Douglas Kohrs, AMS (American Medical Systems), Endo: Criminals Go To Jail - Executives Pay 'Settlements'

Transvaginal Mesh Settlement News: Endo ENDP Agrees to Resolve “Virtually All” Remaining Pelvic Mesh Claims, Sets Aside Additional $775 Million

Published on August 8, 2017 by Laurie Villanueva  FiDA Highlight

Endo International PLC has announced new agreements to settle “virtually all known” U.S. transvaginal mesh lawsuits involving devices manufactured by its American Medical Systems unit.

In a statement issued yesterday, the company disclosed that it would reserve another $775 million to resolve the remaining U.S. claims. With the additional reserves, Endo will have now set aside more than $2.6 billion to cover costs associated with transvaginal mesh settlements.

“While it remains possible that additional claims will be filed, we believe today’s announcement will assist most mesh claimants to move forward with their lives and will permit Endo to move forward with an even greater focus on executing against our core strategic priorities,” said Paul Campanelli, Endo’s President and Chief Executive Officer.

Under the new agreements, Endo will begin making installment payments in the fourth quarter of 2017. The installments will continue through the fourth quarter of 2019.

Roughly 22,000 transvaginal mesh lawsuits remain pending in the American Medical Systems litigation, all of which were filed on behalf of women who allegedly suffered serious complications after the devices eroded into their vaginal wall. The majority of claims are pending in a federal multidistrict litigation now underway in the U.S. District Court, Southern District of West Virginia.

Nationwide Transvaginal Mesh Litigation

Transvaginal mesh products were once widely-used to treat women suffering from pelvic organ prolapse and stress urinary incontinence. However, the U.S. Food & Drug Administration (FDA) has issued several public health alerts since 2008 detailing life-changing complications potentially associated with the implants, including mesh erosion, chronic pain, organ perforation, incontinence, scarring and adhesions, chronic infections, and more.

In 2011, the FDA reversed its previous position regarding the frequency of transvaginal mesh complications in pelvic organ prolapse repair, stating it no longer considered these adverse events to be rare. The agency also expressed doubt that such procedures offered any additional benefits compared to traditional non-mesh prolapse repair.

Last year, the FDA finalized new regulations that, among other things, reclassified transvaginal mesh intended for use in prolapse repair as a high-risk medical device. The new rules also made the implants ineligible for the agency’s 510(k) clearance program, which had previously allowed such products to come to market without first undergoing human clinical trial.

While it appears that most cases involving American Medical Systems will soon be resolved, the litigation surrounding transvaginal mesh is far from over. Johnson & Johnson and its Ethicon, Inc. subsidiary still face roughly 55,000 pelvic mesh claims now pending in state and federal courts around the country.

Other device makers involved in the massive transvaginal mesh litigation include Boston Scientific Corp., C.R. Bard, Inc., Coloplast Corp., Cook Medical, Inc. and Neomedic.

Ethicon and the other defendants have settled some pelvic mesh lawsuits, but thousands of cases remain pending.

____________________________________________________________________

https://seekingalpha.com/article/4096349-endo-international-plc-endp-q2-2017-results-earnings-call-transcript?page=2   

Earnings conference call today with global banks and investors

Paul V. Campanelli - Endo International Plc

Yesterday, the company announced that it reached agreements to resolve virtually all known U.S. mesh product liability claims. Beginning in the second quarter of 2017, we aggressively executed a settlement strategy in connection with Endo's mesh litigation. We believe that these efforts which include global resolution with all key plaintiff attorneys; case management orders issued by courts overseeing mesh cases, and our goal of having additional orders entered by other courts; our decision to stop selling mesh products in March of 2016; settlements recently entered into by other mesh manufacturers and the corresponding decrease in attorney advertising, as well as the continued running of statutes of limitations will collectively deter future filings.

