Monday, August 05, 2013

The Mystery of the Northwestern Settlement

Watson, quick, the game's afoot.  We have discussed a large number of legal settlements by large health care organizations that serve as markers of misbehavior and often lack of leaderships' responsibility for same.  These settlements often follow a common pattern.  Yet this week a settlement appeared that was quite different, and hence raised some important questions.

The Basics of the Settlement

I will summarize the settlement as described by the Wall Street Journal.  The basic points were:

Northwestern University agreed to pay nearly $3 million to settle claims that a former cancer researcher fraudulently used federal grant money for personal expenses, including food, hotels and airfare for family trips between 2003 and 2010.

The settlement in the civil suit was unsealed Tuesday by the U.S. Attorney for the Northern District of Illinois, which investigated claims brought by a whistle blower under the False Claims Act.

The settlement seemed to be more about the researcher, Dr Charles L Bennett, than Northwestern,

At the time of the alleged fraud, Dr. Bennett was the principal investigator on research funded by the National Institutes of Health, studying adverse drug events, multiple myeloma, a blood disorder known as thrombotic thrombocytopenic purpura, and quality of care for cancer patients.

According to the settlement agreement, he allegedly billed federal grants for family trips, meals and hotels for himself and friends, and for 'consulting fees' for unqualified friends and family. Northwestern also allegedly improperly subcontracted, at Dr. Bennett's request, with various universities for services that were paid for by the NIH grants.

'Allowing researchers to use federal grant money to pay for personal travel, hotels, and meals and to hire unqualified friends and relatives as 'consultants' violates the public trust and federal law,' U.S. Attorney Gary S. Shapiro said in a statement.


 Northwestern, which is in Evanston, Ill., cooperated with the investigators and didn't admit to any wrongdoing, according to a statement by the university.

The settlement was the result of the actions of a purported whistle-blower,

The whistleblower, Melissa Theis, worked as a purchasing coordinator in the Feinberg school's department of hematology and oncology, processing invoices when she 'noticed some red flags,' according to her attorney, Linda Wyetzner, of the Evanston firm Behn & Wyetzner Chartered.

The federal False Claims Act allows private citizens who allege government programs are being defrauded to file actions on behalf of the government and receive a portion, usually 15% to 30%, of any recovered damages. Ms. Theis will get $498,100 in settlement proceeds, according to the agreement.

The settlement resulted from the efforts of multiple federal agencies,

 The allegations were investigated by the NIH, Federal Bureau of Investigation, U.S. Department of Health and Human Services Office of Inspector General and the U.S. attorney's office.

Curious Aspects and the Questions They Raise

So here is yet another settlement by a large health care organization, in this case, the prestigious academic medical center of a well known university.  This one, however, does not follow the usual pattern, and includes some quite curious aspects.

Media Attention vs Severity

The settlement so far has generated articles in the WSJ (above), the Chicago Tribune, the Chicago Sun-Times, Crains Chicago Business, Medscape, Modern Healthcare, UPI, Bloomberg, other local Chicago and university publications, and local outlets in South Carolina, the state in which Dr Bennett currently works.
The amount of the grants that Dr Bennett allegedly misused was $8 million, according to the University Herald.

There are no allegations that any activities of Dr Bennett or the university affected the quality of clinical research, clinical teaching, or patient care.

Contrast that substantial media attention to that generated by another recent settlement we just discussed, that of Pfizer misbranding of Rapamune (look here.)  This involved the excess promotion of a relatively dangerous drug that likely resulted in harm to many patients.  The over-promotion may have caused up to 90% of the drug's $200 million yearly sales.  The settlement itself was for $491 million.  Yet while it got more coverage, mainly from local media outlets which covered it because the settlement will result in payments to individual states, only four big national outlets have covered it so far, again the Wall Street Journal, and  the New York Times, Reuters and Businessweek.

