Act now & you can help!

Call and write to your two U.S. Senators and your U.S. Congress(wo)man :

Let your legislators know you are watching and want to make sure they don't sacrifice safer review of devices when negotiating MDUFA.  The medical device industry has an active, powerful lobby but individual taxpayers/patients/citizens are a potent antidote for the paid lobbyist!   Please join me and many others in this effort. 

Thank you so much and have a very Happy (and healthy) New Year!

"It is just not right."

(LINK) Barry Meier NYT 12/27/11 "The High Cost of Failing Artificial Hips"

The most widespread medical implant failure in decades — involving thousands of all-metal artificial hips that need to be replaced prematurely — has entered the money phase.

Medical and legal experts estimate the hip failures may cost taxpayers, insurers, employers and others billions of dollars in coming years, contributing to the soaring cost of health care. The financial fallout is expected to be unusually large and complex because the episode involves a class of products, not a single device or just one company.
The case of Thomas Dougherty represents one particularly costly example. He spent five months this year without a left hip, largely stuck on a recliner watching his medical bills soar.
In August, Mr. Dougherty underwent an operation to replace a failed artificial hip, but his pelvis fractured soon afterward. The replacement hip was abandoned and then a serious infection set in. Some of the bills: $400,776 in charges related to hospitalizations, and $28,081 in doctors’ bills.
“I’m sitting here on a La-Z-Boy meant for someone who is 80 and I’m 55,” said Mr. Dougherty, who lives in Groveland, Ill., and works at Caterpillar, the heavy equipment manufacturer. His bills are “five times as much” as he paid for his home.
The so-called metal-on-metal hips like Mr. Dougherty’s, ones in which a device’s ball and joint are made of metal, are failing at high rates within a few years instead of lasting 15 years or more, as artificial joints normally do. The wear of metal parts against each other is generating debris that is damaging tissue and, in some cases, crippling patients.
The incidents have set off a financial scramble. Recently, lawsuits and complaints against makers of all-metal replacement hips passed the 5,000 mark. Insurers are alerting patients that they plan to recover their expenses from any settlement money that patients receive. Medicare is also expected to try to recover its costs.
While his insurer has covered his bills so far, Mr. Dougherty said he was preparing to sue his surgeon, who may have implanted the device incorrectly, and Johnson & Johnson, which produced his artificial hip, to help recoup some of the insurer’s money.
“All these payers want to be paid back,” said Matt Garretson, the founding partner of the Garretson Resolution Group, a firm in Cincinnati that manages product liability cases.
Until a recent sharp decline, all-metal implants accounted for nearly one-third of the estimated 250,000 hip replacements performed each year in the United States. Some 500,000 patients have received an all-metal replacement hip, according to one estimate. A new study found that no new artificial hip or knee introduced during a recent five-year period — implants that included some of the all-metal hips — were more durable than older devices, and 30 percent were worse.
One troubled all-metal model, implanted in 40,000 patients in the United States, was recalled last year by the DePuy division of Johnson & Johnson. As of October, some 3,500 patients had filed a lawsuit involving that device.
There is no data on the number of all-metal hips that have failed prematurely in this country because the outcomes of orthopedic procedures are not formally tracked by the government or private companies.
But extrapolating from overseas data and the estimate of metal hip use here, tens of thousands of patients in the United States may have to undergo operations over the next decade to replace the implants, said Dr. Art Sedrakyan, a researcher at Weill Cornell Medical College of Cornell University, who is studying the hip problem.
A decade ago, Sulzer Orthopedics paid a record $1 billion to settle claims by 6,800 patients who received artificial hips and knees that were contaminated with industrial oil during the manufacturing process. “We have been dwarfed by this,” said Teresa Ford, a lawyer who worked at Sulzer at the time and is now in private practice.
Device producers have taken differing stances to covering patient expenses. Zimmer Holdings, which says its all-metal implants are safe, has settled hundreds of patient claims, lawyers involved in those cases say. Also, DePuy is covering costs related to the device it recalled last year, the A.S.R., or Articular Surface Replacement.
DePuy would not comment on how much it had paid in recall-related costs. But a spokeswoman, Mindy Tinsley, said in a statement that DePuy was working with patients and insurers.
Things have not gone smoothly for everyone who has taken DePuy’s payment offer. One patient, Paula Laverty, received a hospital bill for $41,578 and a call from the facility warning her that the bill would be turned over soon to a collection agency.
Ms. Laverty, of Cape Elizabeth, Me., said she spent weeks calling the firm handling claims related to DePuy’s A.S.R. She said she eventually learned that the implant maker had paid the hospital $18,000 for her replacement procedure and that the $41,578 represented the remaining charges.
This month, DePuy made an additional payment to the hospital, according to Ms. Tinsley, the company spokeswoman.
Along with A.S.R.-related cases, DePuy also faces over 560 lawsuits in connection with the all-metal version of another hip model, called the Pinnacle, the device that Mr. Dougherty received. Because the company says that the model is performing well, costs for its replacement are being borne by Medicare, insurers or patients themselves.
To recoup their expenses, insurers typically notify patients through lawyers that they expect to be reimbursed from any settlement money that patients receive, rather than pursue their own lawsuits with the device makers. Also, Medicare is expected to enforce new laws next year that will make it easier for the agency to recover taxpayer dollars spent treating patients injured by problem drugs and medical devices, legal experts said.
Still, some patients are weathering some of the financial impacts on their own. While Charmin McCune, a teacher in Wylie, Tex., is recuperating well from a recent replacement operation, she said that she and her husband, also a teacher, have had more than $12,000 in expenses that have not been covered by insurance.
Mr. Dougherty, the Illinois patient, underwent a procedure this month to get a new hip implant. All went well, he said, so he hopes to spend next year back on his feet and at work.
“You can’t do anything,” he said of his current situation. “You see your wife doing everything for you. It is just not right.”

