Gutting the Health Care Corporate Strike Force

Health care corruption is a severe problem in the US, and globally.

For years, we have ranted about the US government's lackadaisical - to use an execessively polite term - approach to wrongdoing by big health care organizations.  The trend really got started back in the day when now Governor Chris Christie (R - NJ), then a federal prosecutor, started making deferred prosecution agreements available to corporations which appeared to have committed white collar crimes.  However, these agreements were originally meant to give young, non-violent first offenders a second chance.

Since then, we have noted the continuing impunity of top health care corporate managers.  Health care corporations have allegedly used kickbacks and fraud to enhance their revenue, but at best such corporations have been able to make legal settlements that result in fines that small relative to their  multibillion revenues without admitting guilt.  Almost never are top corporate managers subject to any negative consequences.

The Health Care Corporate Strike Force

The US Department of Justice during the Obama administration made some modest attempts to decrease such impunity.  One such measure was the formation of a Health Care Corporate Strike Force.

As reported by Law.com,

the strike force was created in the fall of 2015, with five dedicated lawyers working on about a dozen of the most complex corporate fraud cases in the health care space.

Andrew Weissmann, the then-chief of the DOJ’s fraud section, told a health care conference in April 2016 that the section was placing 'a heightened emphasis' on corporate health care fraud investigations. He pointed to the recently established Corporate Fraud Strike Force that he said would focus resources in investigation and prosecution of larger corporate health care law violations, as opposed to smaller groups or individuals.

The Downsizing of the Health Care Corporate Strike Force

But now, after candidate Donald Trump promised to 'drain the swamp,'



and railed against the supposed corruption of former Secretary of State Hillary Clinton (leading tochants of 'lock her up'), the Trump administration will further diminish this tiny attempt to reduce impunity, the Law.com report stated:

the DOJ, under the Trump administration and new U.S. Attorney General Jeff Sessions, has announced new priorities: violent crime, drugs and illegal immigration.

In restructuring to focus on those priorities, the DOJ has gutted the Health Care Corporate Fraud Strike Force, according to at least two high-level sources who worked at the Justice Department until recently. The sources declined to be named, as being identified could affect their current jobs and clients.

The sources said the strike force has been cut from five full-time lawyers to only two – assistant chief Sally Molloy and trial attorney William Chang. And both are splitting their time in the strike force with other duties.

The DOJ declined an interview request for this story. But DOJ spokesperson Wyn Hornbuckle issued this statement: 'The Health Care Corporate Strike Force, as with the entire health care fraud unit, is going strong under steady leadership—continuing to vigorously investigate and hold accountable individuals and companies that engage in fraud, including tackling an opioid epidemic that claimed 60,000 American lives last year.'

The Task Force had resolved one major case against for-profit hospital chain Tenet.  The Task Force alleged but Tenet actually admitted its

supervisors lied to in-house counsel about the purpose of millions of dollars in contracts, which purportedly were for 'services' but really were bribes and kickbacks to clinics and doctors for sending Medicaid patients to Tenet hospitals.

While its settlement included a non-prosecution agreement, the Task Force actions also resulted in two convictions and a pending indictment of actual people.

Still,

The lawyer openings on the strike force were exacerbated when, on April 14, Sessions imposed a hiring freeze on the DOJ’s Criminal Division as well as on U.S. Attorney Offices, as reported by The New York Times, which obtained a copy of the freeze memo.

Some DOJ lawyers believe, sources said, that white-collar crime and corporate fraud resources are being shifted to cover Sessions’ new priorities of violent crime, drugs and illegal immigration. That emphasis, they said, can be seen in who runs the DOJ’s criminal division.

Under former U.S. Attorney General Eric Holder, himself a white-collar crime prosecutor and then corporate defense attorney, assistant attorney general Leslie Caldwell led the division. Caldwell specialized in securities fraud and white-collar crime, and had participated in the Enron Corp. prosecution.

