A Michigan law requires coverage of cancer drugs. One insurer came up with a 'defensible' way to avoid paying for treatments that offered Forrest VanPatten his last chance for survival. 'We crossed the line,' says a former executive.
This article was published on Wednesday, November 25, 2023 in ProPublica.
By Maya Miller and Robin Fields
Forrest VanPatten was 50 and strong after years as a molten-iron pourer when he learned in July 2019 that a hyperaggressive form of lymphoma had invaded his body. Chemotherapy failed. Because he was not in remission, a stem cell transplant wasn't an option. But his oncologist offered a lifeline: Don't worry, there's still CAR-T.
The cutting-edge therapy could weaponize VanPatten's own cells to beat back his disease. It had extended the lives of hundreds of patients who otherwise had no chance. And VanPatten was a good candidate for treatment, with a fierce drive to stay alive for his wife of 25 years and their grown kids.
VanPatten didn't know it, but he also had the law on his side. His home state of Michigan had long required health insurers to cover clinically proven cancer drugs.
He and his family gripped tight to the hope that the treatment promised.
Then, his insurance company refused to approve it.
Across the country, health insurers are flouting state laws like the one in Michigan, created to guarantee access to critical medical care, ProPublica found. Fed up with insurers saying no too often, state legislators thought they'd solved the problem by passing hundreds of laws spelling out exactly what had to be covered. But companies have continued to dodge bills for pricey treatments, even as industry profits have risen. ProPublica identified dozens of cases in which plans refused to pay for high-stakes treatments or procedures — from emergency surgeries to mammograms — even though laws require insurers to cover them.
Companies can get away with this because the thinly staffed state agencies that oversee many insurers typically don't open investigations unless patients file complaints. Regulators acknowledge they catch only a fraction of violations. "We are missing things," said Sebastian Arduengo, an assistant general counsel for Vermont's insurance department.
In the 34 years since Michigan began to require cancer coverage, regulators there have never cited a company for violating the law.
Like most policyholders, VanPatten had no insight into the decision made by his insurer, a nonprofit called Priority Health that covers about a million Michigan residents.
He didn't know that around the time the therapy won the Food and Drug Administration's approval, executives at Priority Health had figured out a way to weasel out of paying for it.
Through interviews with former employees and a review of company emails and VanPatten's medical records, ProPublica was able to crack through the usual secrecy and expose the health insurer's calculations.
Former employees said the decision not to cover this treatment and a related one was driven almost entirely by their high price tags — up to $475,000. Side effects that could land a patient in the hospital can push the bill over $1 million. Priority Health number crunchers calculated to the penny the monthly cost per policyholder if the company shifted the expense to them: 17 cents. But executives didn't raise premiums or absorb the extra cost. They decided to save that money.
Patients' needs weren't part of the equation, recalled Dr. John Fox, then Priority Health's associate chief medical officer. "It was, ‘This is really expensive, how do we stop payment?'"
Over Fox's objections, fellow executives came up with a semantic workaround: These cancer drugs aren't technically drugs, they argued, they're gene therapies. All Priority Health had to do was to exclude gene therapies from its policies, and it could say no every time.
Priority Health said in a written statement to ProPublica that it provides compassionate, high-quality, affordable coverage and spends 90 cents of every premium dollar on member care.
"We are committed to making medical innovations available to members as quickly as possible, regardless of cost, as soon as they have been proven to be safe and effective," Mark Geary, a spokesperson, wrote. The company said it initially didn't cover CAR T-cell therapy because there was a "lack of consensus" about the treatment's effectiveness.
"Major life-threatening complications and side effects were common, with a high rate of relapse," the statement said.
At the time of VanPatten's denial there was, in fact, already substantial consensus about the medication. In December 2017, the National Comprehensive Cancer Network, then an alliance of 27 leading U.S. cancer treatment centers, spelled out in its guidelines for B-cell lymphomas which patients should receive the therapy and when. VanPatten's doctor said he met the criteria.
VanPatten's family signed a privacy waiver giving Priority Health permission to discuss his case with ProPublica. Nevertheless, Priority Health did not respond to questions about his case or whether the company had violated Michigan's mandate to cover cancer drugs when it refused to pay for his therapy.
VanPatten was disappointed but tried to remain optimistic after the first denial in January 2020. He and his wife, Betty, who worked in medical billing, knew it often took an appeal to coax the insurer to approve care.
In early February, Dr. Stephanie Williams, then the head of the blood and marrow transplant program for Spectrum Health, came to see VanPatten in his hospital room on Grand Rapids' Medical Mile. It had been more than six months since his diagnosis.
He was sitting up in bed hooked up to an IV. His face, once framed by reddish eyebrows and a signature goatee, was hairless and drained of color. Betty pasted on a tight smile.
Priority Health had denied the treatment again, Williams told them, though she vowed to keep fighting.
When she left the room, VanPatten swung his legs over the side of the hospital bed. He had remained resilient and good-humored through his illness. But at that moment, he felt like Priority Health was treating him like an expense, not a person. It got to him, the idea that the insurer he dutifully paid each month knew this was his only chance and was holding it just out of reach.
He grabbed a tissue box from a tray and hurled it against the wall.
Fox, whom Willams described as the "conscience of the company," had long been the point person for oncology in Priority Health's medical department. In his earlier life as a practicing physician, he had trained at the Centers for Disease Control and Prevention as a chronic disease epidemiologist. When he joined Priority Health in 2000, he admired the company's focus on preventive care and the fact that his bosses encouraged him to build deep relationships with local hospitals and doctors.
CAR T-cell therapy was a breakthrough more than 20 years in the making, and Fox had tracked clinical trials and talked to oncologists about it. By genetically reengineering patients' own white blood cells, then infusing them back into the body to fight cancer, the treatment helped most participants in clinical trials get into remission within three months.
He knew this would be a game changer for patients. He also knew the law. So when news of the FDA's approval of the first CAR-T medication, Kymriah, hit his inbox in August 2017, he recalled, "I said, ‘You know, we're required to cover this. This is a treatment for cancer.'"
But the culture at Priority Health had shifted over the previous year under new leadership to focus on cost savings, Fox and four other former employees said in interviews. The company brought in a new chief medical officer, Dr. James Forshee, in late 2016 from Molina Healthcare, an insurer known for wringing profits out of Medicaid managed care plans.
In conversations about the new treatment, several former Priority Health employees recall, Forshee pointed out that the law required covering cancer "drugs," and he argued that the new treatment actually wasn't a drug; it was a gene therapy. (Through a company spokesperson, Forshee declined to comment for this article.)
Fox thought this was ridiculous. He pressed company lawyers for an opinion. Priority Health's filings with the state "indicate that we have to cover FDA approved cancer drugs," Fox wrote to two members of the legal department in a September 2017 email.
Senior counsel John Samalik responded, bolstering Forshee's position that Priority Health didn't have to cover Kymriah: "I believe legally we have a defensible argument that Kymriah is a gene therapy and not a drug." (Samalik declined to comment through a company spokesperson.)
Fox pointed out that the company already covered another gene therapy. He told ProPublica that he suggested asking state regulators whether the cancer-drug mandate applied to Kymriah, but Forshee and at least one other executive refused.
"My inference being that, if we ask the state, they would say yes, so let's not ask," Fox said. Two other former Priority Health employees involved in the discussions confirmed Fox's recollections.
The FDA approved a second CAR T-cell medication, Yescarta, seven weeks after the first approval.
When ProPublica asked if the FDA considered CAR T-cell therapies drugs, an agency spokesperson said yes. She wrote in an email that they have been regulated as gene therapies, and that they "are biological products and drugs under the Public Health Service Act (PHS Act) and the Federal Food, Drug and Cosmetic Act."
Fox continued to push Priority Health to cover them; Forshee didn't budge.
As they often did for new therapies, Priority Health's actuaries calculated the price tag. They estimated that each year, one patient would need Yescarta and one Kymriah. If spread across the company's members, the therapies would cost an extra 17 cents per member per month — 8 cents for Yescarta and 9 cents for Kymriah, emails show.
If the company had chosen to absorb the cost rather than raise premiums, the extra expense — potentially more than $1 million for each patient receiving the therapy — could have hurt its bottom line. Other insurers had also balked at the cost of CAR-T and were slow to cover it.
Priority Health made a slight tweak to its 2018 filings to state regulators, one with life-changing implications for patients like VanPatten. As it had in the past, the company said it covered drugs for cancer therapy "as required by state law." But the insurer slipped in a new sentence more than a dozen pages later: Gene therapy was "not a Covered Service."
Meanwhile, regional and national health plans began approving the drugs. Kaiser Permanente started covering them within months of the FDA's approvals. Blue Cross Blue Shield of Michigan — the state's biggest health plan and Priority Health's main competitor — paid for a cancer patient to receive CAR T-cell therapy in December 2017. (A spokesperson said in an email that the plan added coverage based on the treatments' efficacy, without considering whether Michigan's mandate applied. "We would have covered these drugs irrespective of the law," she said.)
When the national Blue Cross Blue Shield Association made an announcement about CAR-T coverage later in 2018, employees at Priority Health forwarded it to one another. It was an I-told-you-so moment for Fox.
At a meeting that December, Fox made the case again that Priority Health should ask the state whether Michigan's law required covering the new cancer treatments.
Forshee bristled. "You don't trust our legal counsel?" he responded, according to Fox and another executive who attended.
His own temper rising, Fox considered what would happen if the company maintained its position. Patients who needed these therapies would likely die. Fox and his team would have to sign the denial letters, knowing the despair and anger they would sow.
After working at Priority Health for more than 18 years, Fox had once thought he'd retire there. He left that meeting certain he had to move on.
"Health plans have a right to make money; we're providing a service," Fox said. "But we have to do that honestly and fairly, putting patients first, not profits or premiums first. To me, that's where we crossed the line."
About seven months later, on a sticky night in July 2019, Forrest and Betty VanPatten were sipping beers with friends at the local club of the Fraternal Order of Eagles.
When they'd moved to Sparta, a small Michigan town known for its apple orchards, this was where they'd found community. The club had hosted countless charity raffles and fundraisers, including a "pink night" for the American Cancer Society for which Forrest squeezed into a hot-pink minidress Betty sewed for him. (There wasn't much off-the-rack that could fit his almost 6-foot-8-inch frame.)