New Joints Don't Always Last

(LINK) New Joints Don't Always Last.

New joints don't always last

By Rick Ruggles

WORLD-HERALD STAFF WRITER

Those who endure the pain leading to hip or knee replacement know they eventually might have to do it all over again.

Baby boomers are growing old. Obesity is an increasing problem, putting stress on joints. Consequently, the need has increased for what once was a niche in surgery: redoing hip and knee replacements.

Surgeons have had good results with joint replacements in senior citizens, so younger patients with bad joints are more and more likely to undergo replacement surgery, too. And the longer an artificial joint is in place, the more likely it will have to be redone. There's no such thing as a permanent repair.

Several hundred thousand knees and hips are replaced each year in the United States. Sometimes the hardware loosens or breaks down. Sometimes remaining bone wears down and cracks. Sometimes infection requires a redo.

Asked when revisions started to become a booming part of surgery, Dr. Todd Sekundiak at Creighton University Medical Center gave a short answer: "Now."

Hip and knee replacements, and the redos sometimes required, have become so common that a medical journal last year warned there might not be enough surgeons to meet demand five years from now.

Sekundiak, 48, said he does about 600 hip and knee replacement surgeries a year, and 30 percent to 40 percent are revisions. Typically, they are referrals from other clinics and towns. While many surgeons do first-time hip and knee replacements, fewer do revisions because they can be complex and risky.

"Historically, revisions were just kind of a niche market," Sekundiak said. This year he added a partner, Dr. Ian Weber, to help with the demand for replacements and revisions.

Dr. Kevin Garvin also performs revision surgeries. "I've hired two partners in the last three years," said Garvin, chairman of orthopedic surgery at the University of Nebraska Medical Center. Garvin said he and his partners do 750 to 1,000 hip and knee replacements a year, and about 20 percent are redos.

Leland Greving of Central City, Neb., sat with his wife, Shirley, in Sekundiak's west Omaha office one recent morning, hoping their winter plans weren't about to be dashed.

Sekundiak performed hip revision surgery on Greving, 79, in late October. Greving knows the operations can go awry. He had his first hip replacement in 2000 and it had to be redone in 2002. He had trouble with that revision and was referred to Sekundiak this year.

The Grevings went to his office Wednesday for the first follow-up appointment. They hoped to hear from the surgeon that Greving had recuperated enough for them to go ahead with their annual winter retreat to Texas.

