Round Up No Suspects: The Bio Telemetry Settlement Demonstrates the Continuing Impunity of Health Care Organizational (and Other) Leaders

Lambert here: It’s almost like elite impunity is a continuing theme. Remember “My administration is the only thing between you and the pitchfork?”

By Roy Poses, MD, Clinical Associate Professor of Medicine at Brown University, and the President of FIRM – the Foundation for Integrity and Responsibility in Medicine. Cross posted from the Health Care Renewal website

The march of legal settlements by important health care organizations continues, although now producing barely an additional ripple on top of the white-capped covered ocean of news and commentary roiled by the recent US election. However, even the latest small settlement is a reminder of all the problems that continue under the surface. (And I have now beaten this metaphor to death, sorry.)

The Settlement

As reported very briefly in NJ.com:

A company that monitors cardiac devices worn by heart patients has agreed to pay $1.3 million in civil fines to resolve allegations it paid kickbacks to doctors to persuade them to use their services, the U.S. Attorney’s Office announced.

Mednet Healthcare Technologies, Inc. of Ewing, arranged ‘fee-for-service’ and ‘direct-bill’ agreements with certain hospital and physician customers for two services – event monitoring and telemetry – and charged them a fee, the office said.

But Mednet then allowed the physicians to directly bill Medicare for the same services, and keep any reimbursements they received that exceeded the fee that Mednet charged them.

U.S. Attorney Paul Fishman’s office contends Mednet set up the remuneration agreements so their medical customers would continue to send referrals to Mednet, and were illegal under the federal Anti-Kickback Statute.

The Classic Elements

In this case, the allegations were that a company paid kickbacks (aka “bribes”) to physicians to cause patients to use their products. This appears to fit the ethical definition of corruption per Transparency International, “the abuse of entrusted power for private gain.” The physicians were entrusted to make the best decisions for patients, yet allowed their decisions to be influenced by the prospect of making more money (private gain). The company was entrusted to provide safe and effective products, yet over-promoted their products presumably to increase revenue, regardless of whether the ensuing use of it would lead to net benefit, or harm for patients, leading to private gain by their top executives and presumably private gain through bonuses for the sales people involved.

However, as has become usual in enforcement of laws regarding kickbacks, bribes, fraud etc, the case was resolved by a relatively small fine. (According to Yahoo Financials, Bio Telemetry’s 2015 total revenue exceeded $178 million.) The settlement occurred years after the alleged bad behavior (which was said to occur from 2006 -2014.) There was no determination of guilt:

The claims settled in the agreement are allegations only, and there has been no determination of liability, [US Attorney Paul] Fishman’s office said….

Of course, there was no determination of lack of liability, or that the allegations were false either. Left unanswered was why the company settled if no one had done anything wrong.

No one who enabled, authorized, directed or implemented the alleged kickbacks was named, much less suffered any negative consequences. Thus, they exhibited impunity.

All that is missing is the de rigeur statement that usually goes something like this: “We will move on from now. Our company stands for the highest principles and will continue to provide wonderful products and services,” yada, yada, yada…

Comments

We have gone on and on that settlements like this do nothing to deter continued bad behavior by large health care organizations. Such settlements have been the norm in health care for years. They have also been the norm in finance. There were some famous statements to the effect that no one with major responsibility for the global financial crisis or great recession of 2008 went to jail. I contend that the impunity of top leaders in health care, in finance, and in other spheres has led to increasing health care and societal dysfunction.

Such settlements now seem to be the norm for very politically connected figures involved with large for profit education companies. To wit, per the New York Times,

Donald J. Trump has reversed course and agreed on Friday to pay $25 million to settle a series of lawsuits stemming from his defunct for-profit education venture, Trump University, finally putting to rest fraud allegations by former students, which have dogged him for years and hampered his presidential campaign.

The allegations were that the “university,” and Mr Trump himself, committed fraud:

Students paid up to $35,000 in tuition for a programs that, according to the testimony of former Trump University employees, used high-pressure sales tactics and employed unqualified instructors.

The agreement wraps together the outstanding Trump University litigation, including two federal class-action cases in San Diego, and a separate lawsuit by Eric T. Schneiderman, the New York attorney general. The complaints alleged that students were cheated out of thousands of dollars in tuition through deceptive claims about what they would learn and high-pressure sales tactics.

