Former executives at Cleveland Clinic Innovations set up a shell company and submitted inflated bills to the health system for software design and development.
A former executive at Cleveland Clinic was sentenced to 30 months in prison for his role in a conspiracy to defraud the renowned health system out of more than $2.7 million, the Department of Justiceannounced.
Gary Fingerhut, 58, had already pleaded guilty to one count of conspiracy to commit wire fraud and honest services wire fraud and one count of making false statements. He was also ordered to pay back the $2.7 million he stole, DOJ said.
Fingerhut worked at Cleveland Clinic Innovations from 2010 until he was fired in 2015. As general manager of information technologies, and later executive director, he helped doctors and other Clinic personnel with inventing and marketing medical products.
In 2012, Cleveland Clinic Innovations formed a subsidiary called Interactive Visual Health Records, to develop a visual medical charting concept of certain Clinic physicians into a functioning product. Fingerhut hired Wisam Rizk as a consultant and then chief technology officer at IVHR to develop the product, DOJ said.
Fingerhut and Rizk both knew they were prohibited from receiving financial benefit or having any personal or familial financial interests in companies the Clinic did business with, DOJ said.
Rizk created a shell company known as iStarFZE, set up a website, email addresses, and a mailing address in New York City. Once operational, ISTAR submitted a bid to the Clinic to develop and design IVHR's software and to increase the price the Clinic paid for the software design and development, without disclosing his financial stake in ISTAR, DOJ said.
Rizk paid Fingerhut about $469,000 in "referral" fees from 2012 through late 2014. In return for Fingerhut not disclosing the fraud scheme. The fraudsters diverted more than $2.7 million from the Clinic.
Rizk has already pleaded guilty to his role in the conspiracy and is awaiting sentencing, DOJ said.
Federal regulators are asking for public comment and cite 'disparity rates' between state audits and AO reviews of healthcare facilities.
The Centers for Medicare & Medicaid Services is asking questions about potential conflicts of interest between Medicare accrediting organizations and the healthcare facilities they monitor.
"We are concerned that the practice of offering both accrediting and consulting services–and the financial relationships involved in this work–may undermine the integrity of accrediting organizations and erode the public’s trust," CMS Administrator Seema Verma said in a media release.
"Our data shows that state-level audits of healthcare facilities are uncovering serious issues that AOs have missed, leading to high 'disparity rates' between the two reviews," Verma said.
"We are taking action across-the-board to ensure the quality and safety of patient care through strengthened CMS oversight of AOs, and today's RFI is a critical component of that effort."
The query likely will include an examination of The Joint Commission, the nation's largest hospital accrediting organization. In a media statement, The Joint Commission said it is reviewing CMS's requests for comment, but said it is confident in the integrity of the "firewall" between its consulting and accrediting divisions.
"The Joint Commission recognizes the importance of assuring the integrity of the accreditation process, which we accomplish by prohibiting any sharing of information about consulting services for individual organizations with anyone involved in accreditation," the statement read.
"The Joint Commission as an accrediting organization and Joint Commission Resources, Inc. as a provider of education and consulting services are two separate organizations. The Joint Commission enterprise has long-standing firewall policies, practices and procedures in place that assure that this goal is achieved," the statement read.
Analysts believe Friday's ruling declaring the ACA to be unconstitutional will get tossed out on appeal. Until then, however, the ACA's precarious status will sow uncertainty across the healthcare sector.
A federal judge's ruling that the Affordable Care Act is unconstitutional could be bad news for states, healthcare providers, and health insurers, financial analysts say.
Moody's Investors Service, Fitch Ratings, and S&P Global Ratings this week issued near-identical predictions of rough times ahead if U.S. District Judge Reed O'Connor's ruling late Friday is not reversed on appeal.
"If the entire law is found to be unconstitutional, federal funding for Medicaid expansion and subsidies to individuals purchasing insurance on the health exchanges would end—an outcome that would be significant for all affected sectors," Moody's said.
Hospitals
"This scenario would be credit negative for hospitals, especially those in Medicaid expansion states," Moody's said, "because it would increase the number of uninsured patients, resulting in higher bad debt and uncompensated care."
S&P said tax-exempt hospitals and healthcare systems—which provide the bulk of U.S. healthcare—"will see a broad diminution in credit quality over time in our view as the growth in both bad-debt expenses and charity care costs would directly lower operating margins."