"I want to travel and walk when we take vacations and stuff," the retired farmer said before Sekundiak walked in the room.

"We're anxious about it," his wife said. "We want to go to Texas."

Sekundiak sees the anxiety on his patients' faces all the time. They've undergone surgery they hoped would cure their problem. Usually it does. But sometimes the pain returns and the cutting must occur again.

"They're demoralized. They're debilitated," Sekundiak said of many patients who have to undergo redos. "And so the level of anxiety is high. The level of stress is high. And for us, too, because your heart yearns for them."

Dr. Nicolas Noiseux, an orthopedic surgeon at the University of Iowa, said that in patients 55 and older, 80 percent of knee replacements work well for the first 20 years. The percentage is higher for hip replacements.

But Noiseux tells 40-year-old patients receiving a replacement that there's a 100 percent chance they'll need a redo if they live to old age.

Surgeons began replacing hip and knee joints in large numbers in the 1970s. Senior citizens usually received the implants, which proved so successful that younger patients began undergoing the surgery. The numbers will shoot up dramatically over the next few decades.

A 2007 article in the Journal of Bone and Joint Surgery estimated that first-time hip and knee replacements would increase from about 660,000 in 2005 to 4 million in 2030. The number of revisions may rise from close to 80,000 in 2005 to about 365,000 in 2030.

Revisions are harder to do than first-time replacements in many cases. "They can be very simple," UNMC's Garvin said. "But they can be very complex."

Some revisions involve removing only the implanted hip socket liner and the ball that fits into the socket. Others require the surgeon to delicately chisel bone from rods before he removes everything that was put in the first time. Then new rods, cables, screws and other material must go in.

The redos can take several hours to perform and, because of their complexity, involve higher risk of medical complications such as infection and pneumonia.

Surgeons doing revisions sometimes have little bone to work with. Bones can be thin or damaged from prior surgery or trauma.

Microscopic particles caused by friction between the artificial ball and socket can lead to an immune-system response that diminishes bone in the area.

They may use bone grafts or artificial pegs and devices to bulk up the area. Ultimately, surgeons want the bone to grow into the implants. This process can be promoted by coating implants with calcium or manufacturing them with tiny pores into which bone grows. The technology and implants have improved over time.

Still, implanted materials sometimes are recalled by manufacturers because they don't meet expectations. A recall may require removal of implants, but not necessarily.

Patients are encouraged to get up and start walking soon after revision surgery because bone is living tissue, and walking helps bone in the hips and knees to strengthen and thicken.

If bone doesn't grow into the implant, the artificial material loosens, and the surgery must be redone.

Sekundiak, a Canadian who trained in Phoenix and Chicago and practiced in Winnipeg and at the Nebraska Medical Center before joining Creighton, said he receives referrals from throughout the Midwest.

He said a first-time hip replacement may cost around $20,000, while a redo can cost more than $100,000 if it's especially difficult. Insurance usually covers much of the cost.

Sekundiak said annual follow-ups are important. Sometimes devices loosen or fail without causing the patient great pain.

"If you wait till it hurts, usually it's a mess," he said.

Richard Cornelison, a retired letter carrier and school bus driver in Red Oak, Iowa, didn't want to have another hip revision surgery last year. Cornelison, now 78, had a first-time hip replacement in 1995. It became infected and had to be redone that year.

The infection simmered in his system and his surgeon referred him to Sekundiak in 2003.

Evidently the infection stemmed from a case of shingles that Cornelison experienced in 1995. Shingles is a virus, but the rash it caused allowed bacteria to enter his system and migrate to the hip implant, Sekundiak said.

Bacteria love hip and knee implants, the surgeon said, because there's no blood flow there to carry immune-system defenses to fight them. Sekundiak did what he calls a "temporary" redo on Cornelison in 2003, placing antibiotic-coated implants in with the intention of replacing them with permanent material.

The coated implants don't bond well with the bone but help knock out infection.

Cornelison was so pleased with the temporary implant that he squawked at having another redo. "I said, 'I'm not ready,'" Cornelison recalled. "He said, 'Well, I think it's time.'"

