A Small Challenge to Impunity - Lawsuit Against Former Synthes CEO Proceeds

Numerous allegations of bad behavior by big health care organizations, some apparently causing patient harm, have resulted in legal settlements, sometimes of criminal charges.  Yet rarely do the individuals who apparently authorized, directed, or implemented the bad beahvior suffer any negative consequences.  In particular, the top executives on whose watch the bad behavior occured seem to have impunity.

Suing the Former Synthes CEO

So it is news that a lawsuit will proceed against the former CEO of medical device company Synthes,  alleging actions that led to the death of a patient.  The basics were reported by the Daily Caller,

Hansjorg Wyss ... will face charges of running a 'criminal profiteering enterprise' through the illegal use of a drug and in violation of federal patient safety rules that resulted in the death of a 67-year old woman....

Washington State Superior Court Judge Dean Lum agreed Oct. 30 that Wyss, a Swiss billionaire ... can stand trial under the state’s racketeering laws for leading a criminal enterprise that caused the death of Reba Golden. She died during an illegal drug test conducted by Wyss’s company in 2007.

The Washington suit charges Wyss, the former CEO of a Pennsylvania-based medical device company called Synthes and his co-defendants with murder in the second degree as a class A felony, second degree assault and criminal profiteering under the Washington Criminal Profiteering Act.

Wyss faces a statutory civil penalty of $250,000 for each violation, amounting to $9.2 million for 'personal injury to and death of Mrs. Golden.' He is charged in 37 violations.

The plaintiff is Reba Golden’s daughter, Cynthia Wilson, whose mother died in 2007 on the operating table after Synthes organized illegal 'market tests' for at least 50 persons across the country of an untested bone cement substance that the Food & Drug Administration banned for use in the spine.

Ultimately, five patients died during the illicit drug testing. Synthes failed to report the deaths to the FDA, as required by law, until the third fatality occurred.

Furthermore, 

Wyss 'entered into a criminal enterprise to perfo'rm illegal and experimental surgeries on patients,' Daniel Hannula, Golden’s attorney, told The DCNF.

Also,

'Mr. Hansjorg Wyss was the controlling stockholder and ranking executive of Synthes and Norian Corporation and the leader of a criminal enterprise,' the complaint states. 'The criminal enterprise engaged, for profit, in a pattern of criminal profiteering activity,' enticed by the prospect of a company forecast of $3 million in after-tax profit for the first year of sales.

Judge Davis agreed case was about profits, saying their behavior was 'generated by a desire to realize the immense profits.'

Hannula told the DCNF, 'they completely ignored what was required of them in order to get their product to the market as quickly as possible because they recognized that this was a market of huge financial potential.'

These are only allegations, of course. However, again, it is very rare for any top executive of a health care organization to personally face a lawsuit for his or her organization's conduct, no matter how bad that conduct may be. 

The Synthes Case Up to Now

We already knew that Synthes' conduct was particularly bad. We last discussed the Synthes case in 2011.  The case was already extraordinary in that it resulted in criminal convictions of several high-ranking Synthes executives.  At that time we wrote:

Synthes USA, the American branch of a Swiss based device company, first settled charges that it had been paying surgeons with company stock to use its products in its clinical trials in 2009 (see this post).  Then prosecutors alleged that these were not really rigorous trials. Instead, for marketing purposes, executives of Synthes subsidiary Norian persuaded surgeons to use its Norian XR product in a case series of spine surgery patients and then publish the results.  Three patients who received the product for this "off-label" use died.  This scheme was alleged to have been directed by 'person no. 7,' whom journalists identified as the company CEO, Hansjorg Wyss (see post here.)   In an unusual move, the prosecutors indicted four company executives, who then pleaded guilty.  They did not take any further action against Wyss, who turns out to be one of the world's richest men (see post here).

In 2011, Wyss agreed to sell Synthes to Johnson and Johnson, itself a company with a very chequered past (look here), thus making himself into a multi-billionaire, and one of the world's richest men.  (Currently, Forbes lists Wyss as number 240 on its list of the world's richest, estimating his fortune at $6.1 billion.)

The case then slipped into relative obscurity, although Fortune ran a long-form article on it in 2012, which called it a "medical horror story."

An Almost Anechoic Lawsuit

Because of the unusual nature of the ongoing lawsuit, one might expect that it would generate some public discussion.  One would be wrong.  The litigation against Mr Wyss so far has received almost no media coverage, demonstrating the ongoing anechoic effect.  We previous defined  the anechoic effect, as the phenomenon that information or discussion that could challenge or discomfit the powers that be in the US health care often generates no echoes.  