Under Sessions, himself a former law and order prosecutor in Alabama, the criminal division now reports to deputy assistant attorney general Kenneth Blanco. Blanco has a long history of bringing cases centered on drugs and violent crime in the Miami-Dade State Attorney’s Office, in the U.S. Attorney’s Office in Southern Florida, and in Main Justice in Washington, D.C., where he served as chief of the narcotic and dangerous drug section at the DOJ.

Discussion

So the Trump administration proposes two part time attorneys to drain the health care corporate swamp.  That seems like bailing out the Titanic with teaspoons. But should we expect anything else from an administration that is being increasingly identified with corruption and impunity itself?

We have frequently discussed outright corruption in health care as one of the most important causes of health care dysfunction.  Transparency International (TI) defines corruption as

Abuse of entrusted power for private gain

In 2006, TI published a report on health care corruption, which asserted that corruption is widespread throughout the world, serious, and causes severe harm to patients and society.

the scale of corruption is vast in both rich and poor countries.

Also,

Corruption might mean the difference between life and death for those in need of urgent care. It is invariably the poor in society who are affected most by corruption because they often cannot afford bribes or private health care. But corruption in the richest parts of the world also has its costs.

The report did not get much attention.  Since then, health care corruption has been nearly a taboo topic in the US.  When health care corruption is discussed in English speaking developed countries, it is almost always in terms of a problem that affects benighted less developed countries.  On Health Care Renewal, we have repeatedly asserted that health care corruption is a big problem in all countries, including the US, but the topic remains anechoic,. presumably mainly because its discussion would offend the people made rich and powerful by corruption.

As suggested by the recent Transparency International report on corruption in the pharmaceutical industry,  there is so much money to be made through pharmaceutical (and by implication, other health care corruption) that the corrupt have the money, power, and resources to protect their wealth accumulation by keeping it obscure.  In the TI Report itself,

However, strong control over key processes combined with huge resources and big profits to be made make the pharmaceutical industry particularly vulnerable to corruption. Pharmaceutical companies have the opportunity to use their influence and resources to exploit weak governance structures and divert policy and institutions away from public health objectives and towards their own profit maximising interests.

I might as well repeat myself once again.  As I wrote in 2015, if we are not willing to even talk about health care corruption, how will we ever challenge it? 

So to repeat an ending to one of my previous posts on health care corruption....  if we really want to reform health care, in the little time we may have before our health care bubble bursts, we will need to take strong action against health care corruption.  Such action will really disturb the insiders within large health care organizations who have gotten rich from their organizations' misbehavior, and thus taking such action will require some courage.  Yet such action cannot begin until we acknowledge and freely discuss the problem.  The first step against health care corruption is to be able to say or write the words, health care corruption.

Musical Interlude

What else, the Honey Island Swamp Band, playing "Prodigal Son,"

Through the Revolving Door, Darkly

While the rare appointments to top health care positions by the Trump administration deservedly get considerable media coverage, lower level appointments sneaking through the revolving door do not.  So we hereby present our latest roundup of same, in chronological order by first coverage.

Lance Leggitt from Health Care Lobbyist at Baker Donelson to Chief of Staff for the Secretary of Health and Human Services

This appointment first appeared in StatPlus on March 2, 2017 but was behind a paywall.  It was more recently covered in the New York Times in a long article about revolving door appointments not specific to health care.  From the Times,

Lance Leggitt, who serves as chief of staff to Tom Price, the health and human services secretary, worked last year as a lobbyist for 10 different health care companies, including United States Medical Supply and Advanced Infusion Services. He focused largely on lobbying the agency related to Medicare billing rules, as well as rules for health care supplier accreditations, lobbying disclosure reports show. All these issues are routinely handled by the agency he helps oversee.

Note that a lobbyist for many large health care corporations would now be next door to the leader of government policy on health care. 

Makan Delrahim from Lobbyist at Brownstein Hyatt Farber Schreck to Assistant Attorney General for Anti-Trust

This was first reported by Reuters on March 17, 2017, and has health implications beyond the headline above,

Before coming to work at the White House following Trump's inauguration in January, Delrahim was a lobbyist with the law firm Brownstein Hyatt Farber Schreck, LLP.