And so Sekundiak performed another redo on Cornelison last year. The Iowa man who once played baseball and basketball at a high level and bowled avidly now uses a cane and has a limp. Nevertheless, he still mows lawns, plays cards with his buddies and enjoys his wife of 52 years and their nine grandchildren.

"Been doing fine," he said last week. "I'm not in any pain at all."

Back in Omaha, the Grevings of Central City awaited the surgeon's verdict on their winter trek to Texas.

Sekundiak walked into the exam room. "How you doin'?" he asked.

"Good. I've been exercising every day," Leland Greving said. "I haven't got much faith in hips. I've got a lot of faith in you."

Sekundiak said he understood Greving's decade-long frustration with hips and hip surgery. "The problem is, when they (artificial hip joints) go bad, they don't go a little bad. They go way bad."

He told the Grevings that the bone must grow into the implant, and that will take time. As for the trip to Texas, he said, go ahead.

The couple beamed.

"Well, I really want to thank you," the farmer said.

Sekundiak told him to be true to his follow-up appointments.

"You can never divorce me," Sekundiak said.

"I don't want to," Greving said.

Contact the writer:

402-444-1123, rick.ruggles@owh.com

Graphite carbon found in metal-on-metal hip implant study

NIH researchers uncover clues related to metal-on-metal hip implants

"Graphite carbon is a key element in the lubricating layer that forms on metal-on-metal hip implants.  The lubricant has more in common with the lubrication of a combustion engine than that of a natural joint."

• research is relevant to several hundred thousand Americans undergo hip replacement each year 
• typical life of implant is more than 10 years but material improvement is needed for patients younger than age 60
• prior to this study, it was thought that proteins from the body entered the joint and adhered to the implant 

Foreign Medical Device Implant Registry Study: New Not Better

New York Times: New Models of Hip and Knee Implants Not Better Study Finds / Barry Meier

"The study, which draws on data from Australia's orthopedic registry, covered implants introduced from 2003 to 2007 and was published this week.  The findings are significant for patients in the United States because many of the new designs, like so-called metal-on-metal hips, are widely used here.  Those implants, which have both a ball and cup made of metal, are expected to fail prematurely in tens of thousands of patients rather than lasting 15 years or more as artificial joints are supposed to do."

• no new implant performed better than older ones
• many new implants performed worse than older ones
• newer implants tended to cost more
• deficiencies in regulation must be addressed
• focus on patient safety will save billions of dollars
• an orthopedic registry can be a useful tool to identify implant problems
• surgeon bias is widespread
• regulation of "innovation"  protects patients and companies 

 

Medical Device Double Jeopardy?

Link to NEJM here. Breast Implant disappears during Pilates exercise.

This very brief article remarks upon treatment of a Maryland woman who had breast implant prosthesis (breast cancer).  She reported that her breast implant was swallowed into her body and disappeared.  The medical providers located the implant and added surgical mesh!  

Surgical mesh is a medical device that is being questioned for its' safety and effectiveness, yet surgeons continue to implant it into unsuspecting patients. www.truthinmedicine.us.com

What protections will she be provided if the surgical mesh proves to be a problem rather than a solution?  That is what Congress is responsible for determining:  right now, the charter of the FDA disallows patient stakeholder voting rights, there is no independent, accessible post-market data registry and legal protections unfairly favor the medical provider and medical device industry.   Patients beware!

Study finds improved patient health care delivery a must for orthopedic surgeons

Chair of Orthopedic Surgery at Mayo Clinic: Daniel J. Berry

Study finds improved patient health care delivery a must for orthopedic surgeons

ORLANDO, Fla. — For the specialty to survive, orthopedic surgeons must provide patients with new methods ofhealth care delivery in the form of improved safety, value and care, according to a presentation at the Current Concepts in Joint Replacement 2011 Winter Meeting, here. “We will not thrive as a profession if the population cannot afford our care,” Daniel J. Berry, MD, said. In his presentation, Berry, who chairs the orthopedic department at the Mayo Clinic in Rochester, Minn., outlined five ways that he believes orthopedic medicine can “out distance” other specialties: innovations in patient safety, fostering research and development, creating affordable and accessible care, improving quality of work, and attracting the best talent to the profession.

