Regulatory Watchdogs Complicit With Medical Device Industry: A Case In Mesh

NHS and medical devices regulator tried to limit scandal over vaginal mesh implants

Minutes show NHS England and MHRA worked together to try to ‘avoid media attention’ of problems faced by women

Denis Campbell and Carmen Fishwick

Friday 21 April 2017 11.19 EDT

Last modified on Friday 21 April 2017 12.43 EDT

NHS bosses and the watchdog that oversees medical devices tried to limit public exposure of the scandal over vaginal mesh implants that have harmed hundreds of women.

Minutes of a meeting held in October 2016 show that NHS England and the Medicines and Healthcare Products Regulatory Agency (MHRA) agreed to “avoid media attention” over the implants, despite the fact they were seeking to encourage patients to report any complications.

More than 800 women sue NHS and manufacturers over vaginal mesh implants

The document, obtained by the Press Association, records an agreement to “take the press element out” of the “yellow card” campaign to record adverse reactions experienced by vaginal mesh patients, suggesting that it could be incorporated into a wider effort, “of which mesh is one element, to avoid media attention on mesh”.

The apparent cooperation between NHS England and the MHRA to minimise media focus on the debilitating problems increasingly associated with the implants appears to breach the NHS’s duty – reiterated regularly by the health secretary, Jeremy Hunt – to be open and transparent over patient safety failings.

NHS England and the Department of Health both refused to comment on the minutes of the meeting.

MHRA officials said the minutes were more than six months old and the conversation noted in them was one of many conversations held during one of many oversight meetings about the issue.

The campaign, when it begins, will aim to ensure that both women and healthcare professionals know that there is no time limit on reporting complications with mesh devices. It will include engagement with the media, officials stressed. 

An MHRA spokeswoman said: “Patient safety is our highest priority and we are committed to help address the serious concerns raised by some patients. MHRA strongly encourages the reporting of issues related to all medical devices. When promoting reporting it is important to strike a balance between causing undue concern to patients who may benefit from a procedure and making sure they are aware of the potential complications.”

One possible reason for the NHS to want to limit exposure of the issue could be to reduce the number of potential lawsuits faced by the health service.

More than 800 women are suing the NHS and the manufacturers of the implants after suffering serious complications, it emerged this week. Some women reported that implants had cut into their vaginas, with one woman saying she was left in so much pain that she considered suicide. Others have been left unable to walk or have sex, according to the BBC.

Vaginal mesh implants are used to treat incontinence after childbirth or pelvic organ prolapse, where the womb or bladder bulge against the walls of the vagina. Between 2006 and 2016, more than 11,000 women in England were given the implants to treat prolapse or incontinence, NHS data shows.

About 11% to 12% of users have reported problems, while lawsuits in the US have already seen about $2bn (£1.5bn) paid to affected women.

Campaigners say that hundreds more women have come forward after learning of the group planning to sue.

What's your experience of vaginal mesh implants?

Kath Sansom, who runs the campaigning website and Facebook group Sling the Mesh, says the number of women contacting her has risen from a few people a day to more than 200 in the past 24 hours.

“It’s always the same story,” she said. “There are so many women who were told it was just them, that they were a one-off. They can’t believe there are others out there. So many people are told it’s back pain, endometriosis, gall bladder pain, scar tissue. And so many of them accept it, you trust medical professionals.”

Data from the MHRA, which has been looking at the issue since 2011 after complaints from women, shows more than 1,000 adverse incidents have been reported in the past five years. 

Despite the problems that have emerged the MHRA insists the best current evidence supports the continued use of the implants to resolve health conditions that could themselves cause serious distress to patients.

A report into the issue from a working party led by NHS England admits there is a huge lack of data on complications from the devices. Published studies on mesh implants do “not tell the whole story” and there are gaps in NHS knowledge about their safety, it added.

https://www.theguardian.com/society/2017/apr/21/nhs-vaginal-mesh-implants-scandal-suppress-media

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Convicted Corporate Criminal Johnson & Johnson (Acclarent) kicks employees under jail-time bus.

Melayna Lokosky Wants to Take Down the Sociopathic Business Model

By Editor Filed in News November 30th, 2016 @ 10:21 am  Corporate Crime Reporter

In July, the former CEO and the former VP of sales of Johnson & Johnson unit Acclarent, Inc., a medical device company, were convicted by a federal jury in Boston in connection with distributing adulterated and misbranded medical devices.

