAgra Foods (CAG), and oversaw H.J. Heinz' (HNZ) European operations. With consumer packaged goods, 'Decisions have to be made quickly because the market moves quickly,' he says. But pharmaceutical businesses have long development lead times, which 'tends to slow decision-making in areas where it doesn't need to.' Jimenez oversaw the introduction of kid-friendly green ketchup when he was Heinz' North America chief executive,....</blockquote>Further explanation of why supervising the selling of cleaning or food products would be good experience for the chief executive of a pharmaceutical company, which faces technical, regulatory, and clinical issues very different from the challenges of selling bleach or ketchup, was not forthcoming. The reason for citing Jiminez's responsibility for green ketchup was more obscure.  According to the authoritative medical journal, <a href="http://www.womansday.com/Articles/Food/The-Biggest-Food-Product-Duds-of-All-Time.html">Woman's Day magazine</a>, Heinz's green ketchup was one of the "7 Biggest Food Product Duds," in the US, and was discontinued in 2006. As we have <a href="http://hcrenewal.blogspot.com/2009/12/on-automobile-and-health-care-companies.html">discussed before</a>, the current culture of US and global business includes the belief that someone trained in finance or marketing is the most suitable leader of every type of organization.  Such leadership has lead the US biggest automobile manufacturer into bankruptcy.  We have discussed numerous examples of leaders of health care organizations with no health background or experience who seem to be most expert at making sure their compensation is hugely larger than that of most of their employees. We hope Novartis does not end up trying to sell the pharmaceutical equivalent of green ketchup.  I say again, to really reform health care, we need to have leaders of health care organizations who actually understand health care and share its values.

Green Ketchup for Novartis?

We recently commented on the challenges facing the large, Swiss based multinational pharmaceutical company Novartis. From Business Week c...

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Everything is Up to Date in Kansas City, Except the Health Care University CEO's Knowledge of Her Own Budget