That concern was already raised this week by Bruce Siegel, MD, president and CEO of America's Essential Hospitals, who said safety nets would suffer the most if O'Connor's ruling is upheld.
"The crushing rise in the number of uninsured patients likely to follow this decision, absent a higher court's reversal, would push these hospitals to the breaking point," Siegel said. "Communities across the country are in jeopardy."
Fitch Ratings agreed that any reductions to the ACA will be detrimental for the not-for-profit healthcare sector, particularly in states that have expanded Medicaid.
"Those that currently receive healthcare insurance under expanded Medicaid would likely become bad debt or charity for provider organizations," Fitch said.
S&P said for-profit hospitals will also see rising numbers of uninsured patients, bringing higher levels of uncompensated care and pressuring margins, "but most likely not as bad as tax-exempt hospitals because they typically operate in markets that tend to have a more commercially focused payer mix."
Hospitals and companies that provide healthcare with mandated coverage under the ACA such as emergency services, mental health, and substance abuse treatment, could also be adversely affected, S&P said.
Health Insurers
For insurers, Moody's predicts that the end of federal funding would be a credit negative because it would eliminate the Medicaid expansion, which accounted for most of the net gain in the insurance rolls.
Ending the ACA would also eliminate subsidies on the health exchanges, making insurance unaffordable for many of the nine million people now getting assistance, Moody's said.
S&P said eliminating the ACA would mean lower revenues and membership from payers' individual and Medicaid businesses.
The elimination of the ACA would allow insurance companies to deny coverage for people with pre-existing conditions, S&P said, and it could also spur interest in short-term, or minimum benefit plans that could help insurers offset the loss of business from the individual markets.
"To the extent these types of policies replace more comprehensive policies, greater bad debt expense for inpatient providers can be expected given the coverage limitations inherent in these policies," S&P said. "Preventative services to the newly uninsured would decline with an expectation that more expensive emergency room care and inpatient care would have to be provided."
Ultimately, S&P said, eliminating the ACA would make health insurance more expensive for the people with chronic conditions, which could result in more medical-expense driven personal bankruptcies.
Historically, uninsured care costs were taken on by state governments using risk pools and cost-shifting to commercial plans, but S&P says those days are over.
"Employers, in our opinion, are increasingly unwilling to pay those costs," S&P said. "The current array of insurance products already requires consumers to pay more for their healthcare, which reflects a combination of rising costs for employer-based health insurance and employers' desire to pay less."
"This is not a new trend, but we believe it would be exacerbated by elimination of the ACA," S&P said.
State & Local Government
States that expanded Medicaid under the ACA would likely revert to prior eligibility levels and eliminate ACA-related spending, Moody's said.
"Although many states have 'poison pill' language in their Medicaid expansion laws that would eliminate expanded state coverage if the federal law is struck down, they nonetheless would face political pressure to help their expansion populations," Moody's said.
S&P noted that the loss to states of billions of federal dollars for Medicaid expansion would represent a significant cost increase for states hoping to maintain coverage for the expansion population.
"Furthermore, we expect the withdrawal of federal funding flows would have an incrementally negative impact on regional economies, which are already poised to see economic deceleration as the effects of the fiscal stimulus from the tax cuts begins to fade," S&P said.
Longer-Term Outlook
The three bond rating agencies all believe that O'Connor's ruling will be overturned on appeal, either in the 5th Circuit Court in New Orleans, or in the U.S. Supreme Court, which upheld the constitutionality of the ACA in 2012 and 2015.
"Ultimately, we believe the ACA will survive through the appeals process as it has survived other challenges in the Supreme Court," Fitch said. "However, renewed debate on the ACA will generate further uncertainty for healthcare providers and the general public alike."
Longer term, if the ruling is upheld, S&P said it has "the potential to change the direction of the current efforts to reform the U.S. healthcare delivery system fundamentally."
"Given the makeup of the incoming Congress, we think it is highly unlikely bi-partisan compromise could be reached on such a large subject, one that amounts to one-sixth of the U.S. economy," S&P said. "In our view, the demise of the ACA would become the number one issue in the 2020 presidential election."
A federal judge's ruling that the Affordable Care Act is unconstitutional was greeted with a chorus of boos from key stakeholders, who are hoping the ruling is reversed on appeal.