Melayna Lokosky

In the same month, the company paid $18 million to resolve allegations that the company caused health care providers to submit false claims to Medicare and other federal healthcare programs by marketing its sinus spacer product for use as a drug delivery device without U.S. Food and Drug Administration (FDA) approval of that use.

Behind both cases – Melayna Lokosky – a former sales rep for the company.

She blew the whistle on the wrongdoing that led to the $18 million recovery and the criminal prosecutions.

Now she is on a campaign against what she calls the sociopathic business model.

Lokosky was a sales rep for Acclarent and was making $250,000 a year.

In 2011, she decided she would blow the whistle on the company’s fraud.

She laid out the case for the government.

Acclarent sold a variety of medical devices used in sinus surgeries, including a device known as the Relieva Stratus MicroFlow Spacer.

In 2006, Acclarent received FDA clearance to market the Stratus as a spacer to be used only with saline to maintain sinus openings following surgery.

The government alleged that Acclarent intended for the Stratus to be used instead as a drug-delivery device for prescription corticosteroids, including Kenalog-40, and that the device was specifically designed and engineered for this use.

Acclarent marketed the Stratus as a drug delivery device even after the FDA rejected the

company’s 2007 request to expand the approved uses for the Stratus.

Acclarent employees trained physicians using a video that demonstrated the Stratus being used with prescription corticosteroid Kenalog-40 and also used a white, milky substance resembling Kenalog-40 when demonstrating the Stratus.

In 2010, Acclarent added a warning to its label regarding use of active drug substances in the Stratus. The government alleged that Acclarent nonetheless continued to market the Stratus for drug delivery.

By May 2013, Acclarent discontinued all sales of the Stratus and the company agreed to withdraw all FDA marketing clearances for the device, which is no longer commercially available in the United States.

On July 20th, Acclarent’s former Chief Executive Officer, William Facteau, 47, of Atherton, California and former Vice President of Sales, Patrick Fabian, 49, of Lake Elmo, Minnesota were convicted following a six-week jury trial of 10 misdemeanor counts of introducing adulterated and misbranded medical devices into interstate commerce.

As a result of Lokosky’s whistleblowing, the government recovered $18 million. Lokosky’s share — $3.5 million.

“That number is not in my bank account, I can assure you,” Lokosky told Corporate Crime Reporter in an interview last week.

Because of taxes and your lawyer’s fee?

“Correct,” Lokosky said. “Reporters always want to know — what does the whistleblower get? It makes us look like we were greedy. I was making $250,000 a year. I would have made more money if I kept my mouth shut. That’s not why I did this.”

Taxes are 40 percent. The lawyer gets 40 percent. You are down to a couple of years’ salary.

“Less,” she says.”That’s not a complaint. That’s a reality. People should know that if you are going to go forward. The Department of Justice needs to fix it also. You are not talking about pharmaceuticals where you are talking about a billion dollars in damages. It’s not there. The Department of Justice says you are awarded that. That’s bullshit. I earned every penny of that. I was without a job for over three years.”

Facteau and Fabian were convicted at trial.

What was their sentence?

“They haven’t been sentenced yet. That comes January 11, 2017 in Boston.”

Did you know them?

“Yes. I worked with them.”

Did you testify against them?

“I could not because I was the whistleblower. I was in the courtroom every day with the exception of two days for six weeks.”

You were staring them down?

“It was mainly to see that what was being said was accurate. I don’t have an axe to grind with them. They are puppets. They got pinched. They didn’t have enough information to flip on higher ups. That is what happened.”

Was there a criminal case brought against a company?

“No. That’s the other thing wrong with the process. Once you file a whistleblower complaint, it goes behind closed doors. All of those I worked with at the Department of Justice and the FBI worked their asses off to get this done. And then it goes to DC and a settlement is decided on behind closed doors with Covington & Burling — Johnson & Johnson’s attorney — and the Department of Justice. And of course, the lawyers walk from the Department of Justice to Covington for a job afterwards.”

Who was the attorney for Johnson & Johnson?

“Ethan Posner. How many corporate integrity agreements does the company get to sign before the government realizes that the company has no integrity?”

What is your current work?

“I’m starting a consulting company. I’m consulting with companies about how to become more profitable and do it ethically.”