Importantly, we believe these actions will assist most mesh claimants to move forward with their lives and permit Endo to move forward with an even greater focus on executing against our core strategic priorities. We increased our mesh liability accrual by $775 million in the second quarter, which is expected to cover approximately 22,000 U.S. mesh claims subject to a claims validation process for all resolved claims as well as all of the known international mesh claims and other mesh-related matters. I'll let Blaise address this more fully as he discusses our financial performance.

Blaise Coleman - Endo International Plc

Moving to slide 11, on the mesh litigation settlements, Paul already discussed we've reached agreements to resolve virtually all known U.S. product liability claims relating to the transvaginal mesh products sold by Endo's AMS subsidiary. As to the financials, in the second quarter 2017, Endo recorded a $775 million mesh product liability charge, reflecting an estimate for the expected future payments related to the resolved U.S. mesh product liability claims, the small portion of known unresolved U.S. claims and all of the known international mesh product liability claims and all other mesh related matters.

As of June 30, 2017 the mesh liability accrual was approximately $1,295 million, with $359 million in the qualified settlement funds, leaving approximately $935 million to be paid into qualified settlement funds. We expect to pay approximately $160 million to $185 million into the qualified settlement funds or directly to plaintiffs during the second half of 2017, with the remaining payments into the qualified settlement funds continuing through the fourth quarter of 2019.

Question-and-Answer Session

Operator

Yes, sir. First question comes from Liav Abraham of Citibank. Your line is now open.

Liav Abraham - Citigroup Global Markets, Inc.

Good morning. A couple of questions.  

And then secondly, on your settlement on mesh, congrats for closing this out. Just a couple of clarifications. The settlement amount that you announced, is this a post-tax amount or pre-tax? I assumed it was pre-tax, so what would the tax shield be on that? And I also noticed that the number of claims covered by the agreement that was announced yesterday of 22,000 was a lot higher than what was disclosed in Q1 of 10,500. So, was this just a significant step-up in the number of new claims in the recent past few months? Thank you.

Paul V. Campanelli - Endo International Plc

Thank you. So, I'll take the environment question, then I'll talk a little bit about the increase in claims to 22,000 and Blaise will talk a little bit about your financial question. 

Regarding the mesh update in terms of the increase from 10,000 to 10,500 to 22,000, the starting point was is when I was asked to take over as CEO in late September and early October, it took me a period of time to evaluate the current strategy that Endo was pursuing.

And then after careful consideration, looking at where we're heading in terms of looking at this for a series of years, looking at – opining with internal and external counsel, as you know, we made some disclosures early in the, I guess, mid to late second quarter would probably be better way that we disclosed at that period of time, that there was approximately 10,500 claims that had been filed or asserted or that we believed that were likely to be filed or asserted.

And that was our starting point. However, later in that period of time, we did change our strategy. I got closer involved and we had an opportunity to meet with private plaintiffs and we started to negotiate. At that point in time, we received more information that we did not have earlier in that period of time. And we learned a lot more about unfiled claims that totaled approximately 22,000 claims. So we had to make a business decision. We looked at where the company was headed, we were looking at distraction; we were looking at the amount of time that we were investing into resolving the mesh claims.

So at that point in time, we looked at the number of claims and we negotiated to $775 million accrual. And we view this as an inflection point for the company. So while it was a difficult negotiation, we are now moving forward as a company. We're focused on operational execution and we can focus on our business.

So with that, I'll pass it over to Blaise and can talk a little bit about the financial aspect.

Blaise Coleman - Endo International Plc

Yeah, sure. So, just in terms of the pre- and post-tax question, just as a remainder, as we've previously discussed, one really needs to model taxes at a total enterprise level. So as we said for 2017, we expect to be in a net tax cash receipt position of $15 million. And for modeling purposes for 2018 and 2019, we're providing a range that our cash taxes paid will be between $15 million and $30 million at a total company level. And that would obviously include everything including the mesh payments that are new here that we'll have in 2018 and 2019.

Liav Abraham - Citigroup Global Markets, Inc.

Great, thank you.