To date, I could only find coverage of the ongoing lawsuit against Mr Wyss in the Daily Caller.  And ironically the Daily Caller did not appear to cover this case because it specializes in malfeasance in health care.  It seemed to cover it because it may have indirectly reflected negatively on prominent members of the US Democratic Party.

Actually, the main focus of the article I quoted above was not health care.  It was that Mr Wyss appears to be a supporter of Hilary Clinton, the currently leading Democratic candidate for the US presidential nomination, and of ostensibly left-wing causes.  I put an ellipsis in the first sentence of the article to allow me to focus on its health care aspects.  What I removed was not a description of Mr Wyss not as an extremely rich former CEO of a medical device company, but as

Hansjorg Wyss, a prominent Clinton foundation donor and wealthy bankrolled of liberal activist groups, will face charges of running a 'criminal profiteering enterprise'....

And the article's title similarly did not mention health care at all: 

Major Clinton Donor Faces 'Criminal Profiteering' Charges

The Daily Caller actually specializes not in health care malfeasance, but in issues of interest to the right wing.  As Politico reported in 2014, Tucker Carlson, described as a "conservative pundit, who founded the Daily Caller, has said

What I despise most about the legacy media isn’t just that they’re mindlessly liberal, though they are.

The Columbia Journalism Review described the Daily Caller as having

carved out a cozy corner of the web in its short life. It’s a place for conservatives to read about the latest liberal scandal and the latest movements in the GOP presidential field.

So presumably if Mr Wyss was uninterested in politics, and did not donate to any remotely left wing causes, the Daily Caller would not have covered the ongoing lawsuit, leaving it totally anechoic.

But whether of not the Daily Caller had an axe to grind when making its choice to report on the ongoing litigation against Mr Wyss, why did every other media outlet to ignore the story?  Perhaps again the rule is in general it is simply not done to publicly discuss what might excessively embarass the people who have gotten very rich from the currently dysfunctional health care system?

Conclusions

The just revealed story of the lawsuit against the extremely rich former CEO of Synthes does suggest that perhaps individuals injured by our curent dysfunctional health care system could use the legal system to try to challenge those who get rich from enabling such injuries.  Or not, because the outcome of this lawsuit is uncertain.

Furthermore, the initiation of this lawsuit again reminds us that those who lead large health care organizations, and may profit mightily from them, regardless of the effects on patients' and the public's health, remain beyond the law.  It is not clear why the US Department of Justice chose not to even attempt to prosecute Mr Wyss, although they apparently believed he was responsible for directing the actions that led to patient deeaths.  But his impunity mirrors that granted to just about every top health care manager who authorized or directed corporate bad behavior that endangered patients. 

This impunity is further enabled by how anechoic stories of bad leadership of health care organizations, even of apparently criminal or corrupt leadership, are.  As long as most health care professionals and the public at large remain unaware of the dark side of health care, they are unlikely to seek light to shed upon it.

True health care reform would encourage open, widespread discussion of all aspects of health care dysfunction, particularly bad behavior by those who profit most from it, and would encourage health care leadership that puts patients' and the public health first, is willing to be accountable for its actions, is transparent, honest and ethical. 

11:52 AM

Synthes Indicted

Last month, we posted about a legal settlement in which device manufacturer Synthes agreed to stop creating conflicts of interests by paying physicians who performed its trials with company stock. Synthes is back in the news, and not in favorable terms. As reported by the Philadelphia Inquirer,

A Swiss company with major operations in West Chester illegally tested its bone cement on about 200 people, three of whom died, according to a 52-count indictment issued yesterday by the U.S. attorney in Philadelphia.

Synthes Inc., a producer of orthopedic products that employs about 1,400 in Chester County, did not tell any of the patients that they were participating in experimental surgeries, the indictment said.

Federal prosecutors also accused Synthes executives of lying to the U.S. Food and Drug Administration about whether they had tested the product for uses that the agency had not approved.

Particularly striking were allegations that the company's CEO was directly involved in the decisions.

The FDA had approved Norian XR to fill bony voids or defects in some parts of the body, but not in the spine. The agency insisted that Synthes conduct clinical trials, which are lengthy and expensive and require FDA oversight, if it wanted to expand the uses of Norian XR to treat spinal fractures.

But, a company executive identified in the indictment as 'Person No. 7' decided not to conduct clinical trials. Instead, the person said the company should 'get a few sites to perform 60-80 procedures and help them publish their clinical results,' according to the indictment.