You have created something called the sociopathic business model. What is it?

“It’s a tool or checklist to help people to determine whether or not they are being abused by an institution. Once you see this pattern, you cannot unsee it.”

“Companies are encouraging, replicating and rewarding unethical and illegal behavior and removing those who expose that. The checklist helps people see if you are getting inconsistent and contradictory language to action. Regulatory is telling you one thing. Sales and marketing is telling you another. That’s a trigger for a sociopathic business model.”

“If a company is covering up sexism, retaliation, racism — in 99 percent of the cases it means they are engaged in far greater unethical and illegal activity.”

“This is laid out on my web site — killingmycareer.com. I’m the first whistleblower under seal to start a blog in their own name about their own case without breaking the seal. According to the Department of Justice, I broke the spirit of the seal, but I did not break the seal. They were not happy about my blog. I got called back to the principal’s office in Boston and was told that I needed to take it down. I told them no — I have a First Amendment right. I will not take this down.”

“If the criminals can use the First Amendment, why don’t the people defending this law get to use it?”

[For the complete q/a transcript of the Interview with Melayna Lokosky, see 30 Corporate Crime Reporter 46(12), November 28, 2016, print edition only.]

http://www.corporatecrimereporter.com/news/200/melayna-lokosky-wants-to-take-down-the-sociopathic-business-model/

Criminal Fraud Prosecutions of Healthcare Corporations and Executives May Increase

Tenet probe shows feds' growing interest in criminal fraud cases 

By Lisa Schencker  | May 14, 2015  (FiDA highlight)

The U.S. Justice Department has launched a criminal investigation into previously disclosed allegations that Tenet Healthcare Corp. hospitals paid kickbacks for maternity referrals. The probe reflects a growing appetite among prosecutors to pursue criminal charges in corporate healthcare fraud cases. 

Tenet spokesman Donn Walker declined to comment on the issue, saying only, “We have disclosed this investigation in our public filings for some time.”

In a filing to the Securities and Exchange Commission this month, Tenet said four of its hospitals in Georgia and South Carolina are under criminal investigation related to a whistle-blower lawsuit filed in 2009. 

The Justice Department, meanwhile, recently adopted a procedure that ensures that its Civil Division shares all new whistle-blower complaints with its Criminal Division to allow the department to conduct parallel investigations. 

In Tenet's case, the civil complaint alleges that the hospitals paid kickbacks to a company called Hispanic Medical Management to send them pregnant women from the company's prenatal clinics to deliver their babies. Those patients—most of whom, according to the complaint, were in the country illegally—would then be eligible for emergency Medicaid services. 

The government also alleged the hospitals included those patients obtained from tainted referrals when seeking additional Medicare funds intended to support hospitals that treat large numbers of low-income patients. 

Tenet has countered in court documents that its hospitals' contracts with Hispanic Medical Management were meant to “create a culturally sensitive and attractive prenatal environment for women” who might deliver their babies at the hospitals. 

The management company provided translators and community outreach and helped families apply for emergency Medicaid coverage, according to Tenet. The government's allegations “rest on the hospitals' open desire to care for a deserving, but underserved population and the attractive solution they designed to do so,” the company said. 

Two individuals—a former Hispanic Medical Management owner and a former employee of one of the Tenet hospitals—have been charged criminally in the matter. The civil suit has been put on hold pending further proceedings in the criminal case, according to Tenet's SEC filing.

Tenet said the Justice Department informed the company on April 10 that the four hospitals named in the civil suit are also under criminal investigation. Those hospitals are Atlanta Medical Center; Hilton Head (S.C.) Hospital; North Fulton Hospital, Roswell, Ga.; and Spalding Regional Medical Center, Griffin, Ga.

Criminal investigations and charges in big Medicare and Medicaid fraud cases are becoming increasingly common, said Sheryl Skolnick, director of research and a healthcare analyst at Mizuho Securities USA. Historically, criminal prosecution was more common in smaller Medicare and Medicaid fraud cases, she said. It's more difficult to bring criminal charges because the standard of proof is higher than in civil cases.

“You have to prove intent, which at a corporate level means you have to have some level of senior management involved and some sort of pattern that you can essentially say this was not just a fluke of a one-off situation but rather this was part of a strategy or policy or intent of the organization to bill in this way,” Skolnick said.