The settlement was for $25 million, a lot of money, but peanuts for Mr Trump, who privately owned the company, and says he is worth billions.

No individual, including Mr Trump, who enabled, authorized, directed or implemented the alleged fraud will suffer any negative consequences. Thus the leaders of Trump University, and the Trump Organization exhibited impunity in this case.

And here is what Mr Trump publicly said about the university previously:

When political opponents pressed him on the claims during the campaign, Mr. Trump doubled down, saying he would eventually reopen Trump University.

‘It’s something I could have settled many times,’ Mr. Trump said during a debate in February. ‘I could settle it right now for very little money, but I don’t want to do it out of principle.’

He added, ‘The people that took the course all signed — most — many — many signed report cards saying it was fantastic, it was wonderful, it was beautiful.’

Mr Trump did settle, of course, but in a way that did not directly contradict his statement that the university was “fantastic, … wonderful,… beautiful.” But the settlement did not affirm that statement either. And the settlement allows Mr Trump to proclaim, per his lawyer,

Mr. Petrocelli said Mr. Trump had settled the case ‘without an acknowledgment of fault or liability.’

But the settlement did not refute the allegations either.

So as we just said… Thus the system appears to be rigged to favor of leadership and management of large companies, as opposed to health professionals, and particularly as opposed to patients. For years now we have discussed stories like this, which include allegations of severe misbehavior by large health care companies affirmed by legal settlements, but which only involve paltry financial penalties to the companies, and almost never any negative consequences to any humans. Furthermore, as in this case, these stories are often relatively anechoic, noted often only briefly in the media, and have inspired no real action by the US government. This adds to the evidence suggesting that US health care, at least, is rigged to benefit its top insiders and cronies, and as such, is part of a larger rigged system. We have previously discussed how market fundamentalism (or neoliberalism) led to deregulation, which enabled deception, fraud, bribery, and intimidation to become standard business practices, and allowed increasing concentration of power by large corporations. Managerialism allowed the top leaders of these corporations and their insider cronies to amass increasing power and money. Everyone else, other employees, stockholders of public corporations, customers, vendors and suppliers, and the public at large lost out. In health care, these changes led to an increasingly costly system which produced increasingly bad results for patients and the public.

We have called for years for what we sometimes term “true health care reform” to derig the system. Little has changed, while perceptions that the system is rigged have become more common. Failure up to now of the “establishment” do do anything about the rigging of the system leads to cynicism, and the search for quick and dirty solutions.

But now we see that the US president-elect has personally benefited from this aspect of the rigged system. Do we really think he will now take the lead in unrigging it? Can I sell you a bridge connecting Brooklyn to Manhattan?

Instead, true health care reform would encourage open, widespread discussion of all aspects of health care dysfunction, particularly bad behavior by those who profit most from it, and would encourage health care leadership that puts patients’ and the public health first, is willing to be accountable for its actions, is transparent, honest and ethical.

And there is a parallel case to be made for larger reform of government and society.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

17 comments

  1. EndOfTheWorld

    The whole US medical system is a festering corrupt sewer. That’s another reason why Bernie should have won, so maybe we could eventually join the rest of the civilized world on the health care issue. BTW, has anybody considered that if Bernie had been the democratic nominee, he would have carried some of the down-ticket dems to victory as well. I myself switched parties when confronted with the odious HRC, and I have vowed never to vote for another democrat as long as I live. I’m sure others switched parties also.

  2. McWatt

    Yes, in fact, you probably will be able to sell me a renovated bridge connecting Brooklyn to Manhattan soon under a President Trump.

  3. Steve H.

    Large companies feel no remoras.

    (Trying to work with your metaphor here, but the metaphor is applied to the news about the invasive procedures, and not to the procedures, organizations, and leaders themselves, for which blood funnels and probisci seem more appropriate.)

  4. Jack

    It has been evident for quite a while that we have a two tiered justice system in the US. Glenn Greenwald wrote an excellent book about it recently (And Justice for Some). A two tiered system is one of the requirements for a plutocracy, both of which we most definitely have here in the US.