Why did a relatively small settlement of alleged financial misbehavior without clinical implications get nearly as much attention as a settlement fifty times bigger that involved actions that likely harmed patients?

Intensity of the Government Response

Dr Bennett's alleged misuse of grant funds required investigation by four different federal agencies, including the FBI.  Pfizer's misbranding of a dangerous drug seemingly was handled only by one, and the FBI was not obviously involved.  In fact, the FBI rarely has rarely been mentioned in the media coverage of most of the legal settlements we have discussed.

Why did again a case of relatively small alleged financial misbehavior require such massive federal resources when much bigger cases which had implications for clinical care, policy, or research seemed to command lesser resources?

Naming and Shaming

The settlement did not involve any admission of any wrongdoing by Northwestern.

In contrast, nearly all the news coverage of this settlement emphasized the role of Dr Charles L Bennett.  The coverage seemed to be following the lead of the Department of Justice press release, which included,

 Northwestern allegedly allowed one of its researchers, Dr. Charles L. Bennett, to submit false claims under research grants from the National Institutes of Health. The settlement covers improper claims that Dr. Bennett submitted for reimbursement from the federal grants for professional and consulting services, subcontracts, food, hotels, travel and other expenses that benefited Dr. Bennett, his friends, and family from Jan. 1, 2003, through Aug. 31, 2010.

Yet Dr Bennett appeared not to be a party in this settlement, and it was unclear whether he had a direct opportunity to respond to it.  The Wall Street Journal did note that after it was announced,

 James M. Becker, an attorney for Dr. Bennett, said, 'We deny the allegations.…We are actively engaged in discussions to resolve the allegations.'

We have discussed numerous legal settlements by large health care organizations, often involving hundreds of millions or even billions of dollars, sometimes involving guilty pleas by the companies involved or their subsidiaries.  Almost never do these settlements name or involve in any way persons who authorized, directed, or implemented the misbehavior.  In fact, we have commented again and again about the impunity of health care organizational managers and executives.  For example, the recent $491 million Pfizer settlement did not name or punish any individuals.  Furthermore, Pfizer's $2.3 billion settlement for deceptive marketing of a drug later pulled from the market (Bextra) did not name much less penalize any responsible individuals (look here.)  Also, GlaxoSmithKline's $3 billion settlement of numerous unethical practices did not name much less penalize any responsible individuals (look here).

So why was naming and shaming Dr Charles L Bennett such an important part of the relatively small Northwestern settlement, when much larger settlements, many involving unethical behavior that could have harmed patients or distorted medical research, and some of which involved corporate guilty pleas to criminal charges did not involve naming and shaming any responsible person?    
How Accountable was Dr Bennett?

As in the Wall Street Journal version, the settlement implies that Dr Bennett was the person most responsible.  The Chicago Sun-Times put it this way,

 Dr. Charles L. Bennett allegedly took his wife on personal trips, then illegally billed the flights, hotels and meals to the National Institutes of Health, claiming it was part of his cancer-fighting work. And he allegedly submitted phony bills for his work over a seven-year period beginning in 2003.

Here I will have to interject a bit of information about how federal grants work.  As I learned when I was a young faculty member, and as I confirmed with several other experienced researchers who have run and reviewed federal grants, these grants are made to institutions.  In the current case, the grant apparently went to Northwestern University.  The institution that receives the grant is responsible for making all payments and disbursements related to that grant.  The grant's Principal Investigator is responsible for the scientific conduct of the grant, but NOT payments, disbursements, business management or accounting.  The Principal Investigator can request that payments be made for various things, including travel expenses and consulting work.  But the Principal Investigator cannot directly authorize or make these payments.  They are authorized, signed, and made by institutional administrators, usually in grants and contracts offices or the equivalent, and usually only after copious paperwork to justify the payments.