But the Justice Department now seems to be extending those criminal investigations to large, publicly traded corporations, she said. “It was pretty much just a matter of time before they would move up the chain now that they have some success under their belt—see what's cooking at the corporate level." 

Leslie Caldwell, the Justice Department's assistant attorney general for the Criminal Division, said as much during an address in September 2014 when she called whistle-blower cases “a vital part of the Criminal Division's future efforts.”

Caldwell reiterated the division's commitment to fraud cases, including those by healthcare executives, during remarks Thursday at the American Bar Association's 25th Annual National Institute on Health Care Fraud.

Under a new policy, she said, all new whistle-blower complaints in the Civil Division are shared with her division. “Parallel investigations maximize the department's ability to secure the appropriate outcome in each matter—whether it be financial penalties, restitution, federal program exclusion or criminal prosecution of both corporations and individuals,” Caldwell said Thursday.

Caldwell pointed to convictions against more than 20 individuals in a fraud case against the American Therapeutic Corp. as an example of a recent complex criminal healthcare fraud case.

Patrick Burns, co-director of the Taxpayers Against Fraud Education Fund, a not-for-profit organization partly funded by whistle-blowers and law firms representing them, said prosecutors are seeking to maximize the financial returns for the government in large cases, especially as the recovery amounts climb. 

Whistle-blowers are entitled to a portion of whatever money the government is able to recover under the False Claims Act. That's not true in criminal cases. 

“As the amount of money has gone up, the Department of Justice has looked for a way to manage down whistle-blower awards,” Burns said.

Burns said he doesn't believe the approach has been much of a deterrent because the Justice Department rarely holds individuals accountable for the fraud by excluding them from Medicare and Medicaid and sending them to prison.

“Yes, we need to recover America's stolen billions but we also need to bring personal pain to the executives who design, operationalize and greenlight these massive frauds,” Burns said.

But Skolnick said the rise in criminal investigations means companies must be “increasingly vigilant." 

In a separate matter, Tenet also disclosed this month that it is in discussions with the Justice Department over a potential settlement involving its use of implantable defibrillators at 56 hospitals from 2002 to 2010. 

The government has spent years investigating suspected overuse of the devices at hospitals across the country. The investigation has yielded settlements with just a few hospitals so far: Irvine, Calif.-based St. Joseph Health; the now defunct MedCath; and Catholic Health Initiatives. None of those companies admitted liability as part of their settlements.

The investigation has been controversial among doctors, who say Medicare's coverage rules for the devices are not aligned with other medical guidelines.

http://www.modernhealthcare.com/article/20150514/NEWS/150519933?utm_source=modernhealthcare&utm_medium=email&utm_content=externalURL&utm_campaign=am

Lisa Schencker

Lisa Schencker

Lisa Schencker covers legal issues and enforcement agencies. Before joining Modern Healthcare in 2014, she was an education reporter for the Salt Lake Tribune and before that wrote for the Bakersfield Californian and the Scranton (Pa.) Times-Tribune. She has bachelor’s and master’s degrees in journalism from the University of Illinois at Urbana-Champaign.

$10M Settlements to whistleblowers do not prevent patient harm: they protect the perpetrators!

UC OKs paying surgeon $10 million inwhistleblower-retaliation case

The settlement ends a case brought by the ex-head of UCLA's orthopedic surgery department, who says the medical school allowed doctors to take industry payments that may have compromised patient care.

By Chad Terhune          Los Angeles Times     FiDA highlight

April 22, 2014, 8:27 p.m.

University of California regents agreed to pay $10 million to the former chairman of UCLA's orthopedic surgery department, who had alleged that the well-known medical school allowed doctors to take industry payments that may have compromised patient care.

The settlement reached Tuesday in Los Angeles County Superior Court came just before closing arguments were due to begin in a whistleblower-retaliation case brought by Dr. Robert Pedowitz, 54, a surgeon who was recruited to UCLA in 2009 to run the orthopedic surgery department.

In 2012, the surgeon sued UCLA, the UC regents, fellow surgeons and senior university officials, alleging they failed to act on his complaints about widespread conflicts of interest and later retaliated against him for speaking up.

UCLA denied Pedowitz's allegations, and officials said they found no wrongdoing by faculty and no evidence that patient care was jeopardized. But the UC system paid him anyway, saying it wanted to avoid the "substantial expense and inconvenience" of further litigation.

