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Why Is Congress Negotiating with Health Care Industry Scofflaws?

Graphic by Destinys_Agent via

After a rather aggravating discussion this past week with rank-and-file members of the local Democratic Party as well as representatives for elected officials, it became clear that hold-outs in Congress who refuse to commit that they will do everything possible to obtain the public option are not on the same page as us.

They believe they need to make no commitments to anyone, including constituents, in order to have maximum negotiating power when bargaining with the health care industry.

We, on the other hand, believe they simply need to do their utmost to get the public option, which is not the same as bargaining away and settling for less.

I was pretty steamed about this situation. Perhaps if I knew less about the health care industry’s performance over the last couple of decades I might be more amenable and understanding.

But I do know about these choice examples -– and they are only a very small number, a smattering of cases presented here in no particular order which exemplify a problem across the health care industry:

09/03/09 — Justice Department Announces Largest Health Care Fraud Settlement in Its History

"…American pharmaceutical giant Pfizer Inc. and its subsidiary Pharmacia & Upjohn Company Inc. (hereinafter together "Pfizer") have agreed to pay $2.3 billion, the largest health care fraud settlement in the history of the Department of Justice, to resolve criminal and civil liability arising from the illegal promotion of certain pharmaceutical products, the Justice Department announced today.

Pharmacia & Upjohn Company has agreed to plead guilty to a felony violation of the Food, Drug and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead. Bextra is an anti-inflammatory drug that Pfizer pulled from the market in 2005."

04/23/08 — Former Bristol-Myers Squibb Senior Vice President indicted for lying to the Federal Government about popular blood-thinning drug

"The Department of Justice announced today that the former senior vice president of Bristol-Myers Squibb Company (BMS), Andrew Bodnar, was indicted for his role in lying to the federal government about a patent deal involving the popular blood-thinning drug, Plavix, used by heart attack, stroke and other patients.


On June 11, 2007, BMS agreed to plead guilty and pay a $1 million criminal fine for misleading the government about the Plavix patent deal. BMS paid the maximum fine permitted by statute for committing two violations under the federal False Statements Act."

08/23/05 — Former Bristol-Myers Executives charged by SEC with Civil Fraud

"The Complaint alleges that from the first quarter of 2000 through the fourth quarter of 2001, at Schiff and Lane’s direction, Bristol-Myers stuffed its distribution channels with excessive amounts of its pharmaceutical products ahead of demand to meet the Company’s internal earnings targets and the consensus estimate of Wall Street securities analysts, and improperly recognized revenue from $1.5 billion of such sales to its two largest wholesalers. According to the Commission’s Complaint, when Bristol-Myers’ results still fell short of its targets and the consensus estimate, at Schiff’s direction, the Company used "cookie jar" reserves to further inflate its earnings. The Complaint also alleges that at Schiff’s direction, and as a result of the channel-stuffing, Bristol-Myers also underaccrued for Medicaid and prime vendor rebate liabilities. As a result of its channel-stuffing and improper accounting measures, Bristol-Myers reported results that met or exceeded the consensus estimate every quarter during the scheme."

06/15/05 — Bristol-Myers Squibb Charged with Conspiring to Commit Securities Fraud; Prosecution Deferred for Two Years

"Bristol-Myers Squibb Company (BMS) has agreed to pay an additional $300 million in restitution and undertake a series of corporate reforms as part of an agreement with the government to defer prosecution on a charge of conspiring to commit securities fraud for the company’s failure to disclose its ‘channel-stuffing’ activities in 2000 and 2001"

September 2008 — WellCare Health Plans Inc. has agreed to pay $35.2 million to the Financial Litigation Unit of the United States Attorney’s Office

"WellCare Health Plans Inc. has agreed to pay $35.2 million to the Financial Litigation Unit of the United States Attorney’s Office arising from understatements of anticipated premium refunds pursuant to its Florida Medicaid contract. This figure is based on WellCare’s estimate of the maximum potential repayment owed to the Florida Agency for Health Care Administration ("AHCA") under the state’s disease management law from December 1, 2002 through December 31, 2006."