They were expecting biopsy results at any moment. Forrest had gone to the emergency room the previous weekend with intense pain. He'd made it through two previous bouts of lymphoma and suspected he was about to face another.
Forrest's phone rang. It was the office of his primary oncologist, Dr. Brett Brinker. Oncologists meet hundreds of patients and their families, but Brinker had grown deeply fond of the VanPattens. Forrest was the guy who could talk to anyone, who made the party worth attending. Betty was his perfect foil. Their laughter and candor left a lasting impression.
The news was bad. Forrest had something called Richter's transformation. It made his lymphoma significantly more aggressive and less likely to respond to conventional chemotherapy. After hanging up, Forrest typed Richter's into his phone. Almost immediately, he proclaimed, "This is a death sentence."
Betty needed to clear her head. She walked around the block, passing a restaurant where Forrest's name was on the wall for completing a taco-eating challenge. When she got back, she urged Forrest to snap out of his defeatism.
He had just celebrated his 50th birthday and was determined to be around for his 51st. His kids, Donovan, 23, and Madison, 22, were in serious relationships, and he wanted to be there for their weddings.
"So we went in and got a game plan," Betty said. Forrest would begin with chemotherapy, and, if the cancer went into remission, they would try for a stem cell transplant. If the cancer didn't go into remission, Brinker made it clear they weren't out of options. He told them about CAR-T.
It felt reassuring at the time.
By January 2020, CAR-T was all they had left. Brinker said he thought the treatment could at least bring Forrest's disease under control for a few years. "It's hard to use the word ‘cure' when it's acting like that," he said of Forrest's cancer. But if they won some extra time, he said, "there's always something in the wings you can hope for."
On Jan. 28, Williams, the doctor who ran the transplant program, worked with her team to submit a request for coverage to Priority Health. Williams knew the company's policy on CAR-T but thought the insurer might relent when faced with an actual patient who was certain to die without the treatment. Plus, by that point, the federal government was covering the therapies for Medicare patients, and insurers often follow its lead.
Knowing it could take weeks to grow the cells used in the treatment, his doctors prepared to extract his white blood cells. "These are diseases where we don't have a lot of time to waste," Williams said.
Then Williams' office found out that Priority Health had denied the request. Forrest's doctors appealed but were turned down again, prompting Forrest to throw the tissue box at the wall.
Williams felt it, too. "I was deflated. I was angry," she recalled. "We kept trying to work it out, and we kept hitting roadblocks."
The VanPattens didn't have the money to pay out of pocket, and Forrest didn't want to saddle his family with medical debt. His medical team filed a third and final appeal, this one to an independent reviewer.
As that went forward, the VanPattens received a letter from Priority Health explaining its reasons for denying Forrest's treatment. CAR-T cell therapy "is not a covered benefit," and "therefore, we are unable to approve this request," the letter stated. Somehow, seeing the words in writing conveyed a different finality, sending Forrest into a downward spiral.
Their son, Donovan, took to social media to blast Priority Health for its decision, hoping to shame the company into a last-minute about-face. He included a screenshot of a text message from Forrest, who knew his insurer was an outlier. "It should be noted that Blue Cross and Blue Shield of MI pays for Car T Cell!" it read.
A reporter for Fox 17, a local TV news station, interviewed Forrest on Feb. 13 in the suede recliner he'd long claimed as his chair in the family's living room.
Days later, Forrest was back in Butterworth Hospital with shortness of breath. "He is in acute distress," an emergency room doctor noted when he was admitted.
The following night, his heart stopped beating. Betty retreated to the back of the room as doctors and nurses swarmed in. Donovan sat in a chair outside, his head in his hands.
Madison raced through Grand Rapids' snow-covered streets to join them. When she reached her father's room, a member of the medical team was still pushing down on his chest. But, she recalled, "it was clear he wasn't there anymore." The family told his doctors to end the resuscitation effort.
Forrest died on Feb. 17, before the independent medical reviewer had a chance to weigh in. Three weeks had passed since Williams and her team had asked Priority Health to cover the therapy.
Williams said that if Priority Health had approved the first request, Forrest could have received the infusion. It's unknowable whether the treatment would have given him more time, she said, but if he'd had that chance, "anything is possible."
Not long after Forrest died, his family received a handwritten card from a clinical coordinator who cared for him.
"I am so so so sad that we didn't get the chance to put the rest of our plan into motion," she wrote. "In honor of your kind (+very funny) husband, dad, friend, I promise to continue to push for Priority Health to cover CAR-T and to bring hope to all who need it."
In Priority Health's statement, Geary, the spokesperson, wrote that the company began covering the therapy "after extensive clinical work improved the treatment." The company would not say when it began paying for the treatment or whether Forrest's death influenced its decision.
"It is devastating when a disease takes a member's life," the statement said. "We recognize the deep pain of losing someone you love."
To former state Sen. Joe Schwarz, now 86 and retired, the story of Priority Health and Forrest VanPatten is a painful echo of a problem he thought he'd fixed.
More than 30 years ago, Schwarz helped write the Michigan law requiring insurers to pay for cancer drugs. Schwarz, a physician, still recalls what drove him to action: Insurance companies were refusing to pay for drugs given to make chemotherapy more effective, arguing they weren't themselves chemotherapy. An op-ed in the Wall Street Journal by the head of the Association of Community Cancer Centers confirmed that insurers nationwide were denying coverage for cancer patients.
At a Senate hearing, Schwarz accused health plans of abandoning their policyholders based on a "play on words." When ProPublica told Schwarz about Priority Health's gene-therapy argument, he let out a mirthless "hah," scoffing at the wordplay.
"You shouldn't split hairs between the term gene therapy and the term chemotherapy or the term radiation therapy or the term surgical therapy," he said. "They're all cancer therapies and they should all be covered."
ProPublica gave Michigan's Department of Insurance and Financial Services a detailed description of VanPatten's case, as well as Priority Health's contention that it didn't have to cover CAR T-cell cancer therapies. We asked if Priority Health broke the state law on cancer treatments. Laura Hall, the department's communications director, wouldn't say. The agency can investigate if it spots a pattern of improper denials, but "in general," she said, it only acts if a patient or their representative files a complaint.
The VanPattens didn't do that. And they didn't know about the Michigan law until ProPublica told them about it.
In the months after her husband died, Betty VanPatten was too weighed down by grief and anger to tangle with Priority Health through state insurance regulators. The days were a blur. Donovan and his partner, McKenzie, moved in with Betty, who threw herself into her job.
"I'd get up at 4, and I'd have my laptop and I just worked until about 9 or 10 o'clock," Betty said. "And a lot of times I'd just sit there and the tears are just running down my face."
The VanPattens still struggle with the sense that Forrest suffered an injustice and that Priority Health got away with it.
"They lost sight of the patient," Betty said at a family dinner this July. Madison agreed.
"Insurance is meant to protect people," she said, "not to make them fight through the last day to get what they should."
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Insurers deny tens of millions of claims every year. ProPublica is investigating why claims are denied, what the consequences are for patients and how the appeal process really works.
After ProPublica and New York Magazine revealed how the school ignored warnings about Robert Hadden, Columbia announced a number of major initiatives, including a settlement fund for survivors and an independent investigation.
This article was published on Monday, November13, 2023 in ProPublica.
In a stunning shift, Columbia University announced on Monday a sweeping series of changes to address the school's failures to protect patients who were sexually assaulted by a Columbia doctor.
A ProPublica investigation, published in collaboration with New York Magazine, found that Columbia had failed to act on years of warnings as Robert Hadden, an OB-GYN, abused at least hundreds of patients during his 25-year career at the university. In 2012, administrators allowed Hadden to continue seeing patients even after he was arrested for assaulting a patient.
The story prompted waves of criticism toward Columbia. State Assembly members held a press conference on campus. A unanimous resolution by the university senate said that the Hadden revelations have "shaken our community to the core."
In Monday's announcement, the university said it would commit to an external investigation to examine systemic failures that allowed Hadden's abuse to continue. It also said it would notify nearly 6,500 former Hadden patients about his crimes. Columbia will also open a $100 million survivors' settlement fund for those who don't want to go through the court system.
The university had long sought to distance itself from the scandal, placing blame solely on Hadden. Columbia had refused demands from survivors that the school notify all of Hadden's patients. It hadn't commissioned an external investigation and had aggressively fought lawsuits filed by survivors.
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Hadden was convicted in federal court of sex crimes in January, and he is now serving a 20-year prison sentence. More than 600 patients have so far come forward to allege abuse.
"Columbia failed these survivors, and for that we are deeply sorry," President Minouche Shafik and Columbia University Irving Medical Center CEO Katrina Armstrong said in a statement on Monday.
Columbia's announcement comes just ahead of a looming deadline for survivors to file suit against the university. The Adult Survivors Act, put into law in New York last year, opened a one-year lookback window, during which survivors can file civil suits against perpetrators of sexual abuse, or institutions that protected them, even if they are past the statute of limitations. The deadline closes on Nov. 23.
The university has previously settled civil suits with 226 patients for $236.5 million.
Marissa Hoechstetter, a former Hadden patient who pushed for the Adult Survivors Act, said she was glad Columbia finally acted.
"This is what we've been asking them to do," Hoechstetter said. "This is good. But we need to continue to hold them accountable and see what comes of this and continue to support survivors."
Still, Hoechstetter said, the $100 million figure will likely be too low. "We don't yet know the full extent of his crimes," she said.
Bianca Fortis was an Abrams Reporting Fellow at ProPublica
Blue Cross and Blue Shield denied payment for the proton therapy Robert 'Skeeter' Salim's doctor ordered to fight his throat cancer. But he was no ordinary patient. He was a celebrated litigator. And he was ready to fight.
This article was published on Tuesday, November 7, 2023 in ProPublica.
By T. Christian Miller
In August 2018, Robert Salim and eight of his friends and relatives flew to the steamy heat of New York City to watch the U.S. Open.