Young Min Lee - Raymond James

Good morning. This is Lucas Lee in for Elliot. Thank you for taking our questions. So, as a follow-up to the dialogue around resolution of mesh litigation claims, understand that this resolves the vast majority of known and potential cases. But assuming there could still be some emerging cases, could you help us frame what the cap on liability is, potential liability is? We're just trying to get a sense of how many patients ultimately used the mesh product and then how many of those have turned into claims. Thank you.

Paul V. Campanelli - Endo International Plc

Yeah. So no, Lucas, we're not going to be able to quantify that for you. What you have to understand is the 22,000 that we disclosed is virtually all known claims. Now, moving forward, what we've done is we've talked about things that have occurred and what we've put in place to deter, and I mentioned this in my opening comments, right? What's in place to deter the assertion of weak or meritless case, right? The sheer nature of having the CMO in place, the case management order at the MDL level and also having a case management order in the state of Minnesota, whereby that is the home state of AMS, that in itself is going to deter, again, weak or meritless cases, right? So, there is a process in order to move cases forward.

The CMO in itself is a deterrent of having mass tort cases coming forward. So, that's one component. You've got to recall that we stopped shipping and selling the product in Q1 of 2016, so you have a timing issue. You also have the statute of limitations. That ranges state by state in a range of two to three and up to six years, but the bottom line is is you have a statute of limitations.

When you look at all of these components, I think we have positioned ourselves in a good place to move forward and away from mesh. So I hope I answered your question, Lucas.

Young Min Lee - Raymond James

All right. Thank you.

Ann-Hunter Van Kirk - BMO Capital Markets (United States)

Good morning. This is Ann-Hunter Van Kirk on for Gary. Thanks for taking our questions. What are your expectations for leverage over the next couple years in light of the mesh payment and are you considering any additional cost cuts to help pay down debt?

Paul V. Campanelli - Endo International Plc

Thanks. So Blaise you'll take this?

Blaise Coleman - Endo International Plc

Yeah. So thanks, Ann, for the question. I think as we told you for 2017, we expect to be in the high 4 times range from a leverage perspective. And as we've previously communicated, we do continue to aspire to leverage down over time back into the 3 times to 4 times range. In terms of timing of when we'll be able to achieve that leverage goal, although today's announcement around mesh removes one of the near-term uncertainties we've been facing in terms of developing a path and timeframe in order to achieve that goal, we're just not going to able to provide any specific timeline today, as there continues to be a number of key uncertainties, both in the near-term and mid-term that could impact the timing of delevering. But again, we will, as we talked about when we come to 2018 guidance, we'll certainly provide what our expectations are, both from a cash flow perspective and from a leverage perspective for 2018.

Paul V. Campanelli - Endo International Plc

On the cost-cutting side, and I think you've seen that we've made some very difficult decisions over the last 10 months.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

https://www.bizjournals.com/philadelphia/morning_roundup/2016/02/endo-shutting-down-astora-womens-health-division.html

Endo shutting down its women's health division

Feb 29, 2016, 4:04pm EST Updated Feb 29, 2016, 4:33pm EST

John George

Senior Reporter

Philadelphia Business Journal

Endo International said Monday it is winding down its Astora Women’s Health division after failing to find a buyer for the business.

The company said it will cease business operations for Astora, based in Eden Prairie, Minn, by March 31 in part to “reduce the potential for product liability related to future mesh implants.”

Endo (NASDAQ: ENDP) and other medical manufacturers who make vaginal mesh products have been sued by patients allegedly injured by the makers of such products used to treat a variety of medical conditions including urinary incontinence and pelvic organ prolapse.

The company's stock closed down 21 percent to $41.81 per share Monday.

In August, Endo said it had set aide $1.53 billion for potential litigation and settlement costs, and the company said Monday it took an additional $834 million pre-tax charge during the fourth quarter related to vaginal mesh cases.

Endo, which is based in Dublin, Ireland, and has its U.S. headquarters in Malvern, said it will work with physicians to support their transition to alternative products.

The company, as part of its strategy to focus on global sales of its branded and generic pharmaceutical products, sold off its men’s and prostate health business last year to Boston Scientific in a deal valued at up to $1.65 billion.