The tendency to rush to adopt new technology has hurt the specialty in the past, Berry noted, citing the recent metal-on-metal hip implant recalls as an example of this problem.

The public is also aware of these controversies, he said. Berry also mentioned that surgeons should collectively fight for more funds for musculoskeletal research, noting that such scientific efforts are under-funded in orthopedics compared with other medical professions, despite the prevalence of orthopedic care throughout our society. “We keep people working [and] we keep them independent,” Berry said. Reference: Berry DJ. Optimizing health care delivery: best in class. Paper #35. Presented at the Current Concepts in Joint Replacement 2011 Winter Meeting. Dec. 7-10. Orlando, Fla. Disclosure: Berry receives royalties from DePuy.

Health Leaders article: Docs Need to Blow the Whistle on Fraud

Doctors need to blow the whistle on fraud. (Link to Health Leaders/Joe Cantalupe article)

Docs Need to Blow the Whistle on Fraud

Joe Cantlupe, for HealthLeaders Media , December 15, 2011

Without skipping a beat, a huge medical device manufacturer allegedly found an easy way to influence physicians to use that company's brand of defibrillators and pacemakers.

How? By giving doctors kickbacks, the Justice Department says.

In a settlement agreement reached this week, Medtronic Inc. of Fridley, MN, agreed to pay $23.5 million to resolve allegations that it used physician payments as kickbacks to "induce doctors" to implant the company's products.

Daniel R. Levinson, inspector general of the U.S. Department of Health and Human Services, noted in a statement, "Patients trust that decisions to implant certain pacemakers or other medical devices are based on their own health interests and not influenced by kickbacks."

This kind of news can certainly erode patients' trust in doctors. And there's more.

The Justice Department's announcement about the Medtronic settlement was barely 24 hours old when, in a separate, unrelated case, several dozen federal and state investigators swooped into a radiology and diagnostic facility in Orange, NJ, arresting 13 doctors and a nurse practitioner in a cash-for-tests referral scheme.

"When physicians take kickbacks that influence how they practice medicine, it has the potential to taint the medical advice and care that is provided to their patients," Office of Inspector General Special Agent Tom O'Donnell said in an official statement.

Bribes and kickbacks are only part of the problem in healthcare fraud, which includes identity theft, illegal prescription drug sales, and countless other areas of wrongdoing. These transgressions do occasionally involve doctors.
The wrongdoing at Medtronic unraveled after two whistleblowers sued the company and alerted authorities to the problem, according to the Justice Department.

Because of their role, the do-gooders will receive a tidy sum of more than $3.96 million. Neither whistleblower was a physician. Justice Department officials declined to comment when I asked how many physicians may have been involved in the Medtronic case.

That's too bad. Physicians need to step up to ferret out fraud, not be a part of it. Most are honest, upholding the profession's reputation. The actions of a few can cast a long, foreboding shadow on the legions of honorable practitioners.

Shortly after he resigned as head of CMS, Don Berwick, MD, touched on the fraud issue in a conversation with journalists. In his 18-month tenure, Berwick said he found that fraud, waste, and abuse were more significant problems than he previously thought. Apparently, Berwick didn't realize how widespread the problem really is.

That's surprising. There were plenty of clues before Berwick stepped into his office in April 2011 that fraud was a big and burgeoning trouble spot in healthcare. Now that he has left, CMS appears to be struggling still with how to uncover fraud, as the behemoth agency tries to raise quality standards under healthcare reform, while also dealing with inadequate data systems that would improve its watchdog functions (more on that in a moment).

As for Berwick, one federal official who is knowledgeable about these decisions told me the CMS leader "was concentrating on other things," such as forming Accountable Care Organizations.

It seems that fraud in Medicare and Medicaid will be a major challenge for Berwick's successor to overcome. Federal officials want physicians to play an instrumental role in helping to stop fraud, and they're backing up that desire with the power of the dollar. Healthcare reform provides fiscal incentives to do so. Berwick had estimated that fraud, waste, and abuse total about $30 billion a year for the whole healthcare system, including up to $10 billion just within CMS.