So Dr Bennett may have requested reimbursement for travel expenses, or requested the university to hire a consultant.  But university managers must have made those payments, unless the university's grants administration mechanism had completely broken down.  Note that given the usual ways grants are administered, it would appear that Ms Theis, the ostensible whistle-blower, who will receive nearly one half of a million dollars from this settlement, actually may have had more direct responsibility for making the payments in question than did Dr Bennett.

Presumably, that is why the settlement was made by Northwestern.

Why then did the settlement, the DOJ press release, and the media coverage so emphasize Dr Bennett's responsibility, and so minimize the role of the university?  

Was Anyone Else Accountable?

The DOJ press release, and all the media articles on the case,  save one, mention only Dr Bennett as the person at fault.  Crain's Chicago Healthcare Daily, however, suggested someone else was responsible,

Northwestern University's nearly $3 million settlement of fraud claims by the federal government protects the director of the school's cancer center, who allegedly failed to supervise a researcher who used grant money to cover personal expenses over a seven-year period.

Dr. Steven Rosen, director of the Robert H. Lurie Comprehensive Center for Cancer, and Dr. Charles L. Bennett, a researcher who is no longer with the center, were both named in a whistleblower complaint unsealed on Tuesday, when the settlement was announced.

Dr. Bennett used federal grant money for family trips and fraudulent consulting fees for his brother and cousin from 2003-10, the government alleges.

Dr. Rosen 'failed to exercise appropriate responsibility,' Randall Samborn, a spokesman for the U.S. Attorney's office said. 'It was a supervisory function that he didn't adequately fulfill.'

When the settlement was announced, Mr. Samborn said the agreement did not cover either doctor. On Wednesday, he corrected himself, saying that settlement covered Dr. Rosen, but not Dr. Bennett.

As I noted above, the way federal grants work, it was the university, and its managers and leaders, who were responsible for making all payments on this and other federal grants.

Why did the government press release and the media coverage emphasize Dr Bennett's alleged role, while ignoring any possible responsibility of anyone else, especially his supervisor?

Backgrounds of the Principles

Dr Bennett and Dr Rosen, who seemingly were treated so differently in this settlement, travel in very different circles.

Most media articles described Dr Bennett as a prolific researcher and medical academic.  Although some described his areas of interest in hematology and oncology, only Medscape described one particular project of his.  

Dr. Bennett's research efforts included a 2008 study on which he was the first author (JAMA. 2008;299:914-924). The study was the first meta-analysis to identify an increased mortality risk in cancer patients associated with erythropoiesis-stimulating agents.(1)

In fact, as we discussed here,  Dr Bennett was the first author of a meta-analysis that was the first to show that epoetins increased the rates of adverse effects and death for cancer patients.  This evidence lead to reduced use of some very expensive drugs made by Johnson and Johnson and Amgen, and hence reduced revenues for both companies.

The JAMA article noted that at the time he wrote it, Dr Bennett had financial relationships with Amgen.  He and a coauthor "reported serving as consultants to AMGEN and Dr Bennett reported he has received grant support from AMGEN previously."

Note that Amgen pleaded guilty to misbranding its epoetin, Aranesp, and therefore paid fine and a civil settlement totaling $762 million.  Given the data on this drug class' adverse events, as shown by Dr Bennett and others, it is likely that the misbranding lead to patients being harmed by the drug without receiving any benefits (look here.) 

After writing that article, Dr Bennett became known as a strong skeptic of the pharmaceutical industry.  Just before the JAMA article was published, he coauthored an editorial which wondered if conflicts of interest would ever prove to be acceptable once sufficient research was done.(2)  In that article, he disclosed consulting for, and receiving honoraria and research grants from Amgen.  In 2010, he published research showing the effects of conflicts of interest on reporting of possible adverse effects based on basic science research about epoetins.(3)  By then he apparently no longer had financial relationships with Amgen.  In 2011, he reported a survey of major cases of pharmaceutical fraud resulting in legal actions.(4)

Dr Bennett became known for skepticism about the practices of pharmaceutical companies, and for publishing about the harms of specific drugs, despite his previous financial relationships with Amgen. 