Furthermore,

Another client in 2016 was health insurer Anthem Inc, which this year lost a court fight with the Justice Department over whether it would be allowed to merge with rival Cigna. Anthem is appealing the loss.

In addition, per David Sirota, writing in the International Business Times,

Makan Delrahim served as one of the healthcare conglomerate’s top lobbyists working on antitrust issues as the company pushed the Justice Department to approve its controversial proposal to merge with Cigna.

Delrahim would head the office that Anthem is pushing to approve the merger, which physicians and consumer groups say could raise healthcare prices and reduce medical coverage for up to 53 million Americans.

And,

According to federal lobbying records, Anthem paid $370,000 in lobbying fees to Delrahim’s firm, Brownstein Farber, between 2015 and 2016. Those fees paid for the lobbying services of Delrahim and William Moschella. Delrahim had previously served in the Justice Department’s antitrust unit under George W. Bush, and Moschella was also a top Justice Department official during Bush’s presidency. The lobbying records said Delrahim and Moschella were working on 'antitrust issues associated with Anthem's proposed acquisition of Cigna.' Lobbying records show Delrahim has also lobbied on antitrust issues for Pfizer, Qualcomm, Ardent Health Services and WMG Acquisitions.

Delrahim was last listed as an Anthem lobbyist five months ago. He is currently serving as President Donald Trump’s deputy White House counsel.

News of Delrahim’s appointment to the nation’s top antitrust job comes weeks after Anthem lawyers told a Delaware judge that they are relying on the Trump administration to settle the antitrust division’s current lawsuit blocking its Cigna merger. Between those court statements and Delrahim’s appointment, President Trump had a personal telephone call with Anthem’s CEO, Joseph Swedish. Anthem gave $100,000 to Trump’s inaugural committee, and after Trump assumed office, the Securities and Exchange Commission helped Anthem quash a shareholder resolution designed to force it to disclose its lobbying expenditures.

Note that Mr Delrahim has worked to promote consolidation of already large health care corporations, yet now would be charged with regulating such consolidation.


John Bardis from MedAssets CEO to Assistant Secretary of Health and Human Services for Administration

This first appeared in Modern Healthcare on March 22, 2017,

John Bardis, the founder and former CEO of MedAssets, has been named HHS assistant secretary for administration.

Alpharetta, Ga.-based MedAssets was a publicly traded group purchasing and revenue-cycle management company. Bardis founded it in 1999 and grew it into one of the largest healthcare group purchasing organizations. He oversaw the firm's diversification into other areas, like revenue-cycle services, for hospital and health system clients.

Bardis stepped down as CEO of MedAssets in early 2015.

 Note that most recently Mr Bardis was the CEO of a health care financial firm and thus was responsible for that company's financial fortunes.  While he has previous experience running other health care related companies, he seems to have no direct experience in health care or public health, per his official biography.

A Prelle Pfuelle from Lobbyist for the Mining Industry to Occupational Safety and Health Administration Administrator

This first and only appeared so far in the Managed Care Matters blog on April 2, 2017,

The Trump Administration’s pick to lead OSHA will push the President’s deregulation agenda far and deep as he shifts OSHA to a more 'business friendly' focus. According to Administrator-designee A. Prelle Pfuelle, the watchword will be 'compliance assistance' instead of enforcement.

Reports indicate the new Administrator, a former lobbyist for the mining industry, will provide 'leadership to curtail funding for enforcement, rescind rules under deregulatory orders, and drop defense of regulations facing legal challenges.' The mining industry has been actively applauding initial moves by President Trump to revoke, rescind, or withdraw several regulations and enforcement actions; Pfuelle may have been instrumental in those early actions.

Pfuelle’s past experience includes stints working as a manager in a diamond mining firm in South Africa, labor relations in Liberia’s oil industry, workplace safety officer in the Pakistani ship-breaking association and most recently lobbyist for the Oklahoma natural gas industry.