They say everything is up to date in Kansas City, so maybe it should not be a surprise that it is the source of a new and colorful tale of how leaders of health care organizations are different from you and me.  The Kansas City Star <a href="http://www.kansascity.com/105/story/1731811.html">reported</a> about the professional life of the recently fired CEO of Kansas City University of Medicine and Biosciences: Hiring the CEO <blockquote>There’s an often-told story about how Karen Pletz, the fired president of the Kansas City University of Medicine and Biosciences, got her job in the first place. On a flight from Phoenix to Kansas City in 1995, a stranger sat next to her: Jack Weaver, then chairman of the university’s board of trustees. Pletz, with a law degree and a career in banking, so impressed Weaver that he proposed she join the board. When the trustees met her, they asked her to apply for the president’s job.</blockquote> The CEO's Compensation <blockquote>Big paydays: Pletz’s compensation skyrocketed from $261,000 in fiscal 1999 to nearly $1.2 million — about $250,000 more than the president of Johns Hopkins University made.</blockquote>Also, <blockquote>Pletz’s million-dollar compensation package put her among an elite group of university presidents. A review of the latest available tax records — for the fiscal year ending June 30, 2008 — shows that the leaders of other osteopathic medical schools in the region were being compensated far more modestly. While Pletz was making $1.2 million, the CEO of the larger Des Moines University received $347,000. A.T. Still University of Health Sciences in Kirksville, Mo., where osteopathy got its start, changed CEOs nine months into the year. Both were paid about $50,000 a month; their combined compensation was $609,000. The last time the Chronicle of Higher Education included free-standing medical schools in its survey of compensation of private college and university presidents, in 2006, Pletz was one of only seven making seven figures.</blockquote>The CEO's Spending Decisions She spent disproportionately on administration versus education: <blockquote>Spending on the university’s primary mission — educating medical students — didn’t keep pace with the school’s rapidly growing administrative costs. From fiscal 1999 to 2008, the amount spent on educating students and other program services rose 59 percent. At the same time, administration expenses jumped 384 percent.</blockquote>Other executives were paid well: <blockquote>For Douglas Dalzell, executive vice president for institutional development, the compensation was $437,000 in fiscal 2008, more than double his pay in 1999. For Richard Hoffine, chief financial officer, it was $616,000, more than triple. Dalzell’s compensation frequently rose in five-figure increments. Hoffine’s pay increased by as much as $127,000 in a single year. The board fired Dalzell on Dec. 31, and Hoffine resigned over the New Year’s weekend.</blockquote> She spent copiously on entertainment and items less well defined: <blockquote>Along with the generous compensation paid to Pletz and her top lieutenants, the university was spending large sums on special events and other activities. Shortly before a retreat for university managers in 1998, the university spent $15,000 to have 26 members of the Kansas City Symphony play for faculty and department heads at the Folly Theater. The object was to demonstrate with music how teamwork and good leadership produce the best work. Records show that expenses for graduation activities jumped 47 percent in just three years, from $199,000 in 2005 to $294,000 in 2008. Entertainment costs averaged $84,000 a year. In fiscal 2002, the university spent more than $197,000 for various services at the Fairmont hotel — now the InterContinental — on the Plaza. Even 'miscellaneous expenses' exploded, according to the university’s tax forms: They were about $81,000 in fiscal 2001 and $1.4 million in fiscal 2005, the last year they appear on tax reports. The university also was spending as much as $739,000 a year on expenses for 'healthcare leadership,' tax records show. Pletz defended the spending on graduation and other ceremonies because of their importance to medical students and their families. Graduation is 'a whole weekend of events,' Pletz said. Many homecoming activities were held at the Fairmont, she said. As to what the healthcare leadership spending entailed, Pletz said she didn’t know.</blockquote> Executives hired their relatives: <blockquote>Family members and friends, including Pletz’s daughter and a top associate’s daughter-in-law, were added to the payroll in administrative positions. The university’s nepotism policy allowed a lot of leeway.</blockquote>And then there was the mysterious Health Policy Institute (as <a href="http://www.kansascity.com/105/story/1731812.html">reported</a> separately by the Kansas City Star): <blockquote>After HCA, Inc., acquired the large, nonprofit hospital group Health Midwest in 2003, opportunity came knocking for Health Midwest executive Barry Seward: An appointment as president of the Kansas City University of Medicine and Biosciences’ new Health Policy Institute. It was an unpaid position, but Seward didn’t have to work for free. He received consulting fees of as much as $177,300 a year from the university, tax records show. Seward’s son, Michael, became the institute’s unpaid vice president. The younger Seward also has a paying job as the university’s director of grant development. Along with his consulting income, Barry Seward has had the fringe benefit of extensive travel for the institute. The Health Policy Institute’s budget was $62,909 in 2008, tax records show. A few thousand dollars of that went to office overhead. The rest was spent on travel and meals.</blockquote> Ms Pletz justified the Health Policy Institute thus: <blockquote>Pletz said the institute’s position papers are widely distributed.  Eight are posted on the institute’s Web site</blockquote>However, <blockquote>they average about 240 words. Stem-cell research took five paragraphs; pandemic flu got three.