Atricure Settles

The march of legal settlements continues.  This time, the US Department of Justice announced,

Atricure Inc., a medical device manufacturer, has agreed to pay the United States $3.76 million to resolve civil claims in connection with the alleged promotion of its surgical ablation devices, the Justice Department announced today. Surgical ablation devices use focused energy to create controlled lesions or scar tissue on a patient’s heart or other organs.

The settlement resolves allegations that the West Chester, Ohio-based company marketed its medical devices to treat atrial fibrillation (the most common cardiac arrhythmia or abnormal heart rhythm), a use that is not approved by the U.S. Food and Drug Administration (FDA). Atricure also allegedly promoted expensive heart surgery using the company’s devices when less invasive alternatives were appropriate, advised hospitals to up-code surgical procedures using the company’s devices to inflate Medicare reimbursement, and paid kickbacks to health care providers to use its devices. The United States asserted that by engaging in this conduct, Atricure knowingly violated the Food, Drug, and Cosmetic Act and caused the submission of false and fraudulent claims in violation of the False Claims Act.

This settlement relates to topics we discussed back in the early days of Health Care Renewal, the convoluted financial ties beween the renowned Cleveland Clinic, its current CEO, and Atricure. In 2005,  investigative reporting published in the Wall Street Journal revealed the complicated relationships among the Clinic, its current CEO Dr Toby Cosgrove, the Clinic's venture capital fund, Foundation Medical Partners, and a small medical device company called Atricure. This coincided with the Clinic's firing of Dr Eric Topol from his leadership positions there. (See posts here and here.) The Cleveland Plain Dealer uncovered more conflicts, involving Dr Cosgrove, the Clinic's board of trustees, Dr Bernadine Healy, and Invacare (see post here.)  In response, in 2006, the Clinic promised to revise its conflicts of interest policy, and held a big conference on the topic of conflicts of interest, although some were skeptical of these efforts (see post here.)

As the Cleveland Plain Dealer just noted,

Cleveland Clinic Chief Executive Dr. Toby Cosgrove helped create the 'AtriClip Gillinov- Cosgrove LAA Exclusion System,' which is being sold by the company and won approval in October for use in the European market. While Cosgrove is eligible to receive royalties from the company, he has not recieved any, Clinic spokeswoman Eileen Sheil said.

This settlement is just the latest in a now long parade of settlements that serve as reminders of poor behavior by myriad health care organizations.  As we have repeatedly noted, these settlements seem to have little deterrent effect on future bad behavior.  Usually, the companies involved only need to pay fines, and no individual who performed, directed or approved unethical or illegal acts will suffer any negative consequences. I submit once again that such fines are viewed merely as costs of doing business by the affected companies, and do not deter future bad behavior.  Until the people who approve, direct, and perform unethical or illegal acts pay some penalties, expect such acts to continue. 

The wrinkle in this case comes from the numerous past ties between the company involved and a prestigious US health care system and its top leadership.  But I doubt that Cleveland Clinic CEO Dr Toby Cosgrove will have any public comment about it.  But why should I expect that a former company director will admit any accountability for that company's poor behaivor? 

Hat tip to the White Collar Crime Prof Blog.

Was Topol Fired for Investigating Conflicts of Interest at the Cleveland Clinic?

The story of the firing of Dr Eric Topol from his leadership positions at the Cleveland Clinic Lerner College of Medicine has just gotten murkier.

The Wall Street Journal published an investigative report on the Cleveland Clinic's complex financial dealings, involving the Clinic's own venture capital fund, and a company called AtriCure. It suggests the possibility of multiple conflicts of interest affecting the top leadership of the Clinic, which were under internal investigation by a conflict of interest committee which included Dr Topol, that is, until he was fired.