Payers and providers are presenting a united front in their condemnation of a federal judge's ruling that the Affordable Care Act is unconstitutional.
U.S. District Judge Reed O'Connor in Fort Worth issued the ruling late Friday, on the eve of the final day of open enrollment for ACA coverage. He sided with Republican plaintiffs in 20 states who argued that the entire ACA was rendered invalid when Congress zeroed out the financial penalties tied to the individual mandate.
California Attorney General Becerra, who with 15 other states and the District of Columbia intervened in defense of the ACA, has already said he would appeal the ruling, which he called "an assault on 133 million Americans with preexisting conditions, on the 20 million Americans who rely on the ACA for healthcare, and on America's faithful progress toward affordable healthcare for all Americans."
However, the ruling has created uncertainty about the future of the ACA, even as many legal experts question O'Connor's reasoning and predict the ruling will get tossed out upon appeal.
Here's a roundup of reactions from key stakeholders, many of whom filed amicus briefs urging O'Connor to reject the plaintiff's complaint against the ACA:
Rick Pollack, president and CEO of the American Hospital Association:
America's hospitals and health systems are extremely disappointed with (Friday's) federal district court ruling on the constitutionality of the Affordable Care Act. The ruling puts health coverage at risk for tens of millions of Americans, including those with chronic and pre-existing conditions, while also making it more difficult for hospitals and health systems to provide access to high-quality care.
We strongly disagree with the ruling and urged the court not to accept the plaintiff’s severability argument in an amicus brief filed earlier this year along with other national organizations representing hospitals and health systems. We join others in urging a stay in this decision until a higher court can review it and will continue advocating for protecting patient care and coverage.
Bruce Siegel, MD, president and CEO of America's Essential Hospitals:
U.S. District Judge Reed O'Connor's ruling is a profoundly troubling development that threatens to leave millions of Americans—including many with pre-existing conditions—little hope for affordable health care coverage and financial stability.
Through the Affordable Care Act’s marketplace and Medicaid expansion, the nation has made significant gains in reducing the ranks of the uninsured. Those gains have translated to better health and productivity for hard-working people who once could not afford the high cost of coverage. We must not return to a time when the emergency department was their only option for care.
The nation’s essential hospitals always will work to meet their mission of caring for those who face economic and social hardships. But the crushing rise in the number of uninsured patients likely to follow this decision, absent a higher court’s reversal, would push these hospitals to the breaking point. Communities across the country are in jeopardy.
Chip Kahn, president and CEO of the Federation of American Hospitals:
The judge got it wrong. FAH believes this ruling would have a devastating impact on the patients we serve and the nation’s health care system as a whole.
Americans deserve access to affordable coverage so they can get the care they need, including consumer protections such as pre-existing conditions. Millions have gained coverage since the passage of the ACA, and this ruling could reverse that progress.
Having this decision come in the closing hours of open enrollment also sows seeds of unnecessary confusion.
Barbara L. McAneny, MD, president of the American Medical Association:
"(Friday's) decision is an unfortunate step backward for our health system that is contrary to overwhelming public sentiment to preserve pre-existing condition protections and other policies that have extended health insurance coverage to millions of Americans.
It will destabilize health insurance coverage by rolling back federal policy to 2009. No one wants to go back to the days of 20% of the population uninsured and fewer patient protections, but this decision will move us in that direction.”
The AMA will work with patient and other health stakeholder groups in pursuing an appeal and reversal of this unfortunate decision at the district court level.
Ana María López, MD, President, American College of Physicians:
If this ruling stands, patients could once again be turned down or charged more for preexisting conditions, and insurers would no longer be required to cover essential benefits like prescription drugs and doctor visits. Additionally, premium subsidies to make coverage affordable would end; insurers would pull out of the marketplaces; and annual and lifetime limits on coverage would return. Federal funding for Medicaid expansion would also be terminated, and seniors would no longer have access to no-cost preventive services.
While ACP hopes and anticipates that this decision by a single federal judge in Texas will be reversed on appeal, we take nothing for granted and will be doing all that we can to ensure that patients do not lose current law protections.
Matt Eyles, president and CEO of America's Health Insurance Plans:
The district court's decision is misguided and wrong. This decision denies coverage to more than 100 million Americans, including seniors, veterans, children, people with disabilities, hardworking Americans with low-incomes, young adults on their parents' plans until age 26,and millions of Americans with pre-existing conditions.