</blockquote>Neither the Health Policy Institute web-site nor a Google search revealed any experience or expertise in health policy on the part of its President.  I would note also that Institute's <a href="http://www.kcumb.edu/hpi/policypositions.asp">position paper</a> on "healthcare workforce" failed to note the shortage of primary care physicians, and the <a href="http://www.kcumb.edu/hpi/policypositions.asp">paper</a> on integrative medicine advocated for more access to, more insurance coverage for, and more medical school training in complementary and alternative medicine without acknowledging the lack of evidence supporting many "CAM" treatments. The Role, Such As It Was, of the University Board <blockquote>Current board chairman Danny Weaver, who also is the university’s acting president, won’t discuss why she was fired. Pletz, who says she’s proud of her work for the school, won’t get into specifics. Danny Weaver, son of Jack Weaver, will say only that more than one person in September brought 'extremely serious' issues to the board’s attention that led to Pletz’s termination. University administrators kept the governing board in the dark for months at a time about important issues, Weaver said. But it was the board Weaver has led since 2004 that approved Pletz’s salary and incentive package. The board, which met just twice a year, approved the university’s budget, but it did not monitor the way money was actually spent. And it did not routinely review key filings the university made to the Internal Revenue Service.</blockquote> How the board justified Peltz's compensation: <blockquote>Questions about her salary and incentives, Pletz said, should go to the university’s trustees. 'Compensation was a board decision,' she said. 'It was the board’s responsibility.' She said she thought the board was interested in retaining top managers. 'It was a very team-oriented approach,' Pletz said. 'If the performance was there, the compensation was there.'</blockquote>In addition, <blockquote>Weaver defended the compensation the board granted Pletz. 'Based on her production and what she brought to the university, her compensation was within reason,' he said.</blockquote> However, apparently none of her production had to do with familiarity with her own university's budget: <blockquote>The spending figures are all line items in tax documents called 990 forms that nonprofit corporations, such as the university, must file each year with the IRS. The forms are available to the public. Pletz could not say what the line items on the 990 forms represented. 'Any questions about the 990, I would not be able to answer for you,' she said. 'You’re going back a number of years, and I really don’t have direct knowledge about those line items and what they would have been comprised of in any given year.'</blockquote> Of course, the board might not have caught that problem, since they seemed equally unfamiliar with the budget: <blockquote>Weaver, who has been on the board since 2001, said he has never reviewed the documents. 'I never see the 990s as the chairman. … The board never saw the 990s,' he said. 'That’s the business of the president and the CFO.' Weaver said he had no idea how the university could run up $1.4 million in miscellaneous expenses. He 'couldn’t even gather a guess' on the entertainment costs. And Weaver said he could only speculate on what 'healthcare leadership' expenses were: Perhaps they were expenses Pletz and her vice presidents incurred in their work with community organizations.</blockquote>Summary So here we have a particularly colorful example of how the leaders of health care organizations are different from you and me.  The CEO of one osteopathic health care university got more than one million a year despite her <a href="http://people.forbes.com/profile/karen-l-pletz/46868">lack of any experience or expertise in health care</a>, and her unawareness of her institution's budget, which apparently included lavish spending on administration and other expenses unrelated to the educational mission.  She nominally reported to a board of trustees which seemed completely clueless about her activities, but happy to pay her for "production" of what they did not know.  So, as I <a href="http://hcrenewal.blogspot.com/2010/02/hospital-executive-pay-in-land-where.html">wrote</a> last week about out-size compensation given for no clear reasons to CEOs and other top executives of not-for-profit hospitals in three US states... Although the executives of not-for-profit health care organizations generally make far less than executives of for-profit health care corporations, collectively, hired managers of even not-for-profit health care organizations have become richer and richer at a time when most Americans, including many health professionals, and most primary care physicians, have seen their incomes stagnate or fall. They are less and less restrainted by passive, if not crony boards, and more and more unaccountable. In a kind of multi-centric coup d'etat of the hired managers, they have become our new de facto aristocracy. Or as we wrote in our previous post, executive compensation in health care seems best <a href="http://hcrenewal.blogspot.com/2009/12/compensation-madness-insiders-hijacking.html">described as Prof Mintzberg described compensation for finance CEOs</a>, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations. It is time to reverse the coup d'etat of the hired managers. A final note - we have heard a lot from health policy "experts" in this time of interest in health care reform, and millions of words about health policy have been dispensed by such "experts" during the continuous health care "crisis" of the last 30 years.  This case demonstrates how little one needs to know about health policy to run a university "Health Policy Institute" to churn out health policy position papers, especially when the university CEO and board of trustees are equally unkowledgeable. Hat tip to Prof Margaret Soltan <a href="http://www.margaretsoltan.com/?p=21133">on the University Diaries blog</a>.