The report never explicitly identifies 'Person No. 7,' but says he was the chief executive officer and a large shareholder. A company spokesman identified Hansjörg Wyss as the CEO while the tests occurred.

Forbes Magazine lists Wyss, a Swiss citizen, as a West Chester resident and the Philadelphia area's wealthiest person, with a net worth of $5.7 billion. Last year, Wyss gave the largest amount from a single source in Harvard University's history when he donated $125 million to create a bio-engineering institute.

Wyss owns about 40 percent of outstanding Synthes stock. The company, which had about $805 million in first-quarter sales this year, specializes in orthopedic devices, including plates and screws.

The Inquirer article included more detail about how the company allegedly disregarded risks to patients as it pushed the surgeons to try Norian XR on them, without disclosing that its use was experimental,

Instead of conducting trials with FDA oversight, Synthes executives convinced about 50 surgeons to test Norian XR in people with spinal fractures. Synthes sales representatives often were in the operating room during the surgeries, including those where patients died, prosecutors said.

When company executives began these surgical tests in 2002, they knew that Norian XR caused blood clots in test tubes and that clots became lodged in the lungs in tests with pigs, the indictment said.

Synthes continued the experimental surgeries even after two patients died on the operating table, prosecutors said. The company stopped the tests after a third patient died in January 2004.

Again, it seems that the current leaders of health care all too often put more priority on personal profits than on protecting patients' health and safety. So instead of all the talk about reforming how health care is financed, maybe the conversation should be about reforming how health care is lead, and finding ethical, honest leaders who put patients' welfare ahead of their own wealth.

12:45 PM

Synthes Settles, Agrees to Stop Giving Stock to Physicians Conducting Clinical Trials

Again, 'tis the season for legal settlements. From the Newark Star-Ledger,

New Jersey and Pennsylvania-based medical company Synthes reached a settlement today over the company's alleged financial conflicts of interest, which officials are calling a landmark deal, state officials announced today.

The attorney general's office launched an investigation early 2008 into Synthes, which produces devices for treating spinal trauma, to determine whether physicians were financially benefiting from conducting clinical trials on the company's products. Under the agreement, Synthes will no longer pay trial physicians with company stock and must disclose all payments to the physicians and whether the physicians have a financial stake in the outcome of the trial.

Attorney General Anne Milgram, who said such provisions were the first of their kind, said conflicts of interest are common within the medical community.

'It is outrageous that doctors who are testing and, in many cases, recommending the use of certain high-risk medical devices are being compensated with stock in the very companies that make the devices,' said Milgram. 'All patients -- but especially those considering high-risk devices such as spinal disc replacements -- deserve honest, objective clinical trial information about the products available.'

She also criticized the Food and Drug Administration, saying the federal agency was not vigilant enough in regulating Synthes, a $3.2 billion global company.

'Medical device makers have a duty to make certain that clinical trial results are accurate and unbiased,' Milgram said. 'In creating these financial incentives for doctors, Synthes and the rest of the industry have done the exact opposite. Going forward, if the industry will not address this problem voluntarily, we most certainly will.'

What will they think of next? We have seen plenty of cases in which physicians have been given payments that could influence their clinical decision making by companies with products or services to sell. Often, such payments are not disclosed. This is one of the few times I have seen physicians other than those on corporate boards, however, receiving payments in company stock. This would seem to be a new low. It surely would provide a more powerful incentive to make the studies' results favor the company's products than would mere cash payments. At least the settlement will stop this practice, and force disclosure of company payments.

The statements by the state Attorney General were particularly and admirably direct.

However, once again we see some familiar patterns. While human beings authorized or committed the acts that got the organization in trouble, rarely do these people seem to suffer any negative consequences. At most, the organization may pay a fine. In this case, the fine was, in corporate terms, tiny. However, even a large fine, however, may come out of dividends or the stock price, dispersing the cost to stock-holders, or out of salaries across the board. Thus, those who got the organization into trouble are unlikely to feel pain from it. Perhaps because of reverence for all organizations related to health care, and fear that the bankruptcy of any health care organization, even a health care insurance company, will leave patients in the lurch, prosecutors do not seem inclined to actually prosecute such organizations. The net effect, though, seems to be that dishonest executives of health care organizations can continue to act with impunity.Until bad leadership of health care organizations leads to negative consequences for those practicing it, health care leadership can be expected to continuously degrade.

ADDENDUM (6 May, 2009) - See also comments by Merrill Goozner on GoozNews blog.

12:55 PM