We argued in an amicus brief before the court that provisions of the Affordable Care Act affecting patients with pre-existing conditions, and those covered by Medicaid and Medicare should remain law regardless of what the court ruled on the individual mandate. Unfortunately, this ruling harms all of these Americans.
This is just the first step in a lengthy legal process. AHIP will continue to engage as this decision is appealed.
Scott Serota, president and CEO of the Blue Cross Blue Shield Association:
While we are extremely disappointed in the court's ruling, we will continue to work with lawmakers on a bipartisan basis to ensure that all Americans can access the consistent, quality health coverage they need and deserve.
(Friday's) federal district court ruling in a case challenging the Affordable Care Act is the first step in what we expect will be a lengthy legal process. Blue Cross and Blue Shield members can be assured that their health coverage and the financial assistance they may receive to help them afford it remains in place despite this ruling, and patients will continue to receive the care they need. Open enrollment for 2019 individual coverage also is unaffected, and BCBS companies will continue to help consumers find the coverage they need at the best possible price.
The two states approve the deal after receiving assurances that consumers will not foot the bill for the acquisition costs. The feds approved the deal in September.
The $71 billion megamerger of Express Scripts and Cigna Corp. cleared big hurdles this week with state regulators in New York and California approving the deal.
California Department of Managed Health Care Director Shelley Rouillard said the deal cleared "a high standard of review to ensure consumers' healthcare rights are upheld and access to appropriate health care services continues."
"The conditions imposed on Cigna and Express Scripts will improve plan performance, increase access to health care services and assist in controlling health care costs," she said.
The DMHC's approval requires that Cigna and Express Scripts not increase premiums to cover acquisition costs, and keep premium rate increases to a minimum. In addition, the two companies have agreed to invest $60 million in California's healthcare delivery system.
New York's Department of Financial Services held a hearing on the proposed merger on Nov. 21, but waived a second hearing scheduled for Jan. 10, 2019 after receiving only one written comment, one request to testify and "substantial commitments" from Express Scripts and Cigna to address concerns about cost increases for consumers. DFS said the deal was subject to ongoing regulatory oversight.
The deal, which received approval from the federal government in September, is expected to close by the end of the year, now that New York regulators have cancelled the January hearing. However, New Jersey regulators have yet to approve it.
The Cigna/Express Scripts merger is the second major vertical integration of a pharmacy benefits management company and health insurance company to be approved by state and federal regulators this fall.
In November, CVS Health and Aetna Inc. announced the completion of their approximately $70 billion merger, days after New York state regulators signed off on a deal. Since then, however, a federal judge reminded CVS and Aetna that the deal still must get his approval.
Observers believe these mergers have the potential to fundamentally change healthcare delivery by more effectively addressing consumer concerns about rising healthcare costs and price transparency.
New York regulators placed the overall valueof the Cigna/Express Scripts deal at $71 billion.
Cigna will pay $58 billion to acquire Express Scripts. This includes $27.5 billion in cash—$24.5 billion in new debt comprised of approximately $20 billion in senior notes, $1.5 billion in commercial paper, $3 billion per term loan credit agreement, and $3 billion cash on hand.
The remaining $30.5 billion in new equity will be issued to Express Scripts' shareholders. Cigna will also assume $13 billion of Express Scripts' debt, with the total value of the merger being approximately $71 billion.
Plaintiffs in the class-action suit allege that the nation's 36 Blue Cross Blue Shield companies have entered non-compete clauses that result in higher premiums and less choice for consumers.
A federal appeals court has upheld a ruling that agreements among Blue Cross Blue Shield companies across the nation to carve out markets and limit competition can be reviewed as inherent violations of the Sherman Anti-Trust Act.
In a one-page memorandum issued Wednesday, the 11th U.S. Circuit Court of Appeals sided with U.S. District Judge David R. Proctor, who last April ruled that the healthcare consumers who filed the suit against the Blue Cross Blue Shield companies "have presented evidence of an aggregation of competitive restraints…which, considered together, constitute a per se violation of the Sherman Act."
The plaintiffs, who include a class of BCBS customers, allege that the 36 Blue Cross Blue Shield companies have entered non-compete pacts that allocates the markets in which they sell health insurance and caps the amount of unbranded health insurance they offer.