Everything is Up to Date in Kansas City, Except the Health Care University CEO's Knowledge of Her Own Budget

They say everything is up to date in Kansas City, so maybe it should not be a surprise that it is the source of a new and colorful tale of h...

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A Lawsuit Over Healthcare IT Whistleblowing and Wrongful Discharge: Malin v. Siemens Healthcare

<div style="text-align: center;">"Any sufficiently advanced incompetence is indistinguishable from malice." - <a href="http://wikidumper.blogspot.com/2007/07/greys-law.html">Grey's law</a> </div> At an Aug. 2009 post "<a href="http://hcrenewal.blogspot.com/2009/08/why-siemens-healthcare-fails.html">Why Siemens Healthcare Fails</a>" I described medical informatics talent management issues that were apparent in a job posting at <a href="http://www.medical.siemens.com/">Siemens Medical Solutions</a>, a company that a decade ago seemed to value medical informatics expertise. (They in fact wanted to hire me then, an offer former employees tell me I was fortunate to have rejected due to a better offer from pharma). I now note a July 2007 healthcare IT-related lawsuit against the same company (and its summary dismissal) of which I was unaware when I wrote the above post. A physician, Murray Malin, MD [note: I do not know this person and have never had contact with him - ed.], working for Siemen's medical IT subsidiary filed a July 2007 lawsuit for wrongful termination after raising safety issues with Siemens HIT designed for critical care. The action initially began in late 2005 as a complaint against Siemens Health Services USA and Siemens Medical USA (which I shall refer to in this post as "Siemens Medical" for the sake of simplicity) to the Occupational Safety and Health Administration (OSHA) of the Department of Labor. This was done under the whistleblower protection provisions of Title VIII of the Sarbanes-Oxley Act of 2002 (SOX). The OSHA complaint was followed by a pro se lawsuit in federal court. The lawsuit's specifics are covered in the following four court documents (PDF). The events described could quite possibly serve as a true poster example of all that's wrong in the too-often perverse world of health IT. Sen. Grassley, <a href="http://hcrenewal.blogspot.com/2010/01/grassley-asks-hospitals-about.html">take note</a>. Here are the court documents: <blockquote>1. The Complaint: <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/siemens/Complaint_Malin_vs_siemens_medical.pdf">Complaint_Malin_vs_siemens_medical.pdf</a> (3.3 Mb PDF) 2. Siemens Answer to Complaint: <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/siemens/Complaint_answer_Malin_vs_siemens_medicl.pdf">Complaint_answer_Malin_vs_siemens_medical.pdf</a> (148 Kb PDF) 3. Memorandum Opinion: <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/siemens/Memorandum_opinion_Malin_vs_siemens_medical.pdf">Memorandum_opinion_Malin_vs_siemens_medical.pdf</a> (22 Kb PDF) 4. Judge Messitte opinion, US District Court Maryland: <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/siemens/MalinvSiemensMedicalOpinion&Order07cv1896.pdf">MalinvSiemensMedicalOpinion&Order07cv1896.pdf</a> (97 Kb PDF) </blockquote> (I have written about health IT problems extensively on this blog and at my <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/medinfo.htm">academic website on HIT failure</a>. These include but are not limited to: medical informatics specialists <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=clinical%20computing%20problems%20in%20ICU">ignored by nonclinician IT personnel</a> [the link is to another case involving critical care]; inverted and paradoxical organizational structures where IT facilitators become HIT project leaders and clinical leaders become HIT project facilitators; ill-conceived and poorly implemented <a href="http://www.tinyurl.com/hostileuserexper">mission hostile health IT</a>; perverse and in fact <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=Cardiology%20story">clinically cavalier IT "politics"</a>; failure to obtain <a href="http://hcrenewal.blogspot.com/2009/03/draft-patient-rights-statement-and.html">patient informed consent</a> as if health IT is an elite world not subject to the same ethical obligations as medicine; probable <a href="http://hcrenewal.blogspot.com/2009/03/health-it-hold-harmless-and-defects-gag.html">violations of Joint Commission safety standards and hospital executive fiduciary obligations</a>, and numerous others.) Here is a synopsis of why I think this 2007 lawsuit against Siemens Medical may be a sentinel case with regard to dysfunction in the healthcare IT industry, based upon the information in the court documents (read them yourself at the links above): <ul style="text-align: left;"><li>Siemens Medical's physician internal consultants (skilled anesthesiologists/informatics specialists), apparently in writing and including a remediation plan, opined that an IT system developed for critical care had numerous severe flaws, of sufficient seriousness that in their opinion the systems could harm or even kill patients if deployed;</li></ul><ul style="text-align: left;"><li>These were warnings of defects and flaws in IT in the worst possible medical environment, critical care with the sickest and most vulnerable of patients, not some ambulatory clinic or primary care office; </li></ul><ul style="text-align: left;"><li>Allegations were raised that the warnings were ignored, with at least one of the physicians, Dr. Malin, who was strongly concerned and vocal about the risks then being told his position was being eliminated. [It is not a surprise to note this rings alarm bells about the possibility of wrongful discharge based on retaliation and/or "greasing the skids" to eliminate potential whistleblowers or "<a href="http://www.ischool.drexel.edu/faculty/ssilverstein/informaticsmd/tactics.htm#team">non-team players</a>" who could delay release of the software and affect revenue - ed.]; </li></ul><ul style="text-align: left;"><li>The company possibly ignored the remediation plans of their own clinician/informatics experts;</li></ul><ul style="text-align: left;"><li>There were allegations of company misrepresentations about the new system to the FDA;</li></ul><ul style="text-align: left;"><li>There were allegations of decision making on these issues by non-clinician IT managers lacking healthcare or healthcare informatics expertise.