03/03/08 — New York takes on United over tactics as industry arbiter of physician pay

"An investigation into how a UnitedHealth Group subsidiary determined reimbursement for out-of-network physicians across multiple insurers alleges to show a pattern of underpricing services to shift the payment burden from insurers to patients.


Cuomo, speaking at a news conference in New York City, said Ingenix had manipulated UCR rates to keep them artificially low, resulting in additional profit for United and unnecessary costs for consumers.


Cuomo’s investigation is extending to other plans that use Ingenix. He said he is issuing subpoenas to 16 other health plans, including WellPoint’s Empire BlueCross BlueShield, Cigna, Humana and Aetna. Humana has acknowledged receiving a subpoena."

02/09/04 — HealthSouth fraud figures higher than thought

"The embattled outpatient services giant HealthSouth now believes its accounting fraud could total as much as $4.6 billion, significantly more than previous estimates.

In a meeting with investors on Jan. 20, HealthSouth officials said an audit was expected to reveal between $3.8 billion and $4.6 billion in fraudulent accounting. In July 2003, the company estimated the fraud to total at least $2.5 billion."

12/22/08 — SEC Files Settled Enforcement Actions Against UnitedHealth Group, Inc. and Former General Counsel in Stock Options Backdating Case

“The Securities and Exchange Commission today filed a civil injunctive action against UnitedHealth Group Inc., a Minnetonka, Minn., health insurance company, alleging that it engaged in a scheme to backdate stock options. Without admitting or denying the allegations, UnitedHealth agreed to settle charges that it violated the reporting, books and records, and internal controls provisions of the federal securities laws.

In a separate complaint, the Commission charged former UnitedHealth General Counsel David J. Lubben with participating in the stock option backdating scheme. Without admitting or denying the allegations, Lubben consented to, among other things, an antifraud injunction, a $575,000 penalty, and a five-year officer and director bar.

The Commission alleges that between 1994 and 2005, UnitedHealth concealed more than $1 billion in stock option compensation by providing senior executives and other employees with “in-the-money” options while secretly backdating the grants to avoid reporting the expenses to investors.”

04/28/09 — Federal court approves $350 million RICO case settlement

"A federal court in Massachusetts approved a $350 million settlement. The case alleged a drug wholesaler of inflating drug prices.


The suit alleged that McKesson and FirstData violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”). The complaint alleged that the companies used interstate mail to fraudulently raise the average price of McKesson’s drugs."

07/29/02 — Blue Cross of California and WellPoint Health Networks to pay U.S. $9.25M to settle allegations of Medicare Fraud

"Blue Cross of California (BCC) and its parent company, WellPoint Health Networks, have agreed to pay the United States $9,250,000 to resolve allegations that BCC defrauded Medicare, the Justice Department announced today. BCC, which was under contract with the Centers for Medicare & Medicaid Services to process Medicare claims in California until December 2000 (Medicare Part A fiscal intermediary) is alleged to have knowingly falsified data regarding its performance of cost report audits for Medicare."

06/29/06 — Tenet Healthcare Corp. to pay U.S. more than $900 million to resolve False Claims Act allegations

"Tenet Healthcare Corporation, operator of the nation’s second-largest hospital chain, has agreed to pay the United States more than $900 million to resolve several "whistleblower" lawsuits and investigations alleging that Tenet and its hospitals knowingly submitted false claims to the Medicare program and other federal health insurance programs over the past decade.

The settlement is the largest single settlement in the nearly 150-year history of the False Claims Act. Previously, the Justice Department settled with HCA for $840 million, as part of a total recovery from HCA of $1.7 billion."


Again, let me reiterate that this list is a tiny number of cases culled from the last seven years alone. There are many, many more like them, and there’s one hell of a lot of money involved.

So tell me exactly why it is we are negotiating at all with these organizations?

Would we tolerate this kind of widespread disregard for the law from any other industry, and still sit down to the table to negotiate with them, believing them to be working with us in good faith?

[Photo: Pharmaceuticals by Destinys_Agent via Cross-posted to Rayne Today.]

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Blogger since 2002, political activist since 2003, FDL community member since 2005, geek since birth.

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