Endo entered the urology device market in 2011 when it bought American Medical Systems Holding Inc. for $2.9 billion in 2011.

Last year, Endo bought rival generic drug manufacturer Par Pharmaceutical Holdings Inc. for $8 billion.

John George covers health care, biotech/pharmaceuticals and sports business.

UK Parliament Hearing About Implant Device FAILURE

Woman who lives in constant pain calls for op to be banned 

Deborah, left, with Owen Smith and Sling the Mesh - Kath Sansom 

Published: 09:34 Friday 04 August 2017  FiDA highlight

A woman who lives her life in excruciating pain after a medical operation four years ago, joined other women at Parliament last month in a campaign to get the surgical procedure banned in the UK. The Sling the Mesh Campaign is calling for an operation using pelvic mesh implants to be banned after thousands of women suffered serious health complications. Deborah Wood, of Bexhill, underwent an operation in 2013 but after experiencing numerous negative side-effects, including extensive bleeding and extremely painful sexual intercourse, she began the process of having the mesh removed. She said: “I have had five operations to remove the tape and I still have a small amount of tape and arms left in. I don’t think I can go through anymore operations. “For the past four years, I have been in chronic pain 24/7. I have nerve damage in my legs – the pain in my legs is constant, they feel like someone is driving red hot glass into my legs. I get a lot of pain in my vagina and my pubic bone. I don’t have any sensation in my bladder so I can’t tell when it is full or empty, I have to use catheters. “I am now left permanently disabled. I cannot walk very far, I need to use crutches, a wheelchair and mobility scooter. I have just been diagnosed with PTSD and I am now on antidepressants. “Before all of this happened I was at university getting a degree in photography and had a photography studio. I had to give that all up. “I am 49 years old and the thought I have to live the rest of my life in pain scares me.” Deborah travelled to London on July 18 with other members of the Sling the Mesh Campaign to meet with Labour MP Owen Smith, who has set up an All Party Parliamentary Group into mesh surgery. The mesh patch or vaginal tape, also known as TVT, TVTO and TOT, are used to treat incontinence and prolapse, often caused by childbirth. Politicians called for mesh operations to be suspended in Scotland in June 2014 and in May 2017, Scottish health secretary Shona Robison called for an independent expert to review a mesh safety report. The English mesh review was due out at the end of July 2017. Deborah added: “The TVT/TOT must stop in the UK. We need to get the public aware to prevent more horrific injuries. This mesh has ruined my life.” Visit https://slingthemesh.wordpress.com/ for details.

Read more at: http://www.bexhillobserver.net/news/health/woman-who-lives-in-constant-pain-calls-for-op-to-be-banned-1-8087506

Bayer Essure: Banned in Finland, the Netherlands, England, Wales, Scotland, Northern Ireland and Brazil

MORE PRESSURE ON BAYER AND FDA AS ESSURE DISCONTINUED IN UNITED KINGDOM

Holly Kelly Ennis

June 7, 2017  FiDA highlight

Victims of Essure celebrated again today after learning that the controversial Essure Sterilization device will be discontinued in the United Kingdom as of September 1, 2017. This follows on the heels of Essure being banned by Brazil in February and recently discontinued in Finland and The Netherlands, with rumors of other countries to follow by the end of the Summer. Bayer recently confirmed it will discontinue sales in the United Kingdom set forth in the letter below:

As Bayer discontinues the sale of the Essure device or countries ban it outright, this exerts greater pressure on the FDA to take affirmative action regarding  pulling the device from the market. For over three years, since the Essure Problems Administrators first shared their valid concerns regarding the device, they have heard the same tired response from the FDA, "We understand your frustration. We assure you, Essure is a high-priority issue for the Agency and we continue to take feedback like yours into consideration." Obviously, the FDA is not hearing the Group's concerns, nor is it a high priority.  In fact, despite repeated pleas from the Group regarding the making the Black Box Warning mandatory to physicians, the FDA designated it as a "guidance."  Accordingly, over 200 hundred women have contacted the Group since the BBW was implemented on November 15, 2016 to report that doctors failed to mention the BBW or use the Patient Decision Checklist.