</li></ul><ul style="text-align: left;"><li>A wrongful discharge complaint and then lawsuit were filed by Dr. Malin on the basis of violation of the whistleblower protection provisions of the Sarbanes-Oxley Act of 2002 (SOX), <a href="http://www.law.cornell.edu/uscode/18/usc_sec_18_00001514---A000-.html">18 U.S.C. § 1514A</a> ("Civil action to protect against retaliation in fraud cases - Whistleblower Protection for Employees of Publicly Traded Companies"); </li></ul><ul style="text-align: left;"><li>The suit was dismissed on the apparent technicality that Siemens Medical in the U.S. is not subject to the provision in the SOX Act as is the publicly-traded corporate parent, <a href="http://w1.siemens.com/">Siemens AG</a>; from document #4, pg 15: </li></ul><blockquote style="font-style: italic;">... Health Services is a wholly-owned subsidiary of Siemens Med ... Siemens Med is a wholly-owned subsidiary of Siemens Corporation, which is indirectly owned, through two intervening layers, by Siemens AG, a German company that is publicly traded as defined by § 1514A of SOX ... Of these entities, only Siemens AG is a publicly-traded company. While both Health Services and Siemens Med are incorporated in Delaware and located in Malvern, Pennsylvania, they are separately incorporated entities. </blockquote><ul style="text-align: left;"><li>Siemens Medical in their response to the suit denied the most severe allegations regarding the IT defects, but this issue was not followed up upon due to the lawsuit's dismissal on SOX issues despite the obvious potential public hazards the allegations of IT defects could represent;</li></ul><ul><li>In fact a US District Judge in the case, Peter J. Messitte, in the period after allowing Malin to prove the validity of SOX towards his case, opined that "No other discovery will be permitted, including but not limited to the alleged safety problems of Defendants’ product", document 4 above, Judge Messitte opinion, US District Court Maryland, pg. 25. [While perhaps understandable from a legal perspective, injured or dead patients don't really care about what legal precedents got them into the injured or dead state - ed.] </li></ul><ul style="text-align: left;"><li>Siemens Medical admitted in their responses to the suit that some of the software in question, actually put in use in hospitals, was in fact "beta" software, i.e., experimental (per Item 38 in 'Siemens Answer to Complaint' document).</li></ul> This latter admission also raises numerous questions. The answering of these questions seems imperative on the grounds of public interest in a rigorous and safe healthcare IT industry, an industry that, in effect <a href="http://histalk2.com/2010/02/01/readers-write-2110/">practicing medicine by machine proxy</a>, should respect patient rights and the Hippocratic Oath: <ul style="text-align: left;"><li>Were patients asked to give informed consent for the beta software's usage in their critical care?</li></ul><ul style="text-align: left;"><li>Were clinicians informed of the fact that the software was experimental?</li></ul><ul style="text-align: left;"><li>Were "hold harmless" clauses demanded from the customers?</li></ul><ul style="text-align: left;"><li>Did hospital executives violate their fiduciary and Joint Commission safety standards obligations by purchasing this beta software, either willfully, or inadvertently due to Siemens' possible concealment of the defects their own specialists wrote up?</li></ul><ul style="text-align: left;"><li>Would the use of beta-version software in critical care areas with possible known defects represent a human rights violation? </li></ul> What is not clear in these court documents is whether any patient harm was attributed to these HIT systems. This is not the important issue, however. The issue is risk and risk mitigation through rigor. One should not depend on good fortune to avoid predictable patient harm, especially when those predictions are from internal experts and are explicit. I therefore believe that the potential HIT safety issues raised in this case and the vendor's responses to internal warnings merit further investigation, especially regarding the specialist's concerns about the harmful defects in the software. These medical concerns and whether they were improperly dismissed were apparently never investigated impartially, due to the lawsuit's rejection by the court on technical grounds of SOX inapplicability. See the attached court documents. It is my personal opinion upon reading these court documents, and knowing this industry, that Dr. Malin was shafted. What is legal is not always just. One can only wonder how many other cases like this exist v. Siemens or other healthcare IT vendors. Perhaps the investigation being conducted by Sen. Grassley will shed more light on this. Finally, I note with sad irony, if these allegations are true, the doppelganger of a German-named company dismissing the concerns of an apparently Jewish physician about medical experiments possibly killing people. -- SS

