Siemens Medical Solutions USA Pleads Guilty to Obstruction of Justice

The giant German company Siemens AG has been under investigation in Europe for corruption. Now its US medical subsidiary, Siemens Medical Solutions USA Inc has pleaded guilty to a charge of obstruction of justice. Per the Chicago Sun-Times,

A subsidiary of international giant Siemens AG admitted in federal court Thursday that it lied to Cook County officials to win a $49 million hospital contract in 2000 then lied in court during a lawsuit to cover it up.

The subsidiary, Siemens Medical Solutions USA Inc., pleaded guilty Thursday to one count of obstruction of justice and is expected to pay a $1 million fine and more than $1.5 million in restitution to the county, according to a plea agreement the company reached with federal prosecutors. The company would also have to show its plea agreement to all government agencies it is currently doing business with, including the Department of Health and Human Services and the Defense Logistics Agency.

The guilty plea is the latest mark against a company that has been embroiled in controversy around the world regarding its corporate behavior.

The company admitted in its plea agreement to lying to Cook County officials that it was setting up a joint venture with a minority business as a true partner to provide radiology equipment to John Stroger Hospital. In fact, instead of cutting the business, Faustech Industries, into the deal with a share of the profits, Siemens Medical had agreed to pay a much lower flat fee to the company to lend its minority status to the deal.

A Siemens Medical manager called the joint venture nothing more than "a shell," according to the plea agreement.

Siemens Medical acknowledged failing to tell county officials about the arrangement because Siemens Medical officials believed their bid would not have been accepted if the county knew the truth.

In 2000, a rival bidder on the radiology equipment contract sued Cook County, challenging its award of the deal to the joint venture, and Siemens Medical repeatedly produced misleading documents and false testimony in court to cover up the true nature of what it was doing, according to the plea agreement.

Note that we first discussed this story back in 2005, and again in 2006.

Well, was it Jimmy Durante who said, "everybody has got to get into the act?" It seems like every kind of health care organization has got to get into the shady business practices act.

How many of these stories will it take for health care professionals and health policy makers to admit we have a systemic problem with the leadership and governance of health care organizations?

We clearly need to admit we have a problem. We need to develop watch-dogs and oversight mechanisms beyond a few people in the blogsphere. We need new regulatory mechanisms adapted to the brave new world of health care, rigorous enough to root out the leaders who would line their pockets at the expense of their organizations' missions, and even more outright corruption, yet flexible enough to allow innovation and progress. It won't be easy, but it won't begin to happen until we can at least admit we have a systemic problem.