In summary,

• Searching for "new ways to make money," the Cleveland Clinic sent up its own venture capital fund, Foundation Medical Partners (FMP).
• The Clinic became the biggest single investor, or limited partner, in FMP, putting in $25 million, which entitles the clinic to 38% of FMP's profits.
• Dr Delos (Toby) Cosgrove was one of the original general partners who managed the fund, and he invested in it personally. At the time, Dr Cosgrove was Chairman of the Department of Thoracic and Cardiovascular Surgery at the Clinic. "The fund's general partners were entitled to share an annual management fee of 2.75% of the money raised from investors that totals about $1.7 million a year. There were three general partners." Furthermore, "the fund's profits are known as 'the carry.'" "Dr Cosgrove was 'compensated with carry,' but didn't receive any of the management fees.."
• "Dr Cosgrove said he was required to invest in the fund by virtue of his role as general partner." Dr Cosgrove invested about $200,000 in the fund. "The fund lent ... the money to invest."
• In 2002, FMP invested $3 million in AtriCure, a private start-up company making medical devices. AtriCure makes a device that it advertises as allowing "you to make linear, transmural lesions that you can trust every time in a matter of seconds." Furthermore, "Using discreet field bi-polar radiofrequency, the AtriCure ASU delivers targeted ablative energy while simultaneously measuring the change in conductive properties of the lesion as it is created." The AtriCure web-site is very vague about what one might use such a device to do.
• Dr Cosgrove became a member of AtriCure's board of directors.
• "Dr Cosgrove also has developed a device for AtriCure ... which the company says it plans to begin marketing in the second half of next year. Dr Cosgrove would receive royalties for the device, known as the Cosgrove Clip."
• "Dr Cosgrove confirmed he also has a financial interest in companies doing research at the Clinic through his personal investment in Canaan partners," another venture fund run by Harry Rein, a friend of Cosgrove's who helped set up FMP.
• Physicians at the Cleveland Clinic have actually used to AtriCure device to treat atrial fibrillation (an irregular heart rhythm that predisposes patients to strokes) by ablating (destroying) electrically conductive heart fibers. For example, a group of Clinic physicians, including Dr. Cosgrove, published an article describing the results of this procedure on 513 patients. (Gillinov AM, McCarthy PM, Blackstone EH et al. Surgical ablation of atrial fibrillation with bipolar radiofrequency as the primary modality. J Thorac Cardiovasc Surg 2005; 129: 1321-8.) Cleveland Clinic physicians, specifically including Dr. Cosgrove, have promoted this procedure, using the AtriCure device, at national meetings.
• These physicians, again specifically including Dr Cosgrove, have not revealed their direct or indirect financial ties to AtriCure to the patients on whom they use this device, in their talks, and in their publications. For example, the article above lists Dr Gillinov and Dr McCarthy as consultants to AtriCure, but did not mention any ties that Dr Cosgrove had to the company. The article also did not mention that at the time it was written, Dr Gillinov and McCarthy had both been offered options to buy 25,000 shares of AtriCure stock.
• The US Food and Drug Administration (FDA) "has three times rejected AtriCure's application to have the system approved for cardiac use...." "Four patients are know to have died shortly after having the AtriCure procedure, at hospitals other than the Cleveland Clinic. AtriCure didn't notify the FDA...."
• "FMP has also invested in two other companies conducting trials at the Clinic: Immunicon Corp. and CardioMems Inc." The amounts it invested were $5 million and $3 million respectively. The Clinic also directly invested $2.75 million in Immunicon.
• "Last winter the Cleveland Clinic's conflict-of-interest committe learned that the FMP venture fund was an investor in companies doing research at the Clinic...." One of the members of the committee was Dr Eric Topol. "Some committee members worried that the Clinic's ties to AtriCure could color what patients were told when weighing treatment options. They also worried that their CEO's roles at AtriCure and the venture fund that invested in the company created a conflict...." "The Institutional Review Board in February directed Clinic researchers conducting clinical trials of the three companies' products to put a 'voluntary' hold on their work...." "The hold was lifted in May after the Clinic reworded consent forms."
• "The conflicts committee began to look into the role of Dr Cosgrove at FMP and AtriCure.... Not long afterward, Dr Cosgrove stepped down from AtriCure's board and said he would give up his position as a general partner at FMP."
• "Dr Cosgrove last week told Dr Topol he was losing his top post at the Clinic's medical school, a change that will take Dr Topol off the conflict-of-interests committee and the Clinic's board of governors."

The Cleveland Plain Dealer reported today that the Cleveland Clinic's board of directors has confirmed the removal of Dr Eric Topol as chief academic officer and provost of the Lerner Medical School. This action also definitively removed Dr Topol from the conflict of interest committee that had been investigating the ties among Dr Delos Cosgrove, Cleveland Clinic CEO, other Clinic physicians, FMP, AtriCure, and other companies doing research at the Clinic. Dr Cosgrove reiterated that this was part of a "streamlining move, nothing more." He said, "there are a lot of people trying to put a lot of spin on what the facts are." However, "students at the medical college sent a letter to the Clinic's board of trustees in support of Topol...." The Plain Dealer article suggested "the exposure also opens the door to questions from the Senate Finance Committee Chairman Charles Grassley, who has launched an investigation into the practices of nonprofit hospitals.
So was Dr Topol fired from his academic leadership positions to streamline the administration? This explanation seems unlikely, given Topol's prominence, and his role in creating the very medical school from whose leadership he was fired.
Was Dr Topol fired because he criticized Merck's Vioxx drug and its marketing, and revealed how Merck executives tried to intimidate him? Or was it because he helped investigate some conflicts of interest and other strange financial goings on involving top Clinic physicians and leaders, including its current CEO?
It seems more credible to suggest that Topol was punished by his own institution for blowing a whistle, regardless of which whistle proved most offensive.
Again, if such a prominent physician and academic leader can be published for whistle blowing, who in health care is safe? And if no physician or medical academic can feel safe speaking truths that offend the powerful, should any patient or student feel safe?
[Update: the MedPundit take on this story is here, the Schwitzer Health Care News take is here. Retired Doc is a bit ambivalent. Medical Rants doesn't agree, though.]