A Lawsuit Over Healthcare IT Whistleblowing and Wrongful Discharge: Malin v. Siemens Healthcare

" Any sufficiently advanced incompetence is indistinguishable from malice. " - Grey's law At an Aug. 2009 post " Why Si...

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More Settlements: Christ Hospital, Teva Pharmaceutical Industries

For the end of the week, a round-up of the latest legal settlements involving large health care organizations, in alphabetical order.... Christ Hospital (Cincinnati, Ohio) As <a href="http://cincinnati.bizjournals.com/cincinnati/stories/2010/02/01/daily26.html">reported by the Business Courier of Cincinnati</a>: <blockquote>Christ Hospital and the federal government have reached a settlement agreement on a whistleblower lawsuit that accused the hospital of defrauding federal health-care programs. The suit alleged that Christ Hospital and the Ohio Heart Health Center cardiology practice, which Christ Hospital has since bought, 'devised a scheme that provided cardiologists improper financial incentives in exchange for generating revenue for the hospital,' according to the U.S. Department of Justice. Potential liability was reported to be as high as $424 million across the Health Alliance and its former members in an October 2007 document from VMG Health, a consultant hired as part of the separation of Christ Hospital from the Health Alliance. Christ faced potential liability of as much as $123 million in the case, according to the report, and the St. Luke Hospitals, which also left the Health Alliance, faced exposure of $51 million. The focus of the suit is an outpatient cardiology testing unit within Christ Hospital known as the Heart Station, where patients receive non-invasive heart procedures such as electrocardiograms, echocardiograms and stress tests. The action was originally filed in the U.S. District Court in Cincinnati under the whistleblower provisions of the False Claims Act by Dr. Harry Fry, a cardiologist who had provided services to Christ Hospital and Ohio Heart. The lawsuit alleges that, between at least 1999 and 2004, cardiologists were allocated time at the Heart Station based on the number of coronary arterial bypass graph procedures and catheter lab revenues they or their group generated for Christ the previous year. Many of the procedures were billed to federal benefit programs, including Medicare and Medicaid, according to the government. It’s against federal law to exchange financial incentives for patient referrals.</blockquote> Teva Pharmaceutical Industries As <a href="http://www.reuters.com/article/idUSN0519320420100205">reported by Reuters</a>, <blockquote>Generic drugmaker Teva Pharmaceutical Industries Ltd ... said on Friday it plans to settle lawsuits alleging it caused governments to pay inflated prices for its drugs under Medicaid and other programs. Teva, which denies the charges, said it will record a charge of about $315 million in its fourth quarter, 2009. The charge includes the settlement in principle and a reserve for the remaining drug pricing lawsuits to which Teva is a party. Israel-based Teva is one of a number of drug companies named in civil lawsuits that relate to drug price reporting by manufacturers in about 15 states. The cases are pending....</blockquote> The march of settlements continues. To repeat, seemingly ad infinitum, these are just the latest in a now long <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">parade</a> of settlements that serve as reminders of poor behavior by myriad health care organizations. As we have previously noted, these settlements seem to have little deterrent effect on future bad behavior. Usually, the companies involved only need to pay fines, and no individual who performed, directed or approved unethical or illegal acts will suffer any negative consequences. I submit once again that such fines are viewed merely as costs of doing business by the affected companies, and do not deter future bad behavior. Until the people who approve, direct, and perform unethical or illegal acts pay some penalties, expect such acts to continue.  I again suggest that to truly reform health care, we need rigorous regulation of health care organizations that has the power to deter unethical behavior that may risk patients' health.

More Settlements: Christ Hospital, Teva Pharmaceutical Industries

For the end of the week, a round-up of the latest legal settlements involving large health care organizations, in alphabetical order.... Chr...

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Networked, Interoperable, Secure National Medical Records a Castle in the Sky?

