Thursday, December 13, 2007

Another Day, Another Deferred Prosecution Agreement

As I mentioned earlier, a major impetus for setting up this blog was finding out that most physicians knew local examples of badly or corruptly run local health care organizations, and felt that their core values were threatened by the actions of these organizations. However, the doctors all felt they were peculiarly unlucky to practice in such a uniquely sleazy environment. They did not realize that things were likely just as bad in the next town, and thus, that the problems were systemic. When I have taken my Health Care Renewal talk on the road, only a few people in the audiences have ever heard of some of the most vivid examples of bad health care organizational governance, e.g., the collapse of the Allegheny Health Education and Research Foundation (see post here).

So it may be easy to dismiss the next story as just the sort of corruption that goes on in our little state of Rhode Island. But remember that the something similar is likely going on in your cities, states, and countries.

Starting with one of the first posts on this blog, we began to recount the follies of the management of Blue Cross and Blue Shield of Rhode Island (BCBSRI), a not-for-profit insurance company and managed care organization, the dominant health insurer in the state. In 2004, Blue Cross "fired its CEO this year after news reports of his huge salary, receipt of a $600,000 no-interest loan which he did not pay back, and, receipt of free acupuncture treatments from a practitioner who wanted to influence Blue Cross reimbursement policies. Meanwhile, Blue Cross was paying health care professionals poorly (often less than Medicare), while hiking premiums at double-digit rates." (See post here.) In 2005, the company settled a class action suit after it was accused of "bilking subscribers" by using a complex scheme to inflate their drug co-payments (see post here). In 2007, a former RI state senator pleaded guilty to literally being a Blue Cross "bag man," being paid for many more bags than he actually delivered to the company in return for promoting legislation favored by it (see post here).

Today, the Providence Journal reported that four high-ranking Blue Cross executives resigned in connection with "an expected announcement ... by the health insurer and the U.S. Attorney's office." They included Lynne A Urbani, who "was promoted to senior vice president for external services, taking on oversight of community services along with her prior responsibilities over customer, provider and medical services"; Matthew T Brannigan, "a former chairman of the East Greenwich Republican Town Committee, [who] joined Blue Cross in 1996 and had also been promoted earlier this year, from vice president to senior vice president for sales and marketing"; Scott A Fraser, "vice president for government relations, and also served for years as Blue Cross’ spokesman"; and Brian Jordan, "who was assistant vice president for government relations."

Then, a news release from the US Department of Justice revealed the Blue Cross had entered into a deferred prosecution agreement with the government. In it, the company acknowledged its conduct, including:

BCBSRI acknowledged in the agreement that while lobbying [former Rhode Island state Senator] Celona on legislation, its executives caused the insurer to pay $74,000 to a communications company to produce a cable access program hosted by Celona. Celona was paid $13,565.

Likewise, BCBSRI acknowledged that, while its executives were lobbying [former Rhode Island state Senator] Martineau on legislation, members of the insurer’s executive management caused the insurer to pay about $175,500 to a business run by Martineau for the purchase of paper prescription bags.

BCBSRI further acknowledges that it paid $400,000 in insurance brokerage commissions to an unidentified former Rhode Island Senate President while its executives were lobbying him concerning legislation.
The company took responsibility for these actions.

BCBSRI acknowledges and accepts responsibility for conduct of certain former executives, who caused the payments in question to be made, knowing that its executives were lobbying the legislators. The company also acknowledges that the executives were acting within their apparent authority as executives of Blue Cross Blue Shield of Rhode Island.

The nature of the deferred prosecution agreement was explained.

As part of the agreement entered today, BCBSRI will continue to cooperate fully with the government’s ongoing investigation. As long as BCBSRI complies with the terms of the agreement, the government agrees not to criminally prosecute BCBSRI for any conduct described in the agreement and in the plea agreements of the former state senators.

The company agreed to pay a fine, and revise its operations.