The FDA responded yesterday that it, "continues to review the available information about Essure, including reports of problems submitted to the FDA."  These reports now total over 15,000 with over 9,000 reports of surgical removals since 2009. How long will the FDA continue to "review" the horrific stories of ladies significantly injured by the device before it takes some definitive action and revokes the PMA for the device? The job of the FDA is to protect the health of American citizens, not line the pockets of pharmaceutical and medical device companies. FDA, it  is time. Do Your Job. 

Questions regarding the Essure Sterilization Device can be directed to attorney Holly Ennis at 1-800-856-6405 or visit us online at www.Ennislaw.com

http://www.ennislaw.com/blog/more-pressure-bayer-and-fda-essure-discontinued-united-kingdom/

J&J Accused of Criminal Behavior: Pelvic Surgical Mesh

Protest Targets J&J CEO on Day of Annual Shareholder Meeting

Women Allegedly Harmed by Pelvic Mesh Express Disappointment with J&J

ARTICLE | MAY 11, 2017 - 9:48PM | BY DAVE SCHATZ   FiDA highlight

MAM co-founder Lisa Mason is seen here during a rally on April 27 outside the State Theatre. Mesh Awareness Movement

NEW BRUNSWICK, NJ–Members of  the Mesh Awareness Movement (MAM) want Johnson & Johnson’s (J&J’s) shareholders “to know they are investing in criminal behavior,” according to a statement.

The group, a grassroots effort to bring awareness to the harmful effects of mesh on the human body, held a rally against J&J in New Brunswick on April 27, during its annual meeting of shareholders. 

MAM has a Facebook group that's grown from about 20 to 700 people in just a year-and-a-half, according to co-founder Tammy Jackson, who said others have contacted her but aren't keen on taking part in social media due to their attorneys' advice.

Jackson said a couple woman in the group were recently offered $189 by the pharma giant to settle their cases, but declined, while five others she knows personally accepted $4,000, and seven received $200,000, in the past six to seven months.

“It’s hard to get people so badly injured to travel across the country and stand all day,” said Jackson, a 50-year-old resident of Kentucky, and former nurse, adding she also brought chairs to the rally for some of the women.

Yet during the hour-plus meeting of shareholders inside the State Theatre, where audio was streamed live on the internet, the women held a protest outside the theatre and say they feel their voices were heard.

Their chants included:

• “No more mesh…”
• “Stop the harm, No more profits.”
• “You are not going to be able to hide from us.”
• “Profit over lives.”

Jackson has had 17 mesh removal and reconstruction surgeries over the past four years, she said.

“Trying to remove mesh out of your pelvic is like removing rebar out of concrete," said Jackson. "Your bladder is angry."

J&J says "we are nothing more than a 'cost of doing business.' We say, we are a hundred thousand severely and permanently injured people who could just as easily be your wife, mother or sister," continues MAM’s statement.

"It doesn’t matter to [J&J] that they’ll have to spend, for example, $2.5 Billion in Litigation, Verdicts, Penalties and fines because they’ve already made $25.1 Billion,” added the statement.

Jackson’s 10-year-old daughter was interviewed for a documentary about patient safety while in the Garden State with her mother and father for the rally.

She told the producers, “I would say quit making mesh and help my mommy,” according to Jackson, who said many MAM members were also interviewed for the film. 

“Where's the media?” wondered one MAM member during the rally. “They need to tape this -- we should flood the TV stations.”

One journalist, Jane Akre, operates the Mesh Medical Device News Desk (MMDND), and was present for J&J's annual meeting of shareholders on the morning of April 27. 

She thought the presentation to J&J's stock holders was "rehearsed" and highlighted "the health of J&J's stock," as Alex Gorsky, J&J's chief executive officer, repeated the words "sustainable" or "people come first." 

Yet across the street, she writes, via an "orderly, heart-felt display," some 30 women and their families rallied.