The group — most of them lawyers who were old tennis buddies from college — gathered every few years to attend the championship. They raced from court to court to catch as many matches as possible. They hung out at bars, splurged on high-priced meals and caught up on each others' lives.
But that year, Salim had trouble walking the half-mile from the subway station to the Billie Jean King National Tennis Center in Flushing Meadows without stopping two or three times to rest. Back in his hotel room, he was coughing badly, his phlegm speckled with spots of blood. Although he had kept fit for a 67-year-old, he felt ragged.
Salim, whose friends call him Skeeter, flew home to Houston, where he saw his family doctor. After dozens of tests and visits to specialists, he received his diagnosis: stage 4 throat cancer. A tumor almost an inch long was growing under the back of his tongue, lodged like a rock. It had spread to his lymph nodes. Dr. Clifton Fuller, his oncologist at the MD Anderson Cancer Center, called it "massive oral disease."
Still, Fuller told Salim that his type of throat cancer would respond well to a treatment known as proton therapy, which focuses a tight beam of radiation on a tumor. So Fuller's staff quickly sought approval from Salim's health insurer, marking its fax "URGENT REQUEST": "Please treat this request as expedited based on the patient's diagnosis which is considered life threatening."
The answer arrived two days later. Blue Cross and Blue Shield of Louisiana would not pay for proton therapy; the costly procedure was appropriate only after doctors had previously tried other methods for irradiating the head and neck. "This treatment is not medically necessary for you," the rejection letter read.
Fuller told Salim that he might have to use a cheaper form of radiation that is less precise. Normally outgoing and optimistic, Salim felt his chest tighten as Fuller described the possible side effects of that other type of treatment. Because there were many critical organs near Salim's tumor, the damage could be severe, causing loss of hearing, diminished sense of taste and smell, and brain impairment, like memory loss.
At that point, Salim seemed in danger of joining millions of other Americans denied payment for medical treatment. These patients often settle for outdated, riskier procedures or simply forgo care.
But Salim was no ordinary patient. He was, in fact, an aggressive litigator who had been named one of the 100 best trial lawyers in America. In a long career working from Natchitoches, Louisiana, a tiny city in the Creole heartland, he had helped extract settlements worth hundreds of millions of dollars from massive corporations that had harmed consumers with unsafe products, including pelvic mesh and the pain reliever Vioxx.
Salim decided to do what few people can afford to do. He paid MD Anderson $95,862.95 for his proton therapy and readied for a battle with Blue Cross, the biggest insurance company in Louisiana. As always, Skeeter Salim was determined to win.
It would be Goliath vs. Goliath.
"It's not about the money for me. I’ve been blessed and we have an extremely lucrative practice," said Salim, a broad-set man quick with jokes. "But I would like to see other people that are not in the same situation not get run over by these people. There's no telling how many billions the insurers made by denying claims on a bogus basis."
Blue Cross and Blue Shield of Louisiana declined to comment, citing ongoing litigation.
In his decades as a plaintiff's lawyer, Salim had relied upon consumer protection laws and billion-dollar judgments to make companies fix their bad practices. But now he stood on different terrain, facing a 1970s-era federal law that deprived patients of tools to fight, let alone change, abuses by the insurance industry.
And interviews, court documents and previously confidential emails and records from Blue Cross, its contractors and MD Anderson would expose the inner workings of a large insurer and an unnerving truth: To overcome a system tilted heavily in favor of the insurance industry, you need money, a dogged doctor and a friend with unusual skills.
'Arbitrary and Capricious'
Salim was angry. For years, he had paid Blue Cross more than $100,000 in annual premiums to cover himself, the employees of his law firm and their family members.
In mid-October 2018, he scrawled a note on a legal pad: "Blue Cross' denial is arbitrary and capricious and will lead to irreversible harm to my physical being."
And so Salim began his unusual journey to appeal an insurance company rejection. Few patients ever do so. One study of Obamacare health plans purchased on healthcare.gov found that less than 1% of people tried to overturn claim denials.
When a patient files an appeal, insurance company doctors are supposed to take a fresh look to reconsider the denial, relying on medical guidelines, their own clinical experience, scientific studies and the recommendations of professional societies.
But the insurance industry doctors who shot down Salim's appeal did little to consult outside sources, a ProPublica review found. They cut and pasted guidelines created by a company called AIM Specialty Health: "The requested proton beam therapy is not medically necessary for this patient," one rejection letter read.
Many insurers won't pay for certain specialized or expensive treatments unless a patient gets approval in advance. Blue Cross and other health plans often farm out those reviews to companies like AIM. The insurance industry maintains such companies keep health care costs down and help patients by rejecting unnecessary and unproven treatments. Critics say the companies unfairly deny claims, noting that they market themselves to insurers by promising to slash costs.
In Salim's case, AIM made decisions using its own guidelines, which it said at the time were based on medical studies and the recommendations of professional medical associations. AIM's parent company, Anthem, renamed itself Elevance Health in 2022, and subsequently changed AIM's name to Carelon Medical Benefits Management. In a statement, Elevance said that Carelon "uses evidence-based clinical guidelines to assess requests."
At Blue Cross, Salim's appeal started with a review by one of its own doctors, an ear, nose and throat specialist. He affirmed the denial using language taken directly from AIM's guidelines.
The insurer then routed Salim's request to an outside company called AllMed that it had hired to render expert opinions. A day later, AllMed's doctor, a radiation oncologist, affirmed the decision to deny payment for Salim's care. He, too, copied AIM's guidelines in explaining his reasons. AllMed did not return requests for comment
Not willing to give up, Fuller, Salim's doctor, took a step physicians rarely do: He asked Blue Cross to have an independent medical review board unaffiliated with the insurer or AIM examine Salim's claim. Louisiana's Department of Insurance randomly selected the review company, Medical Review Institute of America.
Fuller didn't skimp on evidence. He sent the company a 225-page request containing Salim's medical records, MD Anderson's evaluation and outside studies supporting the use of proton therapy.
The next day, the Medical Review Institute denied the claim. Its doctor, a radiation oncologist, not only quoted AIM's guidelines, but also cited four studies that raised questions about the evidence for proton therapy. The Medical Review Institute did not return requests for comment.
In 19 days, five different people at four different companies had reviewed Salim's case. Each had denied his request for treatment. Each had cited AIM's guidelines. The appeal process was over.
Before the review was complete, Salim had decided to pay out of pocket for the proton beam therapy. "If there's a tumor in there, and it's growing, why are we waiting so long to do something?" he asked Fuller.
Over more than two and half months that fall and winter, Salim visited MD Anderson multiple times a week. At each radiation session, he strapped on a custom mask that covered his entire face. Nurses locked him into arm and leg restraints. Then he had to hold still for 45 minutes while the proton therapy machine thrummed around him.
In the background, he sometimes heard the nurses playing the 1977 Kansas song, "Dust in the Wind."
"What a terrible song to play," he thought.
On Dec. 24, he endured two sessions in a day to finish up. He had completed his treatments — a Christmas present to himself. But he wasn't done fighting.
A Useful Friendship
A few months after recovering, Salim decided to sue Blue Cross to force them to pay.
There was one problem. Salim held a type of insurance governed by a relatively obscure federal statute: the Employee Retirement Income Security Act. The Department of Labor is charged with enforcing the law, known as ERISA.
The 1974 law is vague and lacks teeth. Court rulings interpreting this law have often tilted in favor of insurers. For instance, insurance companies have broad authority to decide what to cover and what to deny. And the law does not allow for punitive damages, which are designed to punish a company for abuse or fraud by eating into its profits.
Instead, patients who win ERISA cases get money to cover their treatment and the expense of hiring a lawyer. Nothing more.
Such cases do not, in other words, bring in the big dollars like those Salim had won in large personal injury lawsuits. Few attorneys in the country handle ERISA complaints. Salim said he talked with some of them. All told him his case was unwinnable.
But Salim had a secret weapon: his childhood buddy Ronald Corkern.
Salim grew up a few blocks away from Corkern in Natchitoches (pronounced "nack-a-tish"), a northwestern Louisiana town founded in 1714 and set high on the banks of Cane River Lake. Shops with wrought-iron balconies and columned galleries line the city's red brick main road. Well-preserved slave plantations ring the outskirts.
The city is known for two things: "Steel Magnolias," a 1989 movie about female friendships, was filmed there. And singer-songwriter Jim Croce and his entourage were killed when their plane struck a pecan tree near the end of the runway at the local airport.
Salim and Corkern left for different law schools, but both returned to practice in their hometown. They often found themselves on opposite sides of the courtroom, facing off in more than 100 trials, sometimes pulling pranks on one another.
Affable and deeply engaged in the civic issues of his hometown, Corkern had spent much of his life as a lawyer defending auto insurers. He had never before argued an ERISA case. But for his friend, he was willing to try.
"I got trapped into handling this case," Corken joked. At the end of February 2019, he sued Blue Cross. He started in state court, but Blue Cross quickly got it bumped to federal court in Alexandria, Louisiana, where ERISA law would apply.
Over the next several years, lawyers for Blue Cross argued that under the law, insurers had the ultimate authority to determine what to cover, and Blue Cross had decided that proton therapy wasn't medically necessary in this case. Salim's lawsuit, they contended, should be dismissed.
But prior court rulings had carved out an exception: If Corkern could prove that Blue Cross had committed an "abuse of discretion" — for instance, if it had blatantly ignored or twisted evidence supporting the therapy — the judge could force the insurer to pay Salim for his treatment.
A nine-page letter written by Fuller, Salim's doctor, argued that very thing, criticizing the guidelines that AIM and Blue Cross had relied upon to deny payment.
AIM had cited 48 research studies to support its rejection of proton therapy. Fuller found only a few that pertained to head and neck cancer. One of those was out of date: It cited guidelines by a professional society of radiation oncologists that had subsequently been updated to support proton therapy for head and neck cancers.
And Fuller noted that AIM had "glaringly omitted" information from the National Comprehensive Cancer Network, an alliance of cancer treatment centers that included MD Anderson. In May 2017, the network issued guidelines that said the therapy was under investigation and noted that studies had indicated its potential in reducing radiation doses to critical nearby organs for some cancers. While proton therapy may have similar efficacy as other kinds of radiation treatment at eliminating cancer, studies have shown it generally has fewer side effects in treating sensitive regions of the body — a surgeon's scalpel versus a steak knife.