However, Dr Rosen apparently has continued to work closely with industry.  His faculty disclosure page revealed  the following industry relationships

Consulting / Related Activities
Faculty member engaged in activities such as speaking, advising, consulting, or providing educational programs for the following companies or other for-profit entities:
  • Allos Therapeutics, Inc.
  • Carden Jennings Publishing Co., Ltd.
  • Cerner Corporation
  • Dava Oncology, LP
  • Elorac, Inc.
  • Envision Communications
  • Health Practices Consulting - unverified entity
  • Plexus Communications
  • Prostrakan, Inc.
  • Seattle Genetics, Inc.
  • Studio ER Congressi (Triumph Group, Inc.)
  • The Medal Group Corp.
In addition, faculty member received compensation for medical record consultation and/or expert witness testimony.

Ownership or Investment Interests
Faculty member had an ownership or investment interest in the following companies:
  • AuraSense, LLC
  • Nanosphere, Inc.
Royalty Payments and Inventor Share
Faculty member has the right to receive payments or may receive future financial benefits for inventions or discoveries related to the following companies or other entities:
  • Nanosphere, Inc. 
We have seen various important effects of individual and institutional conflicts of interest in health care.  We have seen corporatism and regulatory capture affecting government and its dealings in health care.  

Did Dr Bennett's break with a powerful industry make it easier to set him up as the villain in this story?


The settlement by Northwestern University, which was mainly about allegations made against Dr Charles L Bennett, who was not a party to the settlement, was very different that the vast majority of the march of legal settlements whose continuation we have frequently discussed.

The settlement and its media coverage raised important questions whose answers would be important to the assessment of  our current regulatory and legal response to misbehavior by and within large health care organizations.  Health Care Renewal is about raising such issues by commenting on public information, media reports, and research.  I hope those with capacity to investigate will consider these questions.  Inquiring minds want to know.

Roy M. Poses MD in Health Care Renewal 


1.  Bennett CI, Silver SM, Djulbegovic B et al.  Venous thromboembolism and mortality associated with recombinant erythropoietin and darbepoetin adminstration for the treatment of cancer-associated anemia.  JAMA 2008; 299: 914-924.
2.  Djulbegovic B, Angolotta C, Knox KE, Bennett CI. The sound and the fury: financial conflicts of interest in oncology.  J Clin Oncol 2007; 25:3567-3568.  Link here 
3.  Bennett CI, Lai SY, Henke M et al.  Association between pharmaceutical support and basic science research on erythropoiesis-stimulating agents.  Arch Intern Med 2010; 170: 1490-1498.  Link here.
4.  Qureshi Z, Sartor O, Xirasagar S, Liu Y, Bennett CI.  Pharmaceutical fraud and abuse in the United States, 1996-2010.  Arch Intern Med 2011; 171: 1503-1506.  Link here.


Michael S. Altus, PhD, ELS said...

"Northwestern, which is in Evanston, Ill., cooperated with the investigators and didn't admit to any wrongdoing, according to a statement by the university."

Not exactly, as far as I can tell. It might be a “neither admit nor deny” settlement.

The Message from Northwestern University President Morton Schapiro, Provost Dan Linzer and Feinberg School of Medicine Dean Eric Neilson: Information and clarification regarding recent legal settlement, August 2, 2013 (available at,-provost-dan-linzer-and-feinberg-school-of-medicine-dean-eric-neilson.html
OR: states the following:

"The settlement involves no findings or admissions of wrongful conduct by Northwestern....” Thus, Northwestern did not deny wrongdoing.

Anonymous said...

Having been employed by Northwestern Medicine in the past, I can tell you that this behavior is blissfully overlooked. As long as everyone plays nice with industry players, misspent money is just a byproduct of the cost of doing business.

Shawn said...

Thank you for following through with such meticulousness. This is first-rate investigative journalism and explains so much for a layman like myself. Thank you for your hard work.