But their signs indicated they didn't feel like they came first: “The Johnson & Johnson Credo: ‘Research must be carried on, innovative programs developed and mistakes paid for.' Pay the mesh injured for your mistake!”

“Mr. Alex Gorsky” was targeted by another sign that continued, “The highest form of ignorance is when you reject that which you know nothing about.”

A sign urged Gorsky to “Talk to the mesh injured,” while the message on another read: “#SerialKiller CEO. It’s time for you to go!”

"Each [woman] represents at least 10,000 [pelvic] mesh implanted women who can’t make it to a mesh rally, because they are too sick or broke from fighting to regain their health! And that doesn’t even begin to include the one million hernia mesh implants a year!” wrote Akre.

"All use polypropylene! Some day in the not so distant future, we may come to recognize that this cheap plastic is not an ideal, bio-compatible material for an implant, I believe."

"The legal facts have shown that [J&J] knew these mesh devices were unsafe, but they quickly put them on the market anyway... bypassing proper FDA approval, failing to conduct thorough testing and withholding serious risks and warnings,” continues MAM’s statement.

"Little did I know that [during the shareholders meeting], a Philadelphia jury was delivering the third verdict for a plaintiff in another mesh trial – $20 million, which included $17.5 million in punitive damages!"

http://newbrunswicktoday.com/article/protest-targets-jj-ceo-day-annual-shareholder-meeting#.WRTstHiim44.facebook

Akre wondered whether J&J might now be considering a "multi-billion dollar global settlement" and whether "fighting mesh-injured women in court" is worth it. 

The pharma giant is facing $34.5 million in punitive damages, plus other amounts awarded by juries in three separate mesh trials in Philadelphia state court, according to reports.

Akre noted that after half a decade of writing reports for MMDND, media coverage of mesh issues is gaining  some traction.

"Internationally, the media is less afraid to report of Pharmaceutical Giants," she writes citing front page stories in Scotland, Australia, New Zealand and the UK, for instance.

Though Akre provided coverage of the April 27 MAM rally, she said very few reporters were there.

“It was a powerful day," said one woman who took part in the event.

"J&J had a line of buses on the other side of the street to block the view of the rally. [The company] rented those buses with money they earned from harming us,” she added, saying that she felt like J&J owned New Brunswick.

J&J did not respond to a request for comment. 

http://newbrunswicktoday.com/article/protest-targets-jj-ceo-day-annual-shareholder-meeting#.WRTstHiim44.facebook

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.

Criminal?: Scottish Surgical Mesh Scandal

Revealed: Two doctors on mesh safetyreview team linked to makers of controversial devices

         Oct 05, 2014 13:53

         By Marion Scott  Daily Record (UK)  FiDA highlight

HEALTH Secretary Alex Neil under fire after victims claim the government probe into mesh implants is being rigged to give operations the all-clear.

Health Secretary Alex Neil

TWO doctors on the government team reviewing the safety of mesh implants have links to the makers of devices used in the controversial surgery.

The appointments have fuelled concern of campaigners that the review has been weighted to support the continued use of the procedures, which have left women around the world crippled and led to multi-million-pound compensation payments.

Ash Monga and Karen Guerrero have been paid by Ethicon, the makers of a mesh product called Gynecare.

Dr Monga described himself as a “consultant for Gynecare” in a 2009 medical research paper.

Dr Guerrero, a surgeon at Glasgow’s Victoria Infirmary, received “educational sponsorships” – including payments and travel costs – from Ethicon and another major mesh manufacturer called Bard.

Dr Karen Guerrero

Both were appointed to a 22-strong safety review commission investigating mesh products launched by Health Secretary Alex Neil.

He won plaudits in June after apparently suspending mesh procedures when Hear Our Voice campaigners, supported by the Sunday Mail, gave evidence to reveal how they have been left in crippling agony by mesh, used to treat prolapse and bladder problems.

At the time, Neil said: “I’m proud Scotland has taken this stance and I believe we are leading the way on what is a significant global problem.”

