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.