The week Berwick talked about fraud with journalists, Gary Cantrell, assistant inspector general for the Office of Inspector General (OIG) at HHS, addressed the extent of Medicaid fraud in Congressional testimony. His comments didn't make headlines, but they were revealing nevertheless, as he described the widespread scope of Medicaid fraud, including prescription drug abuse and problems in the home health care services arena.

"We are now seeing more Medicaid fraud cases involving home health services than any other single program area," Cantrell told two House subcommittees. One investigation of a leading home health services company, Maxim Healthcare Services, led to a $150 million settlement of fraud charges.

Fraud in home health services is not a new problem. There have been repeated warnings that CMS needs to address the issue.

"Auditors have been concerned about fraud in home health care for years, but the problem never seems to get solved," according to a 2009 report from the Cato Institute, a think tank in Washington, D.C.

As in Medicare, Cantrell identified "persistent fraud trends" involving misuse of prescription drugs in Medicaid. He referred to a case in Washington state in which a physician established connections with local heroin users and wrote medically unnecessary prescriptions for narcotics, including Oxycodone and Vicodin.

Cantrell also revealed that the OIG has a list of the 10 "most wanted" healthcare fugitives. Among them: an Illinois physician, Gautam Gupta, MD, sought for allegedly defrauding Medicaid and private insurance companies of more than $24 million, through weight loss clinics.

Whether it's improper billing procedures or weight loss fraud, Medicaid investigations are hampered by a lack of "national-level, timely Medicaid data," he says. While the Medicare databases are efficient, Medicaid's Medicaid Statistical Information System (MSIS) is the only source of nationwide Medicaid claims, but it is typically 1½ years old when released by CMS to users for data analysis purposes, which renders it ineffective for investigative purposes. "In law enforcement, a 1½-year time lag is an eternity," Cantrell says.

Essentially, the OIG is waiting for CMS to get its act together.

In the meantime, Cantrell says he's hoping that providers and patients get more involved in thwarting fraud. The OIG's website offers a tip line for fraud cases. And the OIG recently published a white paper, A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse.

This roadmap offers a journey worth taking, because the integrity of the profession is at a crossroads.

---

Joe Cantlupe is a senior editor with HealthLeaders Media Online. He can be reached atjcantlupe@healthleadersmedia.com.

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Back

Insurance decision delayed is treatment denied for patients . . . profit for industry.

Link to Huffington Post story about insurance shenanigans that hurt patients/consumers.
Tom Wilson, CEO of Allstate, earned $9.3 million in 2010.

Insurance Claim Delays Deliver Massive Profits To Industry By Shorting Customers

First Posted: 12/13/11 05:24 PM ET Updated: 12/13/11 05:52 PM ET

WASHINGTON -- Unlike many other businesses, the insurance industry is bound by law to act in good faith with its customers. Because of their protective role in the lives of ordinary citizens, insurers have long operated as semi-public trusts. But since the mid-1990s, a new profit-hungry model, combined with weak regulation, has upended that ancient social contract.

"Claims has been converted into a money-making process," said Russ Roberts, a New Mexico-based management consultant and former business professor at Northwestern University who has studied the insurance industry's evolution from a service business to a profit-driven machine.

The change started when consulting giant McKinsey & Company sold Allstate and other leading insurance companies on a new system to boost the bottom line: Rather than adjusting claims the traditional way, which gave claims managers wide latitude to serve customers, insurers embraced a computer-driven method that produced purposefully low offers to claimants.

Those who took the low-ball offers received prompt service, while those who didn't had their claims delayed and potentially were reduced to bringing expensive lawsuits to fight for their benefits. As former Allstate agent Shannon Kmatz told the American Association for Justice, the trial lawyers' lobby, the strategy was to make claims "so expensive and so time-consuming that lawyers would start refusing to help clients." The strategy was dubbed "Good Hands or Boxing Gloves" by the consultants, riffing on Allstate's advertising slogan.

McKinsey, which was reportedly hired by Allstate in 1992, prepared about 12,500 PowerPoint slides to present its plan. The slides were introduced in litigation in 2005, when the insurer turned them over under a temporary protective order. David Berardinelli, a New Mexico-based trial lawyer who was working on the case, detailed the slides in his 2008 book, "From Good Hands to Boxing Gloves: The Dark Side of Insurance."