Fuller's touché: 17 academic studies (including some he co-authored) that supported the use of proton beam therapy. Several found significant decreases in radiation exposure and fewer side effects.
The therapy "minimizes toxicity for Mr. Salim, resulting in a more rapid recovery from the treatment of his cancer and less cost to him and you (as his insurer)," wrote Fuller, who declined to comment for this story.
Fuller's letter played a big role in the case. A federal magistrate, Judge Joseph H.L. Perez-Montes, cited it 16 times in his 19-page opinion. Fuller showed that most of the evidence used by Blue Cross was "either outdated or did not pertain to the treatment of head and neck cancer," Perez-Montes wrote. Blue Cross, he said, had "abused its discretion."
A federal judge reviewed Perez-Montes decision and ordered Blue Cross to pay Salim for his proton therapy treatment.
Blue Cross appealed that ruling to the Fifth Circuit Court of Appeals in New Orleans. The company argued that the lower court had erred in accepting Fuller's analysis over the insurer's own experts. On May 3, 2023 — more than four years after Corkern filed the suit — a panel of judges ruled for Salim.
It is unclear why Blue Cross fought so hard to avoid paying Salim. In its appeal, the insurer told the court that the case involved an "important issue" regarding the interpretation of benefits under the ERISA law. It is unknown how much Blue Cross spent on the case. Corkern charged his friend the bargain price of $36,185.
An Unsettled Bill
The treatment worked. Salim has been cancer-free for almost five years, and he suffered few long-term side effects. His Creole accent now has a slight rasp to it. If his next checkup turns up no signs of a tumor, his doctors will consider him cured.
This year, he joined his friends for the U.S. Open again. And he's found a new Goliath, joining other attorneys in a suit against the country's largest pharmacy benefit managers — intermediaries in the buying and selling of medicines who have been accused of artificially inflating prices.
The Blue Cross lawsuit was the last one that Corkern ever filed. He spends most of his time these days conducting mediations between aggrieved parties.
The case itself remains open. The judges ruled that Blue Cross must pay for Salim's treatment. But they did not say how much.
Salim is expecting the full $95,862.95 he paid. However, court records show that Blue Cross has said it only needs to pay Salim the discounted rate it had negotiated with MD Anderson at the time of his radiation treatment: $35,170.47. That's what Blue Cross would have paid if its doctors had said yes in the first place.
A decision is expected later this year.
While not setting a precedent, the case may help persuade insurers and other courts that proton therapy is medically necessary in certain cases, legal experts said.
"They were wrong. Proton radiation is not experimental. It's a wonderful tool," Salim said. "If I played even a small part, it was a very successful lawsuit."
The devices at their bedsides were lifelines, until they learned the foam inside could break down and make them sick. Now, they're plagued by illness, lost sleep and worry.
This article was published on Wednesday, November 1,2023 in ProPublica.
By Margaret Fleming, Monica Sager, Nicole Tan, Susanti Sarkar, Evan Robinson-Johnson and Claire Gardner.
They thought they were getting clean air from the lifelines at their bedsides, coveted nights of healthy sleep that for too long did not come easy.
Near Portland, Oregon, Kim Binford's sleep apnea machine helped him manage chronic pain. Outside Indianapolis, Connie Thompson was able to stay awake in class during her senior year of high school. In the suburbs of Atlanta, Debra Miller could put her grandchildren in the car and drive without fear.
But in June 2021, Binford, Thompson, Miller and millions of others learned that a defect in the breathing machines they relied on for years had the potential to inflict serious harm, including cancer, kidney and lung problems, and severe respiratory infections.
In announcing a massive recall of ventilators and sleep apnea machines, Philips Respironics acknowledged that an industrial foam placed inside the devices to reduce noise could break apart and send tiny particles and fumes into the noses, mouths and lungs of patients.
As many as 15 million devices from two Pittsburgh-area plants were made with the crumbling material, including the company's popular DreamStation continuous positive airway pressure, or CPAP, machine used by those with sleep apnea. The disorder causes breathing to stop and start through the night.
Since the recall, thousands of consumers have described unexplained illnesses while the reported death count linked to the recalled machines rose to more than 370. Some stopped using their devices altogether. Others bought secondhand machines, waited on a replacement from Philips or simply gambled, continuing to use their defective devices long after the recall.
Losses mounted quickly: lost sleep, lost money, lost nights spent worrying about a health threat that the U.S. government determined could cause severe illness or death.
Though it's impossible to know what caused individual illnesses, or whether the machines were capable of advancing cancers that may have developed prior to use by patients, some medical experts say they fear long-term harm. The Food and Drug Administration has said the degrading foam, when inhaled or ingested, can lead to headaches, asthma, inflammatory conditions, respiratory tract problems and "toxic or cancer-causing effects to organs," among other health complications.
In a statement, Philips said that patient health and well-being is a top priority and that the company increased production amid supply chain challenges to send replacement devices to customers. The company added that some received entirely new machines while others received a CPAP motor that would work with existing components.
Since the recall, Philips has walked back its initial assessment that the machines were potentially unsafe, saying new testing on the DreamStation and similar devices has shown that chemicals released by the foam are not at levels that can cause "appreciable harm."
Medical experts and engineers familiar with the testing dispute that claim. Last month, the FDA announced that the company's testing was inadequate and said that Philips had agreed to conduct additional assessments.
In the United States and beyond, families are still struggling.
"I worked my whole life to be pretty healthy," said Miller, a retired elementary school teacher. "I didn't want any debris in my lungs."
CHURCH POINT, LA.
Sleeping Alone After 32 Years
Shawne Thomas' husband, Rodney, died in hospice, holding her hand. She said the company should have warned them earlier about potential health risks.
In the middle of the night in June 2021, in a bedroom that overlooks landscaping projects that her husband never got to finish, Shawne Thomas scrolled through YouTube videos.
Rodney Thomas, a former Marine, had died a few days earlier from a rare form of nose and throat cancer after punishing rounds of chemotherapy and radiation. He was 51 and had recently retired, with plans to spend more time with their grandchildren.
An online post made Shawne Thomas stop cold: Philips had recalled millions of CPAPs and ventilators, saying the machines could send potentially "toxic and carcinogenic" material into the masks of users.
Thomas rummaged through her bedroom closet and found the machine that her husband had used for about 20 months. It was one of the recalled CPAPs, the widely used Philips DreamStation.
"I was amazed, hurt and angry all in one — and then I was furious," she said.
Thomas, 53, met her husband in the late 1980s when they were both Marines and stationed in California as radio operators. He proposed on Valentine's Day, and the couple wed a few months later.
Rodney Thomas
Married for 32 years, they lived on 20 acres in rural Louisiana across from a field of pecan trees. Rodney Thomas took care of the yard, the chores and his wife, who is disabled from a spinal cord injury sustained during military service.
Diagnosed with stage 4 cancer in early 2021, he underwent two surgeries, seven-hour chemotherapy sessions and radiation treatments.
He died in hospice, holding his wife's hand, one week after the Philips recall was announced. Shawne Thomas threw a celebration to honor her husband's life and then, like thousands of others, decided to join litigation against the company.
Thomas said that she and so many others should have been warned far earlier about the potential health hazards.
"I start to feel those thoughts and get angry and get into that dark place, and I have to remind myself I had 32 wonderful years with this man, and I am very lucky to have had that," she said.
More than two years after her husband's death, she said, she still has trouble sleeping. On cold nights, she lies under a quilt made of his T-shirts, next to a stuffed panda he gave her when he proposed years ago.
LAFAYETTE, LA.
"Fearful" Veteran Stopped Using a CPAP
Lee worries about his health, but he can't bring himself to go back on a CPAP.
Jules Lee Jr. isn't scared of much.
The 56-year-old Army veteran watched tanks explode, dodged bullets and swept through enemy bunkers during the Gulf War in the early 1990s. But when he learned in 2021 that the DreamStation that he had been using for three years to help him breathe at night had been recalled, Lee got scared.
His best friend, Rodney Thomas, who had also used a DreamStation, died from nose and throat cancer only days after the recall was announced. Like Thomas' wife, Shawne, Lee said he fears the recalled CPAP was to blame.
Lee decided to stop using a breathing machine altogether.
"That really solidified me not using the machine — and not wanting to use any machine," said Lee, who lives outside Baton Rouge.
He is not alone: Doctors surveyed for a study published in the Journal of Clinical Sleep Medicine said that 1 in 4 patients with sleep apnea stopped using their CPAP machines after the Philips recall. A majority of the doctors also reported that patients had lost trust in medicine.
Lee said he knows a CPAP machine will help control his sleep apnea, which, left untreated, can lead to strokes and heart problems. But he decided that he would rather die in his sleep than risk experiencing what his friend felt during months of cancer treatment.
Struggling with post-traumatic stress disorder, Lee said his depression worsened after Thomas died. On good days, Lee takes deer-hunting trips to Alabama and keeps up with a group of men who served together through basic training in Oklahoma and operations in the Middle East.
He said he worries about his health, his choice and what might come next, but he can't bring himself to go back on a CPAP.
"I'm fearful and untrusting," Lee said. "This is too fresh for me to want to start using a new machine."
HILLSBORO, ORE.
Ex-Marathoner Waited Over 2 Years for a Replacement Machine
Binford said he used his recalled machine for about two years until he received a new one.
Kim Binford can't remember the last time he felt like himself.
In the middle of the night, he wakes up in pain, with excruciating spasms near his heart or in his legs, arms and torso. He paces for long stretches and tries to go back to sleep.
Most nights, he just waits for morning.
The retired engineering manager who once ran marathons has sleep apnea as well as a rare condition known as benign cramp-fasciculation syndrome, which triggers severe muscle spasms.
He used a specialized Philips bi-level positive airway pressure, or BiPAP, machine for more than a decade to treat the conditions, but he stopped after learning in 2021 that his device and millions of others were recalled. Binford said he immediately called the company and registered for a new BiPAP.
Then he waited.