The suit, filed nearly six years ago, claims that the pact artificially inflates premiums and decreased consumer choice for health insurance.
Blue Cross Blue Shield Association General Counsel Scott Nehs said this week's ruling denying the insurers' appeal "was not unexpected, as pre-trial appeals are rare."
"This is another step in a very long process and we look forward to continuing to defend our case in the U.S. District court. We remain confident that we will ultimately prevail," Nehs said in prepared remarks.
"Blue Cross and Blue Shield companies have been at the heart of the U.S. health care system for almost a century," he said. "We provide substantial benefits to medical professionals and currently serve nearly 106 million people with competitive pricing, secure and stable healthcare coverage and reliable service."
By upholding the district court's per se standard for the suit, the plaintiffs' attorneys say the appellate court has made it easier to prove their case without involving extensive documentation of economic damages.
Edith Kallas and Joe Whatley, lead attorneys for the plaintiffs, issued a joint statement calling the appeals court ruling "an important positive step for all healthcare providers and subscribers in America. It is our sincere hope that the parties can now engage in a dialogue to increase competition in health insurance and to improve healthcare for all Americans."
Whatley noted that attorneys for the Blues had asked Proctor to certify the appeal, arguing that, because its the largest antitrust suit in U.S. history, the appeal would be granted.
"Now, they are saying they never expected the appeal to be granted, which means that they were only filing the petition to delay the proceedings," Whatley said in an email to HealthLeaders.
"As the court has found, 15 of the largest 25 health insurance companies in the country are Blues, including two of the largest four or five," Whatley said. "Those 15 have agreed that they will not compete with each other, which is a major reason why we have so little competition in health insurance."
New CEO Gino Santorio has served as COO at the five-hospital health system since 2017, and he takes over immediately.
Broward Health has a new CEO, again.
Gino Santorio, the COO at Broward Health, on Wednesday night was promoted to president and CEO of the five-hospital health system after a unanimous vote by the hospital district's board of commissioners.
Santorio is Broward Health's fifth CEO the past three years, and he takes over immediately, the Fort Lauderdale-based health system said in a media release.
"I am excited to have been selected to lead Broward Health," Santorio said. "Our team is motivated and looking forward to building on our successes. We are committed to our mission of providing the highest quality of care."
Broward Health has been plagued by leadership churn. CEO Beverly Capasso resigned abruptly in October, citing personal reasons, just eight months after signing a three-year contract with the health system.
Capasso and four other Broward Health leaders—General Counsel Lynn Barrett, board Chairman Rocky Rodriguez, and board members Christopher Ure and Linda Robison—face misdemeanor charges for allegedly mishandling the dismissal of former interim CEO Pauline Grant in 2016 in violation of Florida's Sunshine Law, which requires public entities to conduct their business publicly.
Before joining Broward Health, Santorio was senior vice president and CEO for Jackson North Medical Center and was VP/COO of Jackson Memorial Hospital. He has served as COO and CFO/Hospital Compliance Officer at Spring Hill Regional Hospital in Spring Hill, Florida, and assistant CFO at Brooksville Regional Hospital.
"Gino is innovative and forward-thinking, and we are confident he will bring Broward Health to the next level of service," said Andrew Klein, chairman of the North Broward Hospital District Board of Commissioners. "This is an excellent step in the right direction for the organization."
Santorio's appointment as CEO came shortly after Moody's Investors Service changed its rating outlook for North Broward Hospital District to stable from negative.
The bond-rating agency said Broward Health's Baa2 rating "would continue to benefit from the system's role as a large and diversified health system, a strong unrestricted cash and investments relative to total debt and operations as well as modest debt structure risks."
However, Moody's also warned that "thin cash-flow, an above average and rising average age of plant, high reliance on Medicaid and supplemental funding, an extraordinary level of external scrutiny under a Corporate Integrity Agreement, and an unusual degree of turnover of senior leadership will continue to constrain the rating."
Prosecutors allege that the Pennsylvania-based, for-profit health system improperly unbundled claims billed to Medicare and other government payers in order to inflate reimbursements.
Coordinated Health Holding Company, LLC and its founder and CEO Emil DiIorio, MD, will pay $12.5 million to resolve allegations that the health system improperly billed Medicare and other government-sponsored health plans for orthopedic surgeries, the Department of Justice said.