The holy grail of electronic medical record efforts of late is the creation of networked, interoperable, secure national medical records that would allow a physician in Palo Alto to retrieve the records of a patient from Hoboken if that patient moved or was found (in the hackneyed and somewhat histrionic scenario) unconscious on the streets of San Francisco. Recent events have made me skeptical we are anywhere near ready for such a technological accomplishment: <a href="http://www.pcmag.com/article2/0,2817,2358610,00.asp" style="font-weight: bold;"></a><blockquote><a href="http://www.pcmag.com/article2/0,2817,2358610,00.asp" style="font-weight: bold;">McAfee: Big Business Under Constant Cyber Attack</a> 01.29.10 At the World Economic Forum Annual Meeting in Switzerland, McAfee announced the results of a survey of 600 IT security execs in "critical infrastructure enterprises worldwide": that is, in places such as utility companies, banks, and even oil refineries. And apparently, they're constantly under cyber attack and also extortion related to those attacks. </blockquote> It's a real battlefield out there. <blockquote> The report, written by the Center for Strategic and International Studies (CSIS), says that 54 percent of those surveyed have already been attacked. The culprits behind the cyber-attacks are listed as "organized crime-gangs, terrorists, or nation-states."</blockquote> In other words, not simply teenage hackers or <a href="http://en.wikipedia.org/wiki/Papparazi">cyber-papparazi</a> interested in the medical condition of a movie star. <blockquote>Only one-fifth of the IT execs surveyed believe their systems are currently secure. One-third say things are worse now, vulnerability-wise, than a year ago, due to budget cuts. What constitutes a cyber attack? A distributed denial of service (DDoS) is the most typical ... mitigation can be hampered by the local laws, working in multiple countries, or the economics of where they operate. For example, half of those surveyed claim the laws in their countries don't do enough to prevent or deter cyber attacks. That's especially true for Russia, Mexico, and Brazil. Other attack vectors include DNS poisoning where Web traffic is redirected, SQL injection attacks on back-end data via a public Web site, and plain old theft of services. If you need a plot for your new thriller novel, keep in mind that 20 percent of these companies are not just cyber-attacked, but have also been threatened with attacks in the last two years in "low-level extortion" attempts. ... Those surveyed said the money loss is the worst part, second is the loss of reputation, and (if you thought you weren't important) loss of customers' personal information is third. This is a worldwide survey, and almost two-thirds of those surveyed believe foreign governments were responsible in some way for previous attacks. The two countries considering the biggest threats: China (by 33 percent of those surveyed) and the good ol' U.S. of A. (by 36 percent). China believes it's the biggest target. The full report, called <a href="http://newsroom.mcafee.com/images/10039/In%20the%20Crossfire_CIP%20report.pdf">In the Crossfire: Critical Infrastructure in the Age of the Cyber War</a> is free on McAfee's Web site in PDF format.</blockquote> I note that Google recently <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/02/03/AR2010020304057_pf.html">called in the National Security Agency</a> to help analyze a major corporate espionage attack: <blockquote>The attacks targeted Google source code -- the programming language underlying Google applications -- and extended to more than 30 other large tech, defense, energy, financial and media companies. The Gmail accounts of human rights activists in Europe, China and the United States were also compromised. </blockquote> Then there's this: <blockquote><a href="http://www.foxnews.com/politics/2010/02/03/intel-chief-risk-crippling-cyber-attack/"> Intelligence Chief: U.S. at Risk of Crippling Cyber Attack</a> Feb. 4, 2010 The United States is at risk of a crippling cyber attack that could "wreak havoc" on the country, Director of National Intelligence Dennis Blair said. "What we don't quite understand as seriously as we should is the extent of malicious cyberactivity that grows, that is growing now at unprecedented rates, extraordinary sophistication," Blair said. ... He said one critical "factor" is that more and more foreign companies are supplying software and hardware for government and private sector networks. "This increases the potential for subversion of the information in ... those systems," Blair said. [Outsourcing our HIT development overseas sounds like a great idea - ed.] </blockquote> Read the linked articles in their entirety. Perhaps we should focus on the local at present. National networked EMR's are a great concept, but there are a few social-technical details that remain to be worked out beforehand. <div style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyamcc5CjVG9zPUhRgsRXCOiGds9uIKFJs9g940PSsnlrmmFf_slFeJn_nzzdFJIKjTAI9YxmIuo3ahUMtvrGs4W9lQBSnoKND8UltYUNPLoGQ5IyU3-wKPLA6qypoY2QiqApmsn9NM7P1/s1600-h/Castle_in_the_sky.jpg" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5434372822414454802" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyamcc5CjVG9zPUhRgsRXCOiGds9uIKFJs9g940PSsnlrmmFf_slFeJn_nzzdFJIKjTAI9YxmIuo3ahUMtvrGs4W9lQBSnoKND8UltYUNPLoGQ5IyU3-wKPLA6qypoY2QiqApmsn9NM7P1/s320/Castle_in_the_sky.jpg" style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 123px; height: 166px;" /></a>A Castle in the Sky... </div> -- SS

Networked, Interoperable, Secure National Medical Records a Castle in the Sky?