For several weeks after the recall, he said he managed to stay off his recalled machine altogether. But he stopped breathing one night and didn't rouse quickly when his wife tried to jostle him awake at their home in the suburbs of Portland, where they live with two rescued Chihuahuas.
The father of two, who lives on a fixed income and could not afford to pay thousands of dollars for a new machine, started using his old one again.
"I'm kind of damned if I do, damned if I don't," he said. "Anything's better than nothing. I'm just gonna roll the dice with my life."
In September, more than two years after the recall, Binford said his insurance company finally sent him a refurbished machine.
"My condition was getting worse and worse and worse," he said.
ATLANTA
She Finally Got a New Machine — With Missing Parts
After waiting a year for a replacement machine, Miller said she received a CPAP motor without an electrical cord or instructions for use.
One year after Philips recalled millions of breathing machines, retired elementary school teacher Debra Miller decided she was tired of waiting for the company to send a replacement.
So she took matters into her own hands.
In June 2022, she emailed Philips, writing: "I've had a difficult year. I would like my machine as soon as possible."
Three days later, Miller said, a box from Philips arrived at her two-bedroom home in the suburbs of Atlanta. It had a refurbished CPAP machine motor, she said, but no electrical cord or instructions for use.
"The components of the machine came, and they're just dumped in a box," said Miller, 70, who taught in public schools for 30 years.
Miller started using a CPAP machine in 2019 after she passed out driving her Ford Escape and crashed into three other cars, puncturing her liver. The other cars were totaled in the wreck; the drivers had minor injuries.
Miller was diagnosed with sleep apnea and daytime narcolepsy. The grandmother of three was not charged in the accident.
She got her first Philips machine soon after the diagnosis and used it every night.
After the recall, as she waited on a replacement from the company, she withdrew $1,000 from her retirement account to buy a new machine from a Philips competitor. Eleven months later, she received the refurbished CPAP from Philips — and stashed it in her bedroom closet.
"I literally got … half of an old machine," she said.
IBERVILLE PARISH, LA.
Local Sheriff Still Thinks About Mysterious Material in His CPAP
Brett Stassi, who was diagnosed with kidney cancer, is hoping to complete his fourth term as sheriff.
Sheriff Brett Stassi figured the black particles that turned up in the CPAP machine he used every night for four years were harmless.
That changed in 2021 after the Philips recall, when Stassi learned that an industrial foam embedded inside the devices could crumble and send debris and fumes into his lungs.
"You're worried about dying in your sleep, and you come to find out that the machine might be doing more damage than the apnea," he said.
Stassi said he has good reason to worry.
One month before the recall, he was rushed into surgery after a routine visit to the doctor yielded an unexpected diagnosis: kidney cancer. His right kidney was removed, and he was treated with an immunotherapy drug.
Now in remission, the grandfather of five said he'll never know if those black particles made him sick. But he's suing Philips, he said, because the company should have alerted its customers to the health risks years before the recall.
In Iberville Parish outside of Baton Rouge, Stassi tries not to dwell on the diagnosis. He keeps busy supervising 148 deputies and a jail filled with inmates.
His doctors have warned Stassi that the cancer could return, possibly in his lungs or brain. For now, the scans are clear, and he's hoping to finish a fourth term as sheriff. On a spring morning in an office filled with thank-you notes and photos of his children on their wedding days, Stassi flipped through pictures of his infant grandson.
"See why I'm trying to stay alive?" he said.
MARTINSVILLE, IND.
At 24, She's Bracing for a Lifetime of Worry
After using a recalled CPAP for four years, Thompson said she'll always worry about her health.
Connie Thompson spends her days studying public safety, advocating for social and economic justice, and caring for her disabled mother.
At night, the 24-year-old races to the theater. She auditioned at an Indianapolis community theater for the first time last year and was cast in a production of "Little Women." She has since moved on to the musical "Into the Woods."
"It's like, ‘Oh my God, I belong here,'" she said.
Thompson is busy mapping out plans for a future on stage but worries about the years ahead.
Diagnosed with sleep apnea as a teenager, she used a DreamStation for four years before learning about the recall and safety risks. Thompson said she fears that the prolonged use will one day impact her health.
"There's so much that I want to do," she said. "All of the opportunities that I've earned, I want to take them to their absolute fullest. The idea [that] I might not have a choice in that just shattered my world."
Thompson first started using her CPAP machine in high school after excessive fatigue often kept her out of school. When her doctor told her in 2021 that her device had been recalled, Thompson said she had no choice but to continue to use her old one even though she often found black particles in her mask.
Unable to afford a new machine, she waited a year for Philips to send a replacement, cutting up surgical masks and wedging them into the tube that connects to her face mask to try to filter the debris. Lost sleep, she said, wasn't an option. Her mother has rheumatoid arthritis and needs support around the house.
Thompson also takes classes at Ivy Tech Community College and has long considered herself a political activist, with views shaped in part by her experiences as a transgender woman.
She was recently cast in her first paid acting role and is preparing to audition for four-year conservatory programs to study musical theater. But she said insecurity about her health lingers.
"To know that I could get cancer or some other health effect from using a defective machine for so long brings me right back to square zero — the powerlessness of being completely incapacitated by health problems not under my control," she said.
BATON ROUGE, LA.
For Former Federal Marshal, Every Breath Is a Struggle
Carey Jenkins continues to serve as a constable despite a lung cancer diagnosis.
Just months before he was diagnosed with lung cancer, Carey Jenkins walked 60 miles over eight days in the mountains of Alaska on a bear-hunting trip.
Jenkins had always followed a strict exercise regimen. He had served as a deputy federal marshal for 16 years and was later appointed by former President George W. Bush as head marshal for the Middle District of Louisiana. Fitness was required for promotions: running a timed mile and a half, completing situps and pushups, and maintaining a low body fat ratio.
Jenkins went on to serve as an elected constable in his East Baton Rouge parish.
Everything changed, however, when his doctors found a spot on his lower right lung in the fall of 2019. Two years later, it had grown bigger.
The day he went to schedule surgery in 2021, he said he found a notice at the Louisiana home where he and his wife have lived for 30 years. It detailed the sweeping recall of breathing machines, including the DreamStation, which Jenkins used for several years to treat sleep apnea.
Like so many others, the 68-year-old grandfather of four said he worries the machine that helped him breathe at night instead imperiled his health.
With a malignant tumor on his lung removed, Jenkins is still working as a constable. But he said that even walking down his driveway to the mailbox is difficult, and he can no longer help his wife carry the furniture and crystal that she sells through her antique company. He sometimes takes supplemental oxygen with him to catch his breath.
"Before I do something, I know that there's a limit that I have to stop at," he said. "I'm just doing everything I can do to get a deep breath. … You have to work on it."
In recent months, he's been able to return to the gym with a trainer. Now, instead of exercising for his job in law enforcement, he's keeping fit to try to live longer.
His goal: a hunting trip with his son next year.
ST. LOUIS
A Father of Four Is Laid to Rest
Terry Flynn, a father of four, died in 2021. From left: his daughter Colleen Flynn, widow Mary Ann Flynn and son Sean Flynn.
In a church in St. Louis, hundreds of people gathered to honor Terry Flynn with a song: "When Irish Eyes Are Smiling."
The father of four died in 2021, two weeks after he was diagnosed with esophageal cancer. He was 63 and had never made it to Ireland. A family friend planted a tree there in his memory.
"Before I even got engaged to Terry, one of the first things we did was attend a St. Patrick's parade," said Mary Ann Flynn, his wife of 35 years.
Terry Flynn used a recalled Philips machine for nine years to treat sleep apnea. His wife and children say they'll never know if the device caused his illness, but they blame the company for not alerting patients to the potential health risks sooner.
Mary Ann Flynn said her husband, who went to the gym every morning before work at a law firm, would have immediately stopped using the machine.
"Had someone come to us … we would have been like, ‘Toss it out the window,'" she said. "It would have changed the scope of so many things."
Terry Flynn was born and raised in St. Louis, where he coached soccer and baseball and liked to go fishing in local lakes. He met his wife in college, and they married shortly after graduation.
In 2021, the couple were planning a family vacation to Florida to celebrate the birthday of their twins, who were turning 21, and their older son, Sean, who had just been certified as a public accountant.
The trip never happened. Flynn was diagnosed with cancer that had spread from his esophagus to his liver and kidneys and died days later. Mary Ann Flynn said she and her family decided to sue Philips for failing to alert customers about the defective devices.
"It's a machine to help you breathe by a reputable company," she said, adding, "You kind of just trust."
TORONTO
Around the World, Outrage Over Philips Recall
Pedram "Pedy" Ghaitani needed his sleep.
On most days, the driver for a medical company left his wife and young son in their apartment before sunrise to shuttle patients to appointments across the city. Ghaitani drove a limousine in his spare time, racing to airports, weddings and business meetings.
When he was diagnosed with sleep apnea in 2016, he became a faithful user of the DreamStation. He continued to use the machine even after doctors discovered in 2019 that he had a rare form of lymphoma. The 51-year-old Iranian immigrant died later that year.
"I always thought whenever he used to come home late, sometimes 2, 3 o'clock in the morning, ‘Thank God,'" said his wife, Ganna Kron. "He always came home. And then he didn't."
Kron is among thousands of people involved in litigation against the company in Canada. Anger has swept the world, with lawsuits similar to those in the United States unfolding in several countries.
Kron said she'll never know exactly what caused her husband's illness but fears his recalled CPAP played a critical role. "Carcinogenic particles — it just baffles my mind," she said.
Ghaitani fled Iran as a teenager and settled in New York. After he met Kron, he moved to Toronto. The couple married and had a son, Nash.
"He missed the chance to grow up with such a great man," Kron said. "That is my heartbreak."
Philips argued in court that its U.S. subsidiary should be responsible for damages caused by its CPAP machines and ventilators. Patients' attorneys say safety decisions were made at the Dutch company's highest levels.
This article was published on Friday, October 27, 2023 in ProPublica.
By Michael D. Sallah and Mike Wereschagin, Pittsburgh Post-Gazette
After tests showed that breathing machines made by Philips Respironics could spew dangerous particles and fumes into the lungs of patients, the company in April 2021 decided to stop shipping the devices from its factories near Pittsburgh.