    1. allan

      The system has at least four tiers:

      1. The untouchables at the top.

      2. Slightly below, those who might be rapped on the wrist for transgressions
      that would send anybody else to the slammer. (See Petraeus, David.)

      3. Below #2 are those who have the resources to wage a competent defense.
      They might or might not go to jail, but they and their loved ones will be much poorer after the ordeal is over.

      4. The underclass, most of whom will be plea-bargained into prison and a doomed life.

      The borders between #1, 2 and 3 are porous and change with regime priorities.
      Look at the difference between Petraeus and how Gen. Cartwright was treated in the Stuxnet leak probe.
      Game of Thrones for ugly people.

      [waves to Skynet and the mods]

    2. Code Name D

      And it’s largly idological. Consumers are supposed to have a sixth sence about coruption, and would never do busness with somone they could’t trust. Thus, through the magical power of markets, such coruption shouldn’t even exist. So when it is found – it must be because costomers wanted to do busness. The answer is “the market’s made me do it.”

      When such stories do break media silence, its always couched in terms of government coruption; ownerious regulations or redulators asleep at the switch. Thus the solution is always more deregulation and prvitization.

  5. Johnny Lunch Box

    Whats not rigged and corupt? You name a few but how about our political system, our schools, our military, our courts, our tax system, Wall Street?
    We are a cess pool nation of theives and pick pockets artist.

  6. Kris Alman

    I left medicine when I was just 40 years old, stunned by how the profession had changed since I started medical school in 1980.

    Of all the physicians’ oaths, I like the Modern Hippocratic Oath by Dr. Louis Lasagna best. http://www.aapsonline.org/ethics/oaths.htm
    I shall always act in the best interest of my patient and shall never allow personal reward to impact on my judgment.

    IMS Health best articulates the role of physicians in this commodified industry.
    https://www.imshealth.com/files/web/Global/Services/P&MA_2015.pdf

    Physicians are knights
    (in shining armor?)
    Powerful players that protect the
    pawns (patients) and support the
    king (shareholders)

    1. Kris Alman

      Shareholders are the king
      The objective of the game is to protect
      the king (shareholders). Failure to do
      so results in loss of the game

      1. Felix_47

        Thanks for the IMS reference. As a physician I find it horrifying. The only solution I can see is putting all doctors on salary no matter who they please or do not please with no outside work allowed…..kind of like the old Kaiser system.

  7. Tom_Doak

    Would it be possible to outlaw such settlements unless the defendant agrees to admit responsibility?

    I realize this would cause some defendants to NOT agree to settlement and actually go to court over such charges, and which would tie up our court system even more than it already is. Politicians would have to appoint judges as needed, instead of dragging their heels for political purposes; and attorneys would have to work harder instead of paying interns for discovery and then rubber-stamping a settlement when it comes time for them to get involved. I guess there’s no way that’s all going to happen in this day and age.

  8. JimTan

    I agree with your statement that “the impunity of top leaders in health care, in finance, and in other spheres has led to increasing health care and societal dysfunction.”

    We’re reaching a point in these industries, and maybe others, where obtaining legislative protections or guaranteeing weak enforcement of existing legislation is starting to crowd out legitimate strategies for companies to grow profitability. The effects of this can now be seen in boardrooms. Heather Bresch, the current CEO of pharmaceutical company Mylan NV, developed her professional reputation as head of the firms government relations department. Senior management at large corporations tend to be promoted aggressively from the firms most profitable business divisions. Aggressively promoting executives from a firms government lobbying department should be a huge red flag to everyone about what is going on. I suspect she will not be the last, and if things don’t change in these industries you will see many future CEO’s with this credential. To quote Ms Bresch from a 2014 magazine article:

    http://whirlmagazine.com/mylan-ceo-continues-to-expand-international-medicine-efforts/

    “Though, I did understand the role politics and legislation plays in every facet of business and the importance of understanding how laws get made and govern all businesses. In the government affairs position, I was able to marry up my understanding of the system and identify where there were or could be significant legislative opportunities or hurdles to our business goals. That was a real inflection point for me in my career.”

    1. Andrew Foland

      When you refer to Ms. Bresch, you might try referring to her more helpfully as “Ms. Bresch, daughter of the US Senator from West Virginia,” for some context.

      That flag is even redder than it looks.

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