As department chairman, Pedowitz testified, he became concerned about colleagues who had financial ties to medical-device makers or other companies that could unduly influence their care of patients or taint important medical research.

He also alleged that UCLA looked the other way because the university stood to benefit financially from the success of medical products or drugs developed by its doctors.

One of the orthopedic surgeons that Pedowitz complained about testified at trial about receiving $250,000 in consulting fees in 2008 from device maker Medtronic. In memos to university officials, Pedowitz raised concerns about the financial dealings of other doctors as well.

Inside the courtroom Tuesday, Pedowitz sat in the front row with his wife and daughter as the judge told jurors that a settlement had been reached. He said he felt vindicated by the outcome.

"These are serious issues that patients should be worried about," Pedowitz said in an interview. "These problems exist in the broader medical system and they are not restricted to UCLA."

The seven-week trial in downtown Los Angeles offered a rare glimpse into those potential conflicts at a time when there is growing government scrutiny of industry payments to doctors.

Starting this fall, the federal Physician Payments Sunshine Act, part of President Obama's healthcare law, requires public disclosure of financial relationships between healthcare companies and physicians.

Many doctors and universities defend long-standing industry arrangements as essential for carrying out cutting-edge research and top-flight medical education.

In a statement Tuesday, the UC regents said they "resolved this lawsuit to end a prolonged conflict and permit UCLA Health Sciences to refocus on its primary missions of teaching, research, patient care and community engagement."

The statement added that "multiple investigations by university officials and independent investigators concluded that conduct by faculty members was lawful. Patient care was not compromised."

This latest settlement eclipses a $4.5-million payout the UC regents made last year to resolve a racial discrimination lawsuit filed by another UCLA surgeon.

Pedowitz, as part of his settlement, left the UCLA faculty, effective Tuesday. He had agreed to step down as department chairman in 2010 after initially voicing his concerns to top UCLA officials. He filed a whistleblower retaliation complaint in March 2011.

Experts in medical ethics say the UCLA case shows much more needs to be done within academia and by government regulators to address potential conflicts of interest in medicine.

Susan Chimonas, associate director of research at Columbia University's Center on Medicine as a Profession, said some medical schools are still reluctant to take on specialists who bring in considerable money from patients, medical research and patents on breakthrough products.

"Institutions can be dependent on the money these big-earning specialties like orthopedic surgery bring in," Chimonas said. "They are the cash cows and they can set their terms. This is not the first time I've heard of medical schools having policies that are not well enforced."

In an interview last week, the chief compliance officer at the UCLA Health System flatly rejected the notion that the university didn't enforce its policies or look fully into Pedowitz's allegations. She also said industry ties are unavoidable at a big medical school and rules are in place to prevent conflicts.

"We have processes in place to identify those relationships in a transparent fashion and ensure they don't have any inappropriate influence on the actions of the university," said Marti Arvin, chief compliance officer. "In order to meet our mission, it is important we have both the brilliant minds we have at UCLA and collaboration with industry."

Arvin said the university "thoroughly and objectively investigated those allegations of noncompliance raised by Dr. Pedowitz. We were able to determine the vast majority were unsubstantiated."

She said two doctors fell short of university expectations in their handling of outside income, but there was no violation of law or university policy in either instance.

Arvin cited the case of Dr. Nick Shamie, the orthopedic surgeon who testified at trial about receiving $250,000 from Medtronic for consulting work. She said department policy at the time didn't require Shamie to send that outside income through UCLA's faculty compensation plan.

At trial, Pedowitz said he was deeply troubled by the large amount of money Shamie was paid. He testified that he was particularly concerned that Shamie was trying to enroll patients in a research study involving Medtronic at the time.

"I saw this as an obvious problem," Pedowitz testified.

In court, Shamie said he abided by university policy and didn't pursue the study further because finding patients was too difficult. He couldn't be reached for additional comment.

The other physician cited by Arvin for a potential shortcoming was Dr. David McAllister, vice chairman of clinical operations for the orthopedic surgery department.

He didn't report payments from the Musculoskeletal Transplant Foundation, a nonprofit tissue bank that does business with UCLA, because he didn't think disclosure was required in that instance because it didn't involve a for-profit entity, Arvin said.

McAllister also declined to comment, referring a call to UCLA.