The government alleges that Coordinated Health and DiIorio improperly unbundled the global claims used for reimbursements for orthopedic surgeries in order to artificially inflate reimbursements from federal healthcare payers, including Medicare, Medicaid, the Federal Employee Health Benefits Program, and the U.S. Department of Labor's Office of Workers' Compensation Programs.
Under the deal, announced this week by federal prosecutors in Philadelphia, Coordinated Health will pay $11.25 million, and Dilorio will pay $1.25 million. The company also entered a five-year Corporate Integrity Agreement with DOJ.
"The alleged corporate culture and leadership that promoted this conduct and allowed it to continue despite crystal clear warnings is shameful," William M. McSwain, U.S. Attorney for the Eastern District of Pennsylvania, said in a media release.
"If true, it amounts to theft of public funds and a fraud on Medicare, Medicaid, and federal employee health insurers. We are unaware of any unbundling scheme that has had a bigger impact on federal funds," he said.
Coordinated Health, based in the Lehigh Valley region of Pennsylvania, employs 100 physicians, about 30 of whom are orthopedic surgeons.
Florence Brown, director of communications at Coordinated Health, said the provider was "pleased to have come to a resolution with the federal government regarding allegations of our past use of a specific Medicare billing modifier, involving a complex Centers for Medicare and Medicaid Services rule, which does not relate to the quality of patient care."
"We have already updated our billing practice to resolve the issue in question, and have taken a number of decisive actions to reduce the potential for issues in the future," Brown said.
Misused Modifier 59
Prosecutors allege that Coordinated Health and Dilorio knowingly circumvented electronic safeguards designed to block separate reimbursements for parts of the same surgery when a global fee is paid, and that they continued to do so even after they were explicitly warned that it was illegal.
Specifically, prosecutors allege that from 2007 through mid-2014 Coordinated improperly used the billing code Modifier 59 to unbundle claims and bill government payers separately for parts of the same orthopedic surgeries.
DiIorio, an orthopedic surgeon, allegedly changed how he wrote operative reports beginning in April 2009 so that Coordinated Health could use Modifier 59 to maximize improperly unbundled reimbursements for his knee, hip and shoulder surgeries.
For example, in his total knee replacement operative reports before April 2009, DiIorio rarely diagnosed any patient with poor patellar tracking and said in almost every report that a "lateral retinacular release" incision was unnecessary. The procedure is part of the global surgery reimbursement for a knee replacement.
However, in almost every knee replacement operative report after April 1, 2009, DiIorio diagnosed the patient with poor patellar tracking and claimed he performed a lateral retinacular release. Each time, Coordinated Health used Modifier 59 to improperly bill for a lateral retinacular release as if one was performed separate from the knee replacement, DOJ said.
Outside consultants hired by Coordinated Health told top executives in 2011 and again in 2013 that they were misusing Modifier. The 2013 consultant told Coordinated Health to self-report and repay Medicare and other federal payers. The second consultant also provided on-site training on the proper use of Modifier 59 to Coordinated Health coders in November 2013.
"Motivated by its bottom line, Coordinated Health simply ignored the consultants' recommendations and continued abusing Modifier 59 to improperly unbundle orthopedic surgery claims until mid-2014," DOJ said.
Federal prosecutors noted that the claims resolved in the settlement are only allegations and that there has been no determination of liability.
Veteran health system executive Michael Slubowski, Trinity's president and COO, will become the Livonia, Michigan-based health system's next CEO, effective July 1, 2019.
Trinity Health CEO Richard J. Gilfillan, MD, said Tuesday that he will leave the Livonia, Michigan-based the health system in June 2019 after five years at the helm.
Trinity President and COO Michael Slubowski was named by the health system's board to become the next CEO, effective July 1, 2019.
Gilfillan, who is also a primary care physician, told the board in September that he was tired of commuting from his home in Washington, DC, and wanted to spend more time with his family. The board initiated a succession plan and Slubowski was elected unanimously on Dec. 5, according to a media release.
Gilfillan said he was "extraordinarily privileged" to serve as CEO for the non-profit, Catholic health system over the past five years.
"The board’s vision is for Trinity Health to lead nationally in creating a high-value health system. While we have made significant progress toward that goal there is still much work to be done," Gilfillan said. "Mike Slubowski has been a great partner over these past 18 months and is committed to continuing that effort."