But we revealed the anger of campaigners last week after discovering government medical advisers wrote to hospitals within weeks of Neil’s announcement to say the suspension was voluntary and encouraged them to use mesh on patients as part of clinical trials.

Yesterday, politicians and campaigners raised new concerns about the appointments to the review body to establish if there are any conflicts of interest.

Scottish Labour’s shadow health secretary Neil Findlay said: “It is outrageous that, after taking over a year to reach a decision on mesh implants, the Health Secretary has appointed doctors to the review who might appear to have a vested interest.

“Those affected have been through far too much in the past few years and this latest development is simply inexcusable.”

Mesh product

Olive McIlroy, of Scottish Mesh Survivors, said: “We are dismayed that people appointed to carry out this vital review have such links to the manufacturers who profit from the use of these devices.

“Alex Neil promised victims would be at the very heart of the independent review but it feels very much like we are lone voices pitted against the country’s most powerful mesh supporters.”

Ethicon, a subsidiary of Johnson & Johnson, have twice had their TVT-O device declared as “defective” by a US court.

It has also emerged that Gibraltar-born Guerrero was among 23 signatories backing an objection to Neil’s suspension of mesh use in the NHS in June.

Dr Guerrero backed the call made by Aberdeen-based urology consultant Mohamed Abdel-Fattah asking for mesh trials to be exempted.

Abdel-Fattah, who has also received “travel sponsorship” from Ethicon, was supported by two other members of the review group, Professor Charis Glazener and consultant urologist Voula Granitsiotis.

Read about US mesh victim Martha Salazar who won a £60m payout.

Ethicon’s Lucinda Macari said: “Ethicon, in conjunction with the Association of British Healthcare Industries, are supporting efforts by the Scottish Independent Review to gather full and accurate information about pelvic mesh products.”

The Scottish Government said: “This must be an entirely independent review and will be completed as such.”

          

Mesh scandal: Another boost forScottish campaigners as US victim wins £60m payout

         Sep 14, 2014 14:11

         By Marion Scott  Daily Record (UK)

MARTHA Salazar's case in Dallas, Texas – the second major victory for mesh victims in America within days – prompts new calls for criminal inquiry in Scotland.

Campaigner Elaine Holmes in the Scottish Parliament.

AN American mesh patient has been awarded £60million compensation by a US court.

Martha Salazar won the huge payout after the court in Dallas, Texas, heard that the Obtryx implant made by Boston Scientific was defective.

They jury was also told that the manufacturers had failed to properly test the device on humans.

It was the second major victory for mesh victims in the States within days.

Earlier this month, Jo Huskey was awarded damages totalling £3million by a West Virginia court for pain and suffering caused by a TVT-O mesh 
implant made by Johnson & Johnson firm Ethicon.

Both these mesh devices were given to Scottish women on the NHS before the procedures were suspended pending safety reviews after an outcry by mesh victims.

The US payouts have led to politicians and victims calling for the Scottish Government to sue manufacturers and launch a criminal probe.

Labour’s shadow health secretary Neil Findlay said: “These cases are proof, if any further evidence is needed given the hundreds of women injured here, that the mesh scandal is shaping up to be a very big issue for Scotland’s NHS.

“It’s high time the Scottish Government challenged the manufacturers over the catastrophic health problems these devices have inflicted on so many women.

“If there’s evidence of clinic data and trial evidence being deliberately withheld, criminal action should be considered.”

Elaine Holmes, of Scottish Mesh Survivors, added: “A car manufacturer who did this would face a criminal investigation and lengthy jail sentences. It should be the same for mesh manufacturers.”

Lawyer Cameron Fyfe, who is acting for over 400 women involved in the biggest-ever medical legal action in Scotland, said: “Potential damages in 
Scotland would be a fraction of those in the US but we expect to have similar success.”

Gareth Easton

Scottish Health Secretary Alex Neil

Health Secretary Alex Neil suspended mesh operations in March pending an independent safety review.

It followed a Sunday Mail campaign which exposed the hidden agony of hundreds of women given mesh implants to treat incontinence and bladder problems.