 Note that while the OSHA mission is to protect the health and safety of workers, this appointee's past work has involved the financial interests of the mining industry.  Health and safety protections may cost this industry money.  Furthermore, the article suggests that the appointee may be more "friendly" and sympathetic to corporations that employee workers than to to the workers whose health and safety he ostensibly would be protecting.  Note further that he seems to have no experience in public health or health care.

Brett Giroir from CEO of VibraCyte to Assistant Secretary of Health and Human Services

This was first reported by the Bryan (TX) Eagle on April 25, 2017,

President Donald Trump intends to nominate the former executive vice president and CEO of Texas A&M’s Health Science Center to a U.S. Department of Health and Human Services leadership position, according to a White House announcement.

Brett Giroir, who currently serves as president and CEO of biopharmaceutical company ViraCyte and as an adjunct professor at the Baylor College of Medicine in Houston, would serve as assistant secretary of health for the department.

 Note that Dr Giroir is currently responsible for the financial health of a biotechnology company.  He is however, unlike many of these other appointments, a physician.

Summary

When we started Health Care Renewal, the topic of conflicts of interest in health care got little attention in the media or in the medical and health care literature.  The topic of health care corruption was virtually taboo.  Through the years these topics have become somewhat more prominent.  But it took the Trump campaign and then the Trump transition and administration to really put them in the headlines.

So, for example, up to now we did not much discuss the amazing collection of conflicts of interest affecting the Trump administration's pick for leadership of the US Food and Drug Administration, Dr Scott Gottlieb.  His case has been well covered since he was named the nominee.  For example, the NY Times article noted above included:

 Dr. Scott Gottlieb, the nominee to lead the Food and Drug Administration, received more than $350,000 in payments in 2014 and 2015 from nearly a dozen different pharmaceutical companies, including Vertex Pharmaceuticals, whose two approved drugs are seen as breakthrough treatments for cystic fibrosis. (They carry list prices of more than $250,000 a year.) Dr. Gottlieb, who has never been registered as a lobbyist but has served as the director of eight pharmaceutical companies and one laboratory company, wrote in a letter that he was prepared to recuse himself as necessary to avoid any conflicts.

I should note that we have discussed previous examples, in 2007 and 2008 (look here, here, here and here), of Dr Gottlieb's strident promotion of the interests of pharmaceutical and biotechnology companies.  After 2008, I though we thought further discussion of this topic would be redundant.  Who would have thought that Dr Gottlieb, such a noisy champion of pharma and biotech, would be a nominee to run the FDA in 2017?  Whou would have thought.... 

But now headlines about conflicts of interest and corruption are so frequent that the less vivid but still important cases, as those discussed above, may get lost in the shuffle.  So the case of Dr Gottlieb is just the most prominent example of how the latest administration has set the revolving door spinning.  (See also previous posts here, here, and here.) 

As we noted previously, the revolving door is a species of conflict of interest. Worse, some experts have suggested that the revolving door is in fact corruption.  As we noted here, the experts from the distinguished European anti-corruption group U4 wrote,

The literature makes clear that the revolving door process is a source of valuable political connections for private firms. But it generates corruption risks and has strong distortionary effects on the economy, especially when this power is concentrated within a few firms.

The ongoing parade of people transiting the revolving door from industry to the Trump administration once again suggests how the revolving door may enable certain of those with private vested interests to have excess influence, way beyond that of ordinary citizens, on how the government works, and that the country is still increasingly being run by a cozy group of insiders with ties to both government and industry. The latest cohort of revolving door transits suggests that regulatory capture is likely to become much worse in the near future.

So, as we have said before.... The continuing egregiousness of the revolving door in health care shows how health care leadership can play mutually beneficial games, regardless of the their effects on patients' and the public's health.  Once again, true health care reform would cut the ties between government and corporate leaders and their cronies that have lead to government of, for and by corporate executives rather than the people at large.