The holy grail of electronic medical record efforts of late is the creation of networked, interoperable, secure national medical records tha...

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Atricure Settles

The march of legal settlements continues.  This time, the US Department of Justice <a href="http://www.justice.gov/opa/pr/2010/February/10-civ-115.html">announced</a>, <blockquote>Atricure Inc., a medical device manufacturer, has agreed to pay the United States $3.76 million to resolve civil claims in connection with the alleged promotion of its surgical ablation devices, the Justice Department announced today. Surgical ablation devices use focused energy to create controlled lesions or scar tissue on a patient’s heart or other organs. The settlement resolves allegations that the West Chester, Ohio-based company marketed its medical devices to treat atrial fibrillation (the most common cardiac arrhythmia or abnormal heart rhythm), a use that is not approved by the U.S. Food and Drug Administration (FDA). Atricure also allegedly promoted expensive heart surgery using the company’s devices when less invasive alternatives were appropriate, advised hospitals to up-code surgical procedures using the company’s devices to inflate Medicare reimbursement, and paid kickbacks to health care providers to use its devices. The United States asserted that by engaging in this conduct, Atricure knowingly violated the Food, Drug, and Cosmetic Act and caused the submission of false and fraudulent claims in violation of the False Claims Act.</blockquote> This settlement relates to topics we discussed back in the early days of Health Care Renewal, the convoluted financial ties beween the renowned Cleveland Clinic, its current CEO, and Atricure. In 2005,  investigative reporting published in the Wall Street Journal revealed the complicated relationships among the Clinic, its current CEO Dr Toby Cosgrove, the Clinic's venture capital fund, Foundation Medical Partners, and a small medical device company called Atricure. This coincided with the Clinic's firing of Dr Eric Topol from his leadership positions there. (See posts <a href="http://hcrenewal.blogspot.com/2005/12/one-horrible-debacle-indeed-topol.html">here</a> and <a href="http://hcrenewal.blogspot.com/2005/12/was-topol-fired-for-investigating.html">here</a>.) The Cleveland Plain Dealer uncovered more conflicts, involving Dr Cosgrove, the Clinic's board of trustees, Dr Bernadine Healy, and Invacare (see post <a href="http://hcrenewal.blogspot.com/2005/12/topol-merck-cleveland-clinic-case-gets.html">here</a>.)  In response, in 2006, the Clinic promised to revise its conflicts of interest policy, and held a big conference on the topic of conflicts of interest, although some were skeptical of these efforts (see post <a href="http://hcrenewal.blogspot.com/2006/05/cleveland-clinic-to-host-symposium.html">here</a>.) As the Cleveland Plain Dealer just <a href="http://www.cleveland.com/medical/index.ssf/2010/02/ohio-based_atricure_pays_38_mi.html">noted</a>, <blockquote>Cleveland Clinic Chief Executive Dr. Toby Cosgrove helped create the 'AtriClip Gillinov- Cosgrove LAA Exclusion System,' which is being sold by the company and won approval in October for use in the European market. While Cosgrove is eligible to receive royalties from the company, he has not recieved any, Clinic spokeswoman Eileen Sheil said. </blockquote> This settlement is just the latest in a now long <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">parade</a> of settlements that serve as reminders of poor behavior by myriad health care organizations.  As we have repeatedly noted, these settlements seem to have little deterrent effect on future bad behavior.  Usually, the companies involved only need to pay fines, and no individual who performed, directed or approved unethical or illegal acts will suffer any negative consequences. I submit once again that such fines are viewed merely as costs of doing business by the affected companies, and do not deter future bad behavior.  Until the people who approve, direct, and perform unethical or illegal acts pay some penalties, expect such acts to continue.  The wrinkle in this case comes from the numerous past ties between the company involved and a prestigious US health care system and its top leadership.  But I doubt that Cleveland Clinic CEO Dr Toby Cosgrove will have any public comment about it.  But why should I expect that a former company director will admit any accountability for that company's poor behaivor?  Hat tip to the <a href="http://lawprofessors.typepad.com/whitecollarcrime_blog/2010/02/in-the-news-around-the-blogosphere.html">White Collar Crime Prof Blog</a>.

Atricure Settles

The march of legal settlements continues. This time, the US Department of Justice announced , Atricure Inc., a medical device manufacturer,...

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