Under the terms of the non-prosecution agreement, BCBSRI has agreed to pay $20 million to the government and not to seek any rate increases specifically to recoup the $20 million. The money will go into a fund to be administered by the Rhode Island Foundation. The earnings and interest from the $20 million fund will be used to support projects designed to provide quality, affordable health care services in Rhode Island.

BCBSRI has also agreed to a series of ethical reforms that it has already implemented and will maintain. These reforms include: compliance oversight by a Corporate Compliance and Ethics Committee; a full time corporate compliance officer and ethics department; a code of ethics governing the conduct of directors, officers and employees; and ethics training programs. The insurer also agrees to hire a government-approved monitor to oversee its ethics reform and its compliance with the agreement. The monitor will be in place for at least two years.

Meanwhile, the Providence Journal also reported that the current chairman of the board of Blue Cross, Frank J Montanaro, has been accused of a conflict of interest apparently unrelated to the deferred prosecution agreement. Montanaro, who also is head of the Rhode Island State Association of Firefighters and president of the Rhode Island AFL-CIO labor union, served on an arbitration panel which had to decide on the health care benefits for Providence city fire-fighters. Montanaro was on the panel ostensibly to represent the fire-fighters' interests. Yet, he "argued during the arbitration that the city needed to stay with Blue Cross because a change would result in a disruption for the firefighters, but he never disclosed his connection, or that granting that clause would guarantee millions in business for his company." The arbitrator who represented the city's interests asserted, “Frank shouldn’t even be having this discussion with us. Because Frank is biased. Frank is on the board of Blue Cross. How can the chairman of Blue Cross sit here and impartially and objectively decide on this?”

So, another day, another set of executive resignations, another conflict of interest and another deferred prosecution agreement for a big (at least for little Rhody) health care organization. (This is, by the way, the second deferred prosecution agreement imposed on a big health care organization in the state. See our previous post on the agreement affecting the Roger Williams Medical Center.) Is it any wonder that honest health care professionals in this state are demoralized?

That one small state has had two such agreements in two years, and, of course, all the mismanagement and malfeasance we have documented now for three years on Health Care Renewal, suggests that the US, and most likely other countries, have big systemic problems with unethical health care practices and bad health care governance. But as Transparency International noted, health care corruption for a while has been the unacknowledged elephant in health care's living room, raising costs, stifling access, and degrading quality.

How many more such stories will it take for the remaining honest physicians to demand that we throw sunlight on the infestations and drain the swamps of corruption? Will the public and policy-makers ever notice?

By the way, although cases like that of Rhode Island Blue Cross at least serve to exemplify the problems, the failure so far of anybody at Blue Cross to lose more than their current jobs as penalties for their actions suggests that there is still little deterrence for malfeasance in the health care sphere.


Jenny said...

Did I mention, I LOVE this blog?

While you're considering corrupt swamps, when will the medical community look at the way that practice recommendations are set by organizations like the American Diabetes Association whose policies are fatally tainted by their reliance on donations from junk food companies and drug companies who profit when people with diabetes are told to eat sugary high carb diets and take ineffective and dangerous drugs to control their blood sugars--drugs that research published in the ADA's own journals show are ineffective.

The ADA has fought for years to keep the peer-reviewed information away from patients that sugar and starch raise blood sugar and that low carb diets can normalize blood sugar and improve lipids. They refuse to warn the public against TZD drugs despite mounting evidence that both Avandia AND Actos cause osteoporosis and heart failure.

The ADA's position re Diabetes is similar to that of the American Cancer Society during the decades when its cigarette manufacturer sponsors kept the ACS repeating the mantra that "more research needed to be done" before smoking could be linked to cancer. The ACS also took huge amounts of money from the chemical industry and did not ever inform the public of the dangers of the industrial chemicals to which they were being exposed. (All this is brilliantly documented in the recent book, "The Secret History of the War on Cancer" by epidemiologist Devra Davis.

But even though the ADA's advice to patients with diabetes is dangerously flawed, the ADA is who sets both the diagnostic criteria and the practice recommendations for treating diabetes followed by most physicians, hospitals and nursing homes.