Gilfillan joined Trinity Health as CEO in November 2013, following the merger with Catholic Health East in May 2013.
At that time, the health system had 82 hospitals and 89 continuing care locations in 21 states with annual operating revenue of $13.3 billion. In 2018, Trinity had 94 hospitals and 109 continuing care locations in 22 states with operating revenue of $18.3 billion.
"Rick's bold and innovative leadership has transformed Trinity Health from a system focused primarily on acute care to an accountable, people-centered health system that provides outstanding episodic care, population health management and community health and well-being services to address the social determinants of health," Trinity Health Board Chair James Bentley said in prepared remarks.
Slubowski, a veteran hospital executive, was named Trinity Health president and COO in May 2017. Before that, he was president and CEO of SCL Health. Before that, he was president of Hospital and Health Networks at Trinity Health and had worked at Trinity Health for 13 years. He also spent 10 years at Henry Ford Health System in Detroit, where he was vice president of Ambulatory Satellites and Prepayment Programs.
"We are fortunate that Mike already has been deeply involved in Trinity Health operations for the past two years," Bentley said. "We know that he is committed to executing our people-centered health system strategy. As evident in his selection as the board chair of the Catholic Health Association, we also know that he is deeply committed to the mission of Catholic health care."
Trinity provides care for more than 6 million people each year through an integrated health system that includes 7,800 physicians and advanced practitioners. Trinity's Clinically Integrated Networks include 15,000 physicians and clinicians serving 1.3 million people.
Japan-based Olympus Medical Systems and a former top regulator at the company admit they knowingly distributed endoscopes in the U.S. that carried a risk of serious infection.
Olympus Medical Systems and a former senior executive pleaded guilty this week to distributing endoscopes after failing to file FDA-required adverse event reports of serious infections, the Department of Justice said.
Olympus, which is headquartered in Tokyo, Japan, and Hisao Yabe, 62, of Japan, both entered guilty pleas in a federal district court in Newark, New Jersey.
Olympus pleaded guilty to three counts, and Yabe to one count, of distributing misbranded medical devices in interstate commerce in violation of the Federal Food, Drug, and Cosmetic Act, under a deal reached with DOJ.
Olympus will pay an $80 million fine and surrender $5 million in criminal forfeitures.
Yabe will be sentenced on March 27, 2019, and faces a maximum potential penalty of a year in prison and a $100,000 fine, which is twice the gain or loss from the offense.
According to DOJ, Olympus admitted that it failed to file with the FDA required adverse event reports in 2012 and 2013 relating to three separate events involving infections in Europe connected to Olympus’s TJF-Q180V duodenoscope involving 30 patients.
Yabe admitted his own personal responsibility for the failure to file the necessary information with FDA. At the time, Yabe was Olympus's Division Manager for the Quality and Environment Division – Olympus's top regulatory official, whose responsibilities included adverse event reporting in the United States, DOJ said.
Rachael Honig, U.S. Attorney for the District of New Jersey, said the infractions were "especially troubling" because Olympus and Yabe were told about the safety concerns by an independent expert.
"Patient safety must always be a paramount concern for medical device companies, and these defendants simply failed to treat that concern with the gravity it deserves," Honig said.
The FDCA requires medical device manufacturers to file adverse event reports—known as Medical Device Reports—when the manufacturer becomes aware of information that reasonably suggests that the manufacturer’s device may have caused or contributed to a death or serious injury.
Under the FDCA, devices for which required MDRs have not been filed are deemed misbranded, and it is a crime to ship such devices in interstate commerce.
Between August 2012 and October 2014, Olympus shipped hundreds of misbranded duodenoscopes in the United States, generating approximately $40 million in revenue and approximately $33 million in total gross profit.
Olympus's payment of $85 million is more than 2½ times Olympus’s total profit from sales of the misbranded duodenoscopes.
Yabe admitted that he was aware of Olympus's obligation to file supplemental MDRs
An independent report—which Olympus obtained in the summer of 2012—found numerous problems with the Q180V, including that the scope's tip had various cracks, corners, and crevices that could harbor bacteria and could be cleaned only with great difficulty.
The report recommended immediate further investigation of all such scopes, updating the cleaning instructions, and improving the quality of the seals.