McKinsey's strategy put profits above all. One slide in the McKinsey presentation illustrated this philosophy by painting the insurance business as a zero-sum game: "Improving Allstate's casualty economics will have a negative economic impact on some medical providers, plaintiff attorneys, and claimants. ... Allstate gains -- others must lose."

Allstate has certainly gained: It made $4.6 billion in profits in 2007, double its earnings in the 1990s. The stunning increase, said Russ Roberts, came through "driving down loss values to an average of 30 percent below the actual market cost" -- that is, paying dramatically less on claims.

"An insurance company can make a lot of money on the small claims," said Jay Feinman, a professor at Rutgers University School of Law, "because if you save a few dollars on a huge number of claims, it's worth more than saving a lot of dollars on a very small number of claims."

Allstate is the best-known user of the McKinsey model, topping the list of the "Ten Worst Insurance Companies in America" published by the American Association for Justice. But Allstate's rise in profits has led most of the industry to adopt the same approach. McKinsey has worked with State Farm, another insurance giant, and other companies in redesigning their claims systems. Feinman cautioned in his book "Delay, Deny, Defend" that the two major names "are just the largest players in the industry ... [the ones] whose involvement with McKinsey & Company in the transformation of claims is the best documented."

Roberts told HuffPost that, by his estimate, the companies that take in 70 percent of total insurance profits in the United States now abuse their obligations to their policyholders. When Allstate CEO Tom Wilson earned $9.3 million last year, he was not even on the top 10 list of best-paid insurance executives, compiled by New York Law School's Center for Justice and Democracy. (The top 10 list was led by William R. Berkley of W.R. Berkley, who made $24.6 million in 2010.)

Yolande Daeninck, spokeswoman for McKinsey & Company, said, "In line with our firm's longstanding policy to not discuss our client work, we decline to comment."

A HOUSE BURNS DOWN

According to an unpublished Harris Interactive Poll conducted in September, 16 percent of surveyed adults have experienced financial hardship while waiting for an insurance claim to be settled or know someone who has. The same poll found that 59 percent of adults believe that most insurers intentionally delay claims -- and those with an income of $35,000 or less were more likely to agree.

With 15.3 percent of Americans -- about 46.2 million people -- living in poverty, close to 10 percent unemployment, and roughly 2 million people who've been looking for work for more than two years, Allstate's business model is profiting off many consumers at their most vulnerable. A claim delayed by even a month can spell financial disaster for a family. As a National Bureau of Economic Research study found, about 25 percent of Americans could not come up with $2,000 in a 30-day period.

Madeleine Burdette, a retiree, is an Allstate customer who reported her experience on the popular website AllstateInsuranceSucks.com. When her Georgia home burned in November 2010, Burdette was in Ohio, where she lives most of the year. She said the fire marshal in Georgia told her that her house would have to be torn down. "The entire middle of the house was gone," Burdette said. "It took out everything. Just the outside walls were left untouched."

The next day, she said, Burdette's Allstate adjuster told her the house could be repaired. Allstate also said it would have to do a thorough investigation to determine if the fire was caused by arson. If it was arson, the adjuster told Burdette, Allstate would not pay for any damages. According to former employees, such investigations are a common practice at Allstate and are encouraged by supervisors as a way to avoid paying claims quickly.

Burdette, who lives on her Social Security checks, flew from Ohio to survey the damage herself. While in Georgia, she contacted public adjuster Anita Taff. Public adjusters serve as advocates for individuals who feel they need another set of eyes on a claim. Taff met with Burdette at the house, Burdette said, and discussed the damage with the contractor Burdette had hired. Upon returning to Ohio, Burdette spoke with Taff over the phone to find out what her impression was. Burdette said Taff warned her that the contractor might go along with Allstate's insistence that the house could be repaired.

"I believe [delaying claims] is an effort to put the squeeze on policyholders," Taff told HuffPost. She explained that while a claim is being held up, the insurance company may stop paying the policyholder's additional living expenses, forcing the policyholder to cover mortgage and rent entirely out of pocket. "That's something that many people cannot afford to do, so they're forced to take a lower settlement," Taff said.