I'm sure there are similar problems with the other big money health organizations. We see the AHA's logo on high carb foods, even as the evidence accumulates that post-prandial blood sugar (raised by high carb foods) corresponds to CVD risk AND mortality.

As long as these "health" organization are dominated by money coming from sponsors whose interests are not those of patients, they will continue to hurt patients and miseducate doctors.

Anonymous said...

In reading this post I could not help but think of the growing power of the blogs. People now put their story, with his story, and her story, and find they are not getting the best information, or the information is so tainted as to be unusable.

Many doctors are finding it harder to rationalize their relationships with drug reps. Some medical societies, the APA as noted, openly question the marketing and ethical practices of the drug companies.

In the Dec. 14th WSJ article by Jeanne Whalen we find Novartis is going to start focusing it's sales activities on insurance companies. My guess is they feel they will find a kindred soul in what they see as a sales orientated organization. I also feel they will find a very hostile environment, where the major function is to lowering cost.

While the most senior people may engage in questionable behavior, those down the line work under strict policies that allow them to accept nothing from a vendor. The medical staffs are paid a salary, they are not interested in donuts.

Each doctor's office is an independent entity, able to set its own policies. Large corporations must adhere to a mountain of policy directives. Add to this government oversight and things do not bode well of Novartis.

This only points to the increasing failure of pharma's marketing model. Sunlight is the best disinfectant.

Steve Lucas

Anonymous said...

This blog just keeps getting better.

Thanks for relentlessly shining light on what has become, in many areas, a dark industry.

Anonymous said...

Agreed that Dr. Poses' blog is refreshing for its spread of sunlight . . . and Steve Lucas' comments are always insightful and on point. In mentioning the "power of the blogosphere" though, he opens an unexplored can of worms. How many doctors read sites like this? How many are then spurred to action? It's true that blogs allow individuals to learn that "they are not alone" . . . but generally offers little in the way of organization, guidance or leadership. "Yeah," we say, "That's right . . .but what do we DO about it?"

As a lay person, perhaps my thoughts are outside the scope of this article . . . but I wonder when enough doctors will recognize that they--like the patients they serve--are little more than fodder in the giant capitalistic machines of pharma/medicine/insurance. I believe that many M.D.'s are conflicted . . . they don't have time/energy to enter the fray; after all, they have patients to attend, articles to read, pharma reps to see, educations to continue. But, like the frog placed in a pot of water, with the flame ever-increasing, many doctors may find that, like patients, they are being boiled alive, and can't even pinpoint when they jumped into the pot.

Lay people have very little power; their grassroots activism is easily countered by astroturf activists, sponsored by the miscreants, and those doctors who place profits before patients. I believe there are plenty of uncompromised doctors who still have the power to change things . . . if they so choose. But will they?


P.S. Jenny--thanks for your comments. You have very ably identified the travesty that is today's treatment of diabetes . . . from the inappropriate (industry-guided) charitable organizations to the thought-leaders whose thoughts are aligned with Big Pharma, Big Insurance, and Big Medicine. I know you understand the scarcity of adequate medications, monitored by inaccurate, error-prone equipment, and reliant on skewed data presented as "scientific" proof. The DCCT and ADA, in combination, have (in my opinion) caused incalculable harm. The fact that there have been no comparative studies between natural and synthetic insulins is a travesty.

Anonymous said...


I think I may be a little more hopeful of the response to blogs. As in any activity it takes time to reach that point of critical mass, and we are getting close. I asked my doctor if he followed any blogs, and he said no. I later used a doctor written Medscape article to bolster a position I held about his desire to medicate me. That article is now on the top of my file.

My arguments are sharper. My knowledge base is both larger and more defined. My friends know of my activity and this leads them to ask questions of their physicians.

We are having an impact and the doctors who author these blogs, in hearing from us, understand they are also having an impact. Only in shining a light on these back room deals can we hope for a positive change.

Steve Lucas