Philips notified the Food and Drug Administration and said it was considering a recall.
But for the distributors of the devices, the company had another message: Keep selling them.
Despite the findings of its own scientists that showed the machines posed critical risks to patients, Roy Jakobs, now the CEO of parent company Royal Philips, told his employees that the distributors could continue to sell the devices in their inventory, according to testimony in federal court.
The revelations that unfolded during a hearing in Pittsburgh last week over the parent company's potential liability for damages casts new light on the inner workings of a global corporation accused of risking the health of patients who used its sleep apnea machines and ventilators, in some cases to stay alive.
"They're still telling customers who have these devices that they can keep using them," Caleb Seeley, a lawyer whose firm represents thousands of plaintiffs in claims against the company, told U.S. District Judge Joy Flowers Conti.
While lawyers for Royal Philips argued in court that the parent company should be shielded from claims and that the responsibility lies with the U.S. subsidiary, Philips Respironics, attorneys representing thousands of patients countered that decisions over the safety of the company's operations were made at the highest levels of the Dutch corporation.
Philips said in response to questions from the Post-Gazette that Jakobs approved the sale of the machines held by distributors because Philips was still assessing the risks of the devices and its "understanding of the issue was still evolving."
The company launched a recall to pull the machines from the shelves in June 2021 — two months after the halt on shipping — when additional data became available, Philips said in a statement.
The decision was made "after careful consideration of a reasonable worst-case scenario and in an abundance of caution," the company said.
But for the two months leading to the recall, Philips did not warn the public that the company had found the risks to patients to be "unacceptable" and that foam breaking down in the devices was emitting chemicals that could cause "life-threatening" injuries or "permanent impairment," records show.
The move by the company to allow the sale of the defective devices while its own experts were warning about the dangers drew sharp criticism from public health experts interviewed by the Post-Gazette and ProPublica.
"It's disturbing to hear that they put a hold on the machines at the factory and then it's being distributed" by the suppliers, said Dr. Robert Steinbrook, director of Public Citizen's Health Research Group in Washington, which lobbies on behalf of patient safety. "It doesn't make a lot of sense."
The evidence disclosing Philips' directive, which was presented in a slideshow at the Oct. 17 hearing, is the latest in a series of efforts by plaintiffs in court to show how decisions by the company delayed safety measures in what would grow into a worldwide health crisis.
Since the recall two years ago, Philips has changed course and said further tests have shown there is no long-term health impact from the foam — prompting the FDA to issue its own statement on Oct. 5 to say the company's tests have not been adequate to "fully evaluate the risks" posed to users.
Though medical experts say it can take years to establish any links between the machines and illnesses, FDA records show at least 2,000 cases of cancer have been reported by health care providers and users of the devices, along with 600 kidney and liver ailments and 17,000 cases of respiratory infections.
During the court hearing last week, lawyers for the plaintiffs argued that top executives in Amsterdam for years were aware of the problems taking place in the U.S. involving the machines.
Jakobs had been chief business leader since 2020 of the company's Connected Care unit, which oversaw the breathing devices. He was named to the CEO position in 2022.
Lawyers for the plaintiffs, who are suing Philips in hundreds of injury claims and a class-action suit to force the company to pay for medical monitoring, told Conti that former CEO Frans van Houten also took on a key role in the U.S. operation.
While leading the company in 2015, van Houten flew to Washington to meet with the FDA to discuss safety issues that had emerged at the Philips plant in Cleveland, Seeley told the court.
In a case that was unrelated to the breathing machines, the company had received warning letters from the FDA over a failure to file reports to the government about problems involving medical imaging devices made at the facility, records show.
During the visit, van Houten met with Jeff Shuren, the head of the FDA division that oversees medical device safety, and Robert Califf, now the agency's commissioner, FDA records show.
Seeley said van Houten reportedly assured the agency's top administrators that Philips would be making greater strides to meet safety thresholds.
The previous year, Philips temporarily shut down the Ohio facility after the FDA inspected the plant and found "manufacturing control" problems that had not been properly addressed, the company said.
Philips said in a statement that "we regularly engage with the FDA, and we are committed to continuing to do so."
Since the June 2021 recall of the breathing devices, Jakobs has attempted to distance the parent company from the crisis, saying during an earnings call in May that the complaints about the machines were handled by the U.S. subsidiary.
"They did some action and they closed it and carried on," he said to shareholders.
Jakobs and van Houten have previously declined to comment to ProPublica and the Post-Gazette on the company's handling of the tainted machines. After the recall, then-CEO van Houten said, "I very much regret the impact of the … recall on patients, care providers and shareholders."
The fight by the parent company to separate itself from the myriad lawsuits comes as more plaintiffs step forward to join the legal cases against Philips and as government scrutiny of the company's actions deepens.
Conti said during the hearing last week that the motion by Philips to dismiss the parent company from the proceedings could have sweeping implications for some of the world's largest corporations. One of the reasons: Multinational companies are made up of many different subsidiaries that operate in different countries with various levels of liability.
Royal Philips controls a global empire with subsidiaries operating across more than 100 countries, and it reported more than $18 billion in revenue last year. Top executives of an operation that large can't micromanage every plant in their domain, Michael H. Steinberg, a lawyer for Royal Philips, argued at the hearing.
"Philips has [quality] controls," Steinberg said. "Whether people follow those controls, that's a separate issue." Its lawyers argue the company should only have to fight one of the allegations against it: negligence in how it handled the recall — and even then, only for complaints filed in Pennsylvania, the jurisdiction of the federal court hearing the case.
In several high-profile cases, courts have shielded major parent companies from the liability of their subsidiaries, setting legal precedents that entire corporations have organized themselves around, the lawyer for Philips told the judge. "Corporations are trying to be efficient, trying to mitigate risk," Steinberg said.
Lawyers for the plaintiffs countered that the legal protections normally given to parent corporations don't apply in the Philips case. Seeley painted a picture of an organization with few boundaries, where top executives like Jakobs weighed in on decisions as minute as what Philips Respironics' employees should tell their customers.
"Philips is unusual. It's not the norm," Seeley said.
One legal expert reached by the Post-Gazette said the evidence in the case, including the actions taken by the top corporate leaders, may ultimately be used in legal matters beyond the liability battle.
"The information that comes out is about who knew what and when did they [know] it," said Michael Gonzalez, an Ohio lawyer who advises companies on health care compliance. "It's not only about liability, but the culpability for [violating] the rules."
Madris Kinard, a former FDA analyst who has examined many of the complaints filed with Philips about the defective machines, said the company was aware of the breakdowns in the devices years before the recall. "They could have acted earlier, and they could have acted with integrity when learning of the risks posed by the foam," said Kinard, founder and CEO of the York, Pennsylvania-based health data group, Device Events. "This Philips recall is going to be held up as an example of what not to do."
The evidence disclosing Philips' directive, which was presented in a slideshow at the Oct. 17 hearing, is the latest in a series of efforts by plaintiffs in court to show how decisions by the company delayed safety measures in what would grow into a worldwide health crisis.
Since the recall two years ago, Philips has changed course and said further tests have shown there is no long-term health impact from the foam — prompting the FDA to issue its own statement on Oct. 5 to say the company's tests have not been adequate to "fully evaluate the risks" posed to users.
Though medical experts say it can take years to establish any links between the machines and illnesses, FDA records show at least 2,000 cases of cancer have been reported by health care providers and users of the devices, along with 600 kidney and liver ailments and 17,000 cases of respiratory infections.
During the court hearing last week, lawyers for the plaintiffs argued that top executives in Amsterdam for years were aware of the problems taking place in the U.S. involving the machines.
Jakobs had been chief business leader since 2020 of the company's Connected Care unit, which oversaw the breathing devices. He was named to the CEO position in 2022.
Lawyers for the plaintiffs, who are suing Philips in hundreds of injury claims and a class-action suit to force the company to pay for medical monitoring, told Conti that former CEO Frans van Houten also took on a key role in the U.S. operation.
While leading the company in 2015, van Houten flew to Washington to meet with the FDA to discuss safety issues that had emerged at the Philips plant in Cleveland, Seeley told the court.
In a case that was unrelated to the breathing machines, the company had received warning letters from the FDA over a failure to file reports to the government about problems involving medical imaging devices made at the facility, records show.
During the visit, van Houten met with Jeff Shuren, the head of the FDA division that oversees medical device safety, and Robert Califf, now the agency's commissioner, FDA records show.
Seeley said van Houten reportedly assured the agency's top administrators that Philips would be making greater strides to meet safety thresholds.
The previous year, Philips temporarily shut down the Ohio facility after the FDA inspected the plant and found "manufacturing control" problems that had not been properly addressed, the company said.
Philips said in a statement that "we regularly engage with the FDA, and we are committed to continuing to do so."
Since the June 2021 recall of the breathing devices, Jakobs has attempted to distance the parent company from the crisis, saying during an earnings call in May that the complaints about the machines were handled by the U.S. subsidiary.
"They did some action and they closed it and carried on," he said to shareholders.
Jakobs and van Houten have previously declined to comment to ProPublica and the Post-Gazette on the company's handling of the tainted machines. After the recall, then-CEO van Houten said, "I very much regret the impact of the … recall on patients, care providers and shareholders."
The fight by the parent company to separate itself from the myriad lawsuits comes as more plaintiffs step forward to join the legal cases against Philips and as government scrutiny of the company's actions deepens.
Just days after the Post-Gazette and ProPublica published the initial investigative story in September, top members of Congress called for immediate action, with Sen. Richard Blumenthal, D-Conn., demanding an investigation and a crackdown on the company by the Justice Department.
Conti said during the hearing last week that the motion by Philips to dismiss the parent company from the proceedings could have sweeping implications for some of the world's largest corporations. One of the reasons: Multinational companies are made up of many different subsidiaries that operate in different countries with various levels of liability.
Royal Philips controls a global empire with subsidiaries operating across more than 100 countries, and it reported more than $18 billion in revenue last year. Top executives of an operation that large can't micromanage every plant in their domain, Michael H. Steinberg, a lawyer for Royal Philips, argued at the hearing.