Burdette said she immediately called the contractor and told him not to go near her house. According to Burdette, she received a phone call within 10 minutes from her Allstate adjuster asking her not to hire Taff or any other public adjuster. "He said, 'If you hire a public adjuster, I'm going to deny and delay this claim for as long as possible,'" Burdette told HuffPost. Taken aback, she then asked if it wasn't in his best interest to settle the claim. "Not really," he replied, according to Burdette.

Although the Allstate adjuster eventually agreed to work with Taff on Burdette's claim, her troubles did not end. The contractor who had been banned from her property nevertheless worked on the house and billed Allstate for $22,000. Burdette had explicitly told Allstate not to pay the contractor a dime, she said, but the company paid him under her policy anyway. The contractor couldn't be reached for comment.

More than a year later, Burdette's home is still being repaired and Allstate refuses to reimburse the $22,000. She consulted four different lawyers to see if she had a legal case. While she said they all agreed that she was entitled to reimbursement, she said they also agreed that she lacked the funds to fight the insurance giant. "They told me, 'You'll run out of money,'" she said.

NO FLUKES

Roberts, the management consultant, said that companies like Allstate attempt to pass off claims delays as fluke occurrences. But, he said, they are actually routine and intentional products of the McKinsey system: "The Allstate/McKinsey system for 'lowballing' claims payments ... is driven by the claims performance management and pay systems from the top to the bottom of the organization."

Feinman, the Rutgers law professor, also suggested the deck is stacked against individuals who make claims. "You have an accident or a fire in your house. You call up the insurance company. You describe the circumstances. Maybe they send an adjuster out, and they say it's not covered, or it's covered but here's the dollar amount that we're obligated to pay you," he said. Most people, Feinman said, do not have the expertise "to know whether or not that's right."

Allstate spokeswoman Laura Strykowski said the company can't comment on specific cases because of privacy requirements, but considers its claims process both legal and effective. "Our customers and claimants receive prompt and courteous claim service and our goal is to settle each claim fairly and efficiently," she wrote to HuffPost. "As a regulated company, Allstate's claim practices are available to and regularly reviewed by state departments of insurance."

But experts like Feinman argue that insurance regulation has become little more than a fig leaf. State insurance departments are usually understaffed and overwhelmed. And even if they had the legal firepower to contend with giant insurance companies, Feinman said, "the regulators are closer to the industry than they are consumers." Eleven of the past 15 presidents of the National Association of Insurance Commissioners (NAIC) went on to work for the insurance industry after leaving office, while a 17-year study from two Georgia State University professors found that around half of state-level insurance commissioners did so as well.

When combined with penalties that Feinman described as "laughably low" in many states, this close relationship means that regulation does not provide an effective check on insurance companies. And state governments themselves have incentive to place consumers on the backburner. Because insurance taxes are a major source of revenue for the states, said Roberts, insurance oversight commissions are usually more concerned with keeping companies solvent than resolving the problems of policyholders.

With the exception of the federal Affordable Care Act, insurance is regulated on a state-by-state basis. Although most states set a specific timeline for how quickly an insurance company must initially respond to claims, there is much more leeway when it comes to settling those claims. For example, in Missouri, an insurer must acknowledge receipt of a claim within 10 days and either pay or deny it within 15 days of receiving all necessary documentation. However, if the insurer decides it needs more time to investigate, it may keep delaying as long as it updates the policyholder every 45 days. In Georgia, where Burdette's house burned down, the insurer must notify the policyholder if it will affirm or deny a claim within 60 days. However, the insurer does not have to settle the amount it will pay within that period. Many states have similar provisions that allow insurers to put off paying claims indefinitely.

According to NAIC data, claim delays have long been the most frequent cause of policyholder complaint. As of Nov. 28, 2011, the NAIC had received 11,053 delay-related complaints this year alone, comprising almost a quarter of the year's total complaints. These data only reflect confirmed complaints -- the ones that the state insurance commission has investigated -- so the actual number of delayed claims is likely much higher.

Complaining to state regulators about the insurer's delay is always an option, but its effectiveness is questionable at best. "I have not seen it be successful," said Taff.