Shortly before Pedowitz joined UCLA in 2009, the university was already facing criticism from Congress over the failure of a top spine surgeon to report nearly $460,000 in payments he received from Medtronic and other medical companies while researching their products' use in patients, government records show.

Dr. Jeffrey Wang, who left for USC Spine Center last fall, stepped down as head of UCLA's spine program in 2009 after U.S. Sen. Charles Grassley (R-Iowa) publicized his lapse in disclosure as part of a larger investigation into medical conflicts of interest.

Several patients are now suing Wang and UCLA in state court for negligence, fraud and malpractice in connection with surgeries involving Medtronic's controversial Infuse bone graft. UCLA said it doesn't comment on pending litigation. Wang couldn't be reached for comment.

Shortly after raising his concerns, Pedowitz said, he was pressured to step down as department chairman in 2010. Pedowitz said he was further retaliated against by being denied patient referrals and prevented from participating in grants and other activities.

Before UCLA, Pedowitz worked at UC San Diego and as chairman of orthopedics and sports medicine at the University of South Florida.

Mark Quigley, an attorney representing Pedowitz, said the case could have been avoided if the UC system enforced the policies it already has in place.

"What good are all the policies if they protect the wrongdoers and fail to protect the actual whistleblower?" Quigley said. "The university wanted to cover it all up."

chad.terhune@latimes.com

Twitter: @chadterhune

TX cardiac surgeon harms patients and gets wrist slap!

Texas state medical board finesMcKinney heart doctor after at least 10 improper stent implants

By DANIEL LATHROP  Fida highlight, highlight, bold

Staff Writer

dlathrop@dallasnews.com

Published: 18 September 2013 11:01 PM

Updated: 19 September 2013 01:43 PM

The Texas Medical Board has fined a McKinney heart doctor for implanting unnecessary stents into cardiac patients, according to records released by the board.

A medical board panel found that Dr. Taysir Jarrah had performed improper procedures in at least 10 cases at Heart Hospital Baylor Plano and that his “incompetence” was “likely to harm the public,” according to the order fining him.

Jarrah, who declined to comment, agreed to pay a state fine of $3,000 and must take eight hours of classes on record keeping and two hours of classes on medical ethics, an order approved Aug. 30 shows. His license has not been suspended.

The case came to light when a hospital employee reported concerns about Jarrah’s performance of stent procedures to managers, hospital spokeswoman Nikki Mitchell said.

An investigation at the hospital found that Jarrah performed 21 surgeries “without any documentation of the clinical basis for the procedures,” according to the state order.

The Plano hospital suspended his privileges and reported him to authorities, and the state then launched its investigation. The hospital did not confirm the date of those actions but said he hasn’t done a procedure at the hospital since October 2011.

Jarrah was a shareholder at the doctor-owned hospital but hasn’t been since April 2012, Mitchell said. He also resigned his privileges, according to the medical board order.

The stent procedure involves inserting a tube into weakened or blocked arteries to restore blood flow and prevent future heart attacks and aneurysms, according to the National Institutes of Health. It is not considered an invasive procedure.

Since the hospital’s investigation into Jarrah, it has begun conducting reviews of every proposed heart catheterization, Mitchell said.

Jarrah’s patients were invited to meet face-to-face with top hospital officials, who have had 20 such meetings, Mitchell said.

“All monies related to Dr. Jarrah’s potentially medically unnecessary procedures were immediately refunded to Medicare, Medicaid, the patient and/or their insurer and all refunds were made by March of 2012,” she wrote in an email to The Dallas Morning News.

About the same time Baylor suspended Jarrah, he lost his privileges at Texas Health Presbyterian Hospital Allen because he was not board-certified, Texas Health spokesman Wendell Watson said.

Most specialists are board-certified in their field, but it is not always a requirement at hospitals.

Jarrah continues to have privileges at other area hospitals, meaning he still can perform procedures on patients. As part of his agreement with the state, he will be temporarily monitored by another doctor.

Legal crime? Profit trumps patient harm.

http://www.nytimes.com/2012/11/27/business/st-jude-medical-suffers-for-redacting-a-product-name.html

NEWS ANALYSIS

A Name Blacked Out, a Reputation at Risk

By BARRY MEIER  FiDA highlight

Published: November 26, 2012

Peter Muhly for The New York Times

Dr. Ernest Lau holds a Durata lead from a St. Jude Medical Fortify ICD, an implanted heart defibrillator.

                       

IS covering a product’s name in a public document a sign that a company has something to hide? And how should doctors, patients and investors react if the product at issue is one on which peoples’ lives and a company’s fortunes depend?

Such questions now loom over St. Jude Medical after the disclosure last week that its executives had blacked out the name of a heart device component when they released a critical federal report involving the product. The value of St. Jude has since plummeted more than $1 billion, or 12 percent. But the company’s actions may have a more lasting impact on its reputation and the health of patients, some experts say.

Last week’s incident was the latest development in a controversy involving the component, an electrical wire that connects an implanted defibrillator to a patient’s heart. St. Jude officials say the wire, which is known as the Durata, is safe. But uncertainty about the company’s statements is growing, underscored by its handling of the report, which involved a Food and Drug Administration inspection of a plant that makes the Durata.

St. Jude released that report in October as part of a filing with the Securities and Exchange Commission. The F.D.A. provides device makers with the reports in an unaltered form, and they may contain criticisms of a company’s procedures.

But the version of the report that St. Jude filed with the S.E.C. left some doctors and analysts uncertain about which company product or products were at issue for a simple reason — St. Jude had redacted, or blocked out, all 20 references to the Durata in it.

Company executives said they had done so based on their “good faith” interpretation of how the F.D.A. would act if it publicly released the report under the Freedom of Information Act. But both an F.D.A spokeswoman and a lawyer who specializes in medical devices took exception with that view, saying that names of approved products typically do not qualify as the type of confidential business information that the F.D.A. would redact.

Among other things, F.D.A. inspectors found significant flaws in the company’s testing and oversight of the Durata. It was those revelations and the implications that the problems could lead to further F.D.A. action against St. Jude that led to the sharp fall last week in its stock price.

In 2005, Guidant, a device maker that no longer exists, also found itself under scrutiny. Back then, its executives decided not to tell doctors that one of its defibrillators could short-circuit when a patient needed an electrical jolt to save a life. The expert who brought the Guidant problem to light, Dr. Robert Hauser, a heart specialist in Minnesota, has also raised concerns about the St. Jude wires, adding that he believes that its executives have been less than forthright.

“Patients and physicians would appreciate more information,” Dr. Hauser said.

Craig Lassig for The New York Times

Dr. Robert Hauser, a cardiologist who studies heart devices, has raised concerns about wires in defibrillators from St. Jude.

In an earlier interview, St. Jude’s chief executive, Daniel J. Starks, said the company had hidden nothing about the Durata or another heart wire named the Riata, which it stopped selling in 2010.

“We’ve been more transparent than others,” said Mr. Starks, referring to company competitors like Medtronic.

Still, some Wall Street analysts share Dr. Hauser’s view. And if one St. Jude executive can claim credit for shaping their opinion, it would be Mr. Starks.

Earlier this year, he sought, among other things, to have a medical journal retract an article written by Dr. Hauser that was critical of the Riata. The publication refused.

Now, after St. Jude’s latest misfire, Wall Street analysts, who usually agree more than disagree, are placing wildly differing bets on St. Jude, with some valuing it at $48 a share and others at $30. On Monday, St. Jude closed at $31.86 on the New York Stock Exchange.

One of those bearish analysts, Matthew Dodds of Citigroup, said he thought the Food and Drug Administration might act soon on Durata. “I believe that a lot of their actions have made the situation worse, ” he said of the company’s executives.

A St. Jude spokeswoman, Amy Jo Meyer, reiterated the company’s stance that it had interpreted agency rules in “good faith” when releasing the redacted report about the Durata. An F.D.A. spokeswoman, Mary Long, said the agency did not consider the names of approved products to be confidential. And a lawyer, William Vodra, said that while device makers try to make a confidentiality argument for product data they consider embarrassing, like injury reports, they rarely succeed.

“In my experience, the F.D.A. consistently rejects” such arguments, Mr. Vodra wrote in an e-mail.

For patients, the dilemma may become more excruciating. The company’s earlier heart wire, the Riata, has begun failing prematurely in some of the 128,000 patients worldwide who received it. And those patients and their doctors face a difficult decision: whether to leave it in place or have it surgically removed, a procedure that carries significant risks.

St. Jude executives say that the Durata, which uses a different type of insulation than the Riata, is not prone to such problems.

And with the Durata already implanted in 278,000 people, many heart specialists certainly hope they are right.