"Philips has [quality] controls," Steinberg said. "Whether people follow those controls, that's a separate issue." Its lawyers argue the company should only have to fight one of the allegations against it: negligence in how it handled the recall — and even then, only for complaints filed in Pennsylvania, the jurisdiction of the federal court hearing the case.
In several high-profile cases, courts have shielded major parent companies from the liability of their subsidiaries, setting legal precedents that entire corporations have organized themselves around, the lawyer for Philips told the judge. "Corporations are trying to be efficient, trying to mitigate risk," Steinberg said.
Lawyers for the plaintiffs countered that the legal protections normally given to parent corporations don't apply in the Philips case. Seeley painted a picture of an organization with few boundaries, where top executives like Jakobs weighed in on decisions as minute as what Philips Respironics' employees should tell their customers.
"Philips is unusual. It's not the norm," Seeley said.
U.S. Senator Expands Call for Crackdown on Philips Respironics
One legal expert reached by the Post-Gazette said the evidence in the case, including the actions taken by the top corporate leaders, may ultimately be used in legal matters beyond the liability battle.
"The information that comes out is about who knew what and when did they [know] it," said Michael Gonzalez, an Ohio lawyer who advises companies on health care compliance. "It's not only about liability, but the culpability for [violating] the rules."
Madris Kinard, a former FDA analyst who has examined many of the complaints filed with Philips about the defective machines, said the company was aware of the breakdowns in the devices years before the recall. "They could have acted earlier, and they could have acted with integrity when learning of the risks posed by the foam," said Kinard, founder and CEO of the York, Pennsylvania-based health data group, Device Events. "This Philips recall is going to be held up as an example of what not to do."
Sen. Richard Blumenthal is seeking federal enforcement days after a ProPublica and Pittsburgh Post-Gazette investigation revealed the company kept secret more than 3,700 complaints about its breathing machines over 11 years.
This article was published on Friday, October 6, 2023 in ProPublica.
A powerful U.S. senator is calling on federal prosecutors to take immediate action against Philips Respironics after revelations the global company withheld thousands of warnings about popular breathing machines capable of spewing hazardous particles and fumes into the masks of patients.
"Philips brazenly turned a blind eye to its dangerous defective machines all in the name of profit," Sen. Richard Blumenthal, D-Conn., said in a statement about the device maker, which has long dominated the market for ventilators and sleep apnea machines.
The call for enforcement from the Department of Justice comes just days after an investigation by ProPublica and the Pittsburgh Post-Gazette revealed the company kept secret more than 3,700 complaints about the faulty devices over the course of 11 years before launching a massive recall in 2021.
At the time, Philips acknowledged that an industrial foam placed inside the devices to reduce noise could break down in heat and humidity and release material into the air paths of the machines. By then, the company's two factories in Pittsburgh had turned out millions of the tainted devices, which were delivered to infants, the elderly, COVID-19 patients and at least 700,000 veterans.
As the complaints mounted, stock prices for the device maker's parent company, Royal Philips, soared to the highest levels in at least 40 years. In a statement, Philips said it regrets any "distress and concern" caused by the recall and it is cooperating with prosecutors.
"Philips' priority is patient safety and quality," the company said.
The Justice Department, which has been examining the company's testing practices and safety claims, can impose a range of penalties against medical device companies in violation of federal safety laws, including civil sanctions and criminal charges.
"Philips knew about the serious risks of its breathing machines for years, but inexcusably, withheld critical information," said Blumenthal, a member of the Senate Judiciary Committee and chair of an investigations subcommittee that probes violations of laws and regulations impacting national health and safety. "The DOJ must take immediate, aggressive action against Philips for its years-long wrongdoing."
"It's deeply disturbing that Phillips would sit on this information as Americans became sicker and sicker," Durbin said in response to the news organizations' investigation.
To keep the public safe, federal law requires device makers to submit reports of device malfunctions, patient injuries and deaths within 30 days. In the years before the recall, ProPublica and the Post-Gazette found, Philips withheld the vast majority of complaints about the foam from the Food and Drug Administration, which oversees the medical device industry.
News of the recall stunned patients and their doctors, who scrambled to find information about the potential health risks. The FDA has since classified the recall as the most serious, for device defects that can cause severe injury or death.
"All I could do is tell them the truth, what their options were and be sympathetic," said Dr. Byron Cooper, a Philips CPAP user and newly retired pulmonologist who treated sleep apnea patients in Washington, D.C. "It would have helped to have more transparency."
"When these recalls, like the one Phillips finally issued after more than a decade, come to light, consumers have a right to be informed," Durbin said.
Philips has said that complaints about the foam were limited before the recall and evaluated on a case-by-case basis, and that when it became aware of the potential significance of the problem in early 2021, the company launched the recall shortly after that.
Philips acknowledged the foam could release chemicals or break into particles capable of causing life-threatening injuries.
Since the recall, the company has changed course, saying recent testing on the DreamStation continuous positive airway pressure, or CPAP, machine and similar devices shows that chemical emissions fall within safety thresholds.
ProPublica and the Post-Gazette obtained copies of the results of four tests carried out in 2021 that were solicited by Philips. Three experts who reviewed the results for the news organizations disputed the company's claim that emissions fall within safety thresholds. The experts also pointed out that the foam tested positive for genotoxicity, the ability of a chemical to cause cells to mutate, which can lead to cancer.
On Thursday, the FDA released an update on the matter, saying the company's tests on the foam were not adequate and did not "fully evaluate the risks posed to users." Philips has agreed to conduct additional tests, the agency said.
As doctors struggle to assess the long-term health risks, Connecticut Attorney General William Tong said third-party experts should conduct safety tests on the devices.
"There are still people with defective devices who are rightfully scared and frustrated and they deserve better from both Philips and FDA," said Tong, who last year joined Blumenthal in a letter to federal regulators urging them to take action against the company.
Kushal Kadakia, a public health researcher at Harvard Medical School who has written about the recall, said the FDA should launch an advisory panel to determine whether the devices are safe and should also require Philips to carry out a study tracking the long-term health consequences.
The FDA, which said it does not comment on compliance matters, said that it is "unsatisfied" with the status of the recall and that the agency would continue to ensure that patients receive accurate information.
Last month, Philips reached a settlement in one of several lawsuits against the company, agreeing to pay at least $479 million to reimburse customers and others for the costs of the defective machines.
After ProPublica and the Post-Gazette published their investigation on Sept. 27, Philips released a statement saying the stories "do not present new facts and we do not agree with the characterizations made in these articles."
A vaccine against tuberculosis, the world’s deadliest infectious disease, has never been closer to reality, with the potential to save millions of lives. But its development slowed after its corporate owner focused on more profitable vaccines.
This article was published on Wednesday, October 4, 2023 in ProPublica.
By Anna Maria Barry-Jester
Ever since he was a medical student, Dr. Neil Martinson has confronted the horrors of tuberculosis, the world's oldest and deadliest pandemic. For more than 30 years, patients have streamed into the South African clinics where he has worked — migrant workers, malnourished children and pregnant women with HIV — coughing up blood. Some were so emaciated, he could see their ribs. They'd breathed in the contagious bacteria from a cough on a crowded bus or in the homes of loved ones who didn't know they had TB. Once infected, their best option was to spend months swallowing pills that often carried terrible side effects. Many died.
So, when Martinson joined a call in April 2018, he was anxious for the verdict about a tuberculosis vaccine he'd helped test on hundreds of people.
The results blew him away: The shot prevented over half of those infected from getting sick; it was the biggest TB vaccine breakthrough in a century. He hung up, excited, and waited for the next step, a trial that would determine whether the shot was safe and effective enough to sell.
Weeks passed. Then months.
More than five years after the call, he's still waiting, because the company that owns the vaccine decided to prioritize far more lucrative business.
Pharmaceutical giant GSK pulled back on its global public health work and leaned into serving the world's most-profitable market, the United States, which CEO Emma Walmsley recently called its "top priority." As the London-based company turned away from its vaccine for TB, a disease that kills 1.6 million mostly poor people each year, it went all in on a vaccine against shingles, a viral infection that comes with a painful rash. It afflicts mostly older people who, in the U.S., are largely covered by government insurance.
Importantly, the shingles vaccine shared a key ingredient with the TB shot, a component that enhanced the effectiveness of both but was in limited supply.
From a business standpoint, GSK's decision made sense. Shingrix would become what the company calls a "crown jewel," raking in more than $14 billion since 2018.
But the ability of a corporation to allow a potentially lifesaving vaccine to languish lays bare the distressing reality of public health vaccine creation. With limited resources, governments have long seen no other option but to team with Big Pharma to develop vaccines for global scourges. But after the governments pump taxpayer money and resources into the efforts, the companies get control of the products, locking up ownership and prioritizing their own gain.
That's what GSK did with the TB vaccine. Decades ago, the U.S. Army brought in GSK to work on a malaria vaccine and helped develop the ingredient that would prove game-changing for the company. It was an adjuvant, a substance that primed the body's immune system to successfully respond to a vaccine for malaria — and, the company would come to learn, a variety of other ailments.
GSK patented the adjuvant and took control of the supply of the ingredients in it. It accepted government and nonprofit funding to develop a TB vaccine using the adjuvant. But even though it isn't carrying the vaccine to the finish line, it isn't letting go of it entirely either, keeping a tight grip on that valuable ingredient.
As TB continued to rage around the globe, it took nearly two years for GSK to finalize an agreement with the nonprofit Bill & Melinda Gates Medical Research Institute, or Gates MRI, to continue to develop the vaccine. While the Gates organization agreed to pay to keep up the research, GSK reserved the right to sell the shot in wealthy countries.
The trial that will determine whether the vaccine is approved won't begin until 2024, and isn't expected to end until at least 2028. "We just can't operate like that for a disease that is this urgent," said Thomas Scriba, a South African scientist and TB expert who also worked on the study.
GSK pushes back against the premise that the company delayed the development of the TB vaccine and says it remains dedicated to researching diseases that plague underserved communities. "Any suggestion that our commitment to continued investment in global health has reduced, is fundamentally untrue," Dr. Thomas Breuer, the company's chief global health officer, wrote in a statement.
The company told ProPublica that it cannot do everything, and it now sees its role in global health as doing early development of products and then handing off the final clinical trials and manufacturing to others. It also said that a vaccine for TB is radically different from the company's other vaccines because it can't be sold at scale in wealthy countries.
Though a good TB vaccine would be used by tens of millions of people, it has, in the parlance of industry, "no market," because those who buy it are mostly nonprofits and countries that can't afford to spend much. It's not that a TB vaccine couldn't be profitable. It's that it would never be as profitable as a product like the shingles vaccine that can be sold in the U.S. or Western Europe.
Experts say the story of GSK's TB vaccine, and its roller coaster of hope and disappointment, highlights a broken system, which has for too long prioritized the needs of corporations over those of the sick and poor.
"We don't ask for a fair deal from our pharma partners," said Mike Frick, a director of the tuberculosis program at Treatment Action Group and a global expert on the TB vaccine pipeline. "We let them set the terms, but we don't ask them to pick up the check. And I just find it frankly a little humiliating."
Steven Reed, a co-inventor of the TB vaccine, brought his idea to GSK decades ago, believing that working with a pharmaceutical giant was essential to getting the shots to people who desperately needed them. He's disillusioned that this hasn't happened and now says that Big Pharma is not the path to saving lives with vaccines in much of the world. "You get a big company to take it forward? Bullshit," he said. "That model is gone. It's failed. It's dead. We have to create a new one."
Gaining Control
In the early 1980s, the U.S. Army was desperate for a way to keep troops safe from the parasite that causes malaria. Military scientists had some promising ideas but wanted to find a company that could help them develop and manufacture the antigen, the piece of a vaccine that triggers an immune response. They called on SmithKline Beckman, now part of GSK, which had a plant outside of Philadelphia committed to the exact type of antigen technology they were researching.
For the company's part, working with the Army gave it access to new science and, importantly, the ability to conduct specialized research. The Army had laboratories for animal testing and ran clinical trial sites around the world. It's also generally easier to get experimental products through regulatory approval when working with the government, and Army scientists were willing to be infected with malaria and run the first tests of the vaccine on themselves.
Col. Carl Alving, then an investigator at the Walter Reed Army Institute of Research, said he was the first person known to be injected with an ingredient called MPL, an adjuvant added to the vaccine. Today, we know that adjuvants are key to many modern vaccines. But at the time, only one adjuvant, alum, had ever been approved for use. Alving published promising results, showing that MPL boosted the shot's success in the body.
Company scientists took note and began adding MPL to other ingredients. If one adjuvant was good, maybe two adjuvants together, stimulating different parts of the immune system, might be even better.
It was an exciting development, bringing the multiple adjuvants together, Alving said in an interview. But then he learned that the company scientists had filed a patent for the combinations in Europe, which put limits on what he and his colleagues could do with MPL. "The Army felt perhaps a little frustrated by that because we had introduced Glaxo to the field."
Still, the Army wanted the malaria vaccine. Military personnel started comparing the adjuvant combinations on rhesus monkeys at an Army facility in Thailand and ran clinical trials that tested the most promising pairs in humans and devised dosing strategies.
The Army found that one of the combinations came out on top: MPL and an extract from the bark of a tree that grows in Chile. The bark extract was already used in veterinary vaccines, but a scientist at one of the world's first biotech companies had recently discovered you could purify it into a material that makes it safe enough for use in humans.
Alving said that at the time, he didn't patent the work he and his colleagues were doing or demand an exclusive license for MPL. "It's a question of the Army being the Army, which is not a company," Alving said. (This was actually the second time the government failed to secure its rights over MPL. Decades earlier, the ingredient was discovered and formulated by scientists working for the Department of Veterans Affairs and a National Institutes of Health lab in Montana. One of the scientists, frustrated that his bosses in Bethesda, Maryland, wouldn't let him test the product in humans, quit and formed a company, taking the research with him. Though his company initially said it thought MPL was in the public domain and couldn't be patented, he did manage to patent it.)
Experts say drug development in the U.S. is littered with such missed opportunities, which allow private companies to seize control of and profit off work done by publicly funded researchers. Governments, they say, need to be more aggressive about keeping such work in the public domain. Alving has since done just that, recently receiving his 30th patent owned by the military.
It's an open secret in the pharmaceutical world that companies participate in global health research because it's where they get to try out new technologies that can be applied to other, more lucrative diseases.
At an investor presentation in 2016, a GSK executive used the malaria vaccine example to explain the benefit of such work. "Of those of you who think this is just philanthropy, it is not," Luc Debruyne, then president of vaccines at GSK, told the group. He explained that it was through the malaria work that the company invented the adjuvant that is now in its blockbuster shingles vaccine. And, he explained, vaccines are high-volume products that make a steady stream of money over time. "So doing good business, innovating and doing well for the world absolutely can get married."
As the Army's research on the combination of MPL and the bark extract evolved — and its market potential became clear — GSK moved to vacuum up the companies that owned the building blocks to the adjuvant.
In 2005, it bought the company that owned the rights to MPL for $300 million. In 2012, it struck a deal for the rights to a lion's share of the supply of the Chilean tree bark extract.
The company was now in full control of the adjuvant.
Picking a Winner
GSK eagerly began to test its new adjuvant on a number of diseases — hepatitis, Lyme, HIV, influenza.
Steven Reed, a microbiologist and immunologist, had come to the company in 1994 with an idea for a tuberculosis vaccine. An estimated 2 billion people are infected with TB globally, but it's mainly those with weakened immune systems who fall ill. A century-old vaccine called BCG protects young children, but immunity wanes over time, and that vaccine does little to shield people from the most common type of infection in the lungs.
Reed had just the background and resources to attempt a breakthrough: An adjunct professor at Cornell University's medical school, he also ran a nonprofit research organization that worked on infectious diseases and had co-founded a biotech company to create and market products.
He and his colleagues were building a library of the proteins that make up the mycobacterium that causes TB. He also had access to a blood bank in Brazil, where TB was more prevalent, that he could screen the proteins against to determine which generated an immune response that prevented people from getting sick.
At the time Reed pitched the vaccine, the company's decision over whether to take him up was made by researchers, said Michel De Wilde, a former vice president of research and development at the company that partnered with Reed and later became part of GSK. Today, across the industry, finance units play a much stronger role in deciding what a company works on, he said.
GSK signed on, asking Reed to add the company's promising new adjuvant to his idea for a TB vaccine.
Reed and his colleagues used more than $2 million in federal money to conduct trials from 1995 to 2005. GSK also invested, but NIH money and resources were the key, Reed said. As the vaccine progressed into testing, the Bill & Melinda Gates Foundation pitched in, as did the governments of the United Kingdom, the Netherlands and Australia, among others.
Amid all that, in 2003, GSK started testing the adjuvant in its shingles vaccine, according to annual reports, but at a much faster speed. With TB, it performed a small proof-of-concept study to justify moving to a larger one. There's no evidence it did so with shingles. By 2010, GSK's shingles vaccine was in final trials; in 2017, the FDA approved it for use.
To employees and industry insiders, GSK was making its priorities clear. The company built a vaccine research facility in Rockville, Maryland, to be closer to the NIH and the Food and Drug Administration; at the same time, it was retreating from TB and other global public health projects, according to former employees of the vaccine division.
All the while, the adjuvant was limited. GSK struggled to ramp up production of MPL, according to former employees there; it relies on a cumbersome manufacturing process. And it wasn't clear whether there was sufficient supply of the Chilean tree that is essential to both vaccines.
After researchers learned of the TB vaccine's successful proof-of-concept results in 2018, GSK said nothing about what was next.
"You would have thought people would have said: ‘Oh shit, this is doable. Let's double down, let's quadruple down,'" said Dr. Tom Evans, former president and CEO of Aeras, a nonprofit that led and paid for half of the proof-of-concept study. "But that didn't happen."
Scriba, who was involved in the study in South Africa, said he never imagined that GSK wouldn't continue the research. "To be honest it never occurred to us that they wouldn't. The people we worked with at GSK were the TB team. They were passionate about TB," Scriba said. "It's extremely frustrating."
But Reed said that when the shingles vaccine was approved, he had a gut feeling that GSK would abandon the tuberculosis work.
"The company that dropped it used similar technology to make billions of dollars on shingles, which doesn't kill anyone," Reed said.
Those in the field grew so concerned about the fate of the TB vaccine that the World Health Organization convened a series of meetings in 2019.
Breuer, then chief medical officer for GSK's vaccine division, explained that the pharmaceutical giant was willing to hand off the vaccine to an organization or company that would cover the cost of future development, licensing, manufacturing and liability. If the next trial went well, they could sell the vaccine in the "developing world," with GSK retaining the sales rights in wealthier countries.
GSK would, however, retain control of the adjuvant, Breuer said. And the company only had enough for its other vaccines, so whoever took over the TB vaccine's development would need to pay GSK to ramp up production, which Breuer estimated would cost around $200 million.
Dr. Julio Croda was director of communicable diseases for Brazil at the time and attended the meeting. He said he was authorized to spend significant government funds on a tuberculosis vaccine trial but needed assurances that GSK would transfer technology and intellectual property if governments paid for its development. "But in the end of the meeting, we didn't have an agreement," he said.
Dr. Glenda Gray, a leading HIV vaccine expert who attended the meeting on behalf of South Africa, said she wasn't able to get a straight answer about the availability of the adjuvant.
The year after the WHO meeting, after what a Gates representative described as "a lot of negotiation," GSK licensed the vaccine to Gates MRI, a nonprofit created by the Gates Foundation to develop drugs and vaccines for global health issues that for-profit companies won't tackle.
GSK told ProPublica that it did not receive upfront fees or royalties as part of the arrangement, but that Gates MRI paid it a small incentive to invest in the company's global health endeavors. GSK and Gates MRI declined to comment on the amount.
Gates MRI tax documents show a payment designated as "royalties, license fees, and similar amounts that allow the organization to use intellectual property such as patents and copyrights" the year the agreement was finalized. Among available tax documents, that is the only year the organization has made a payment in that category.
The amount: $10 million.
An Uncertain Future
In June of this year, the Gates Foundation and the Wellcome Trust announced they were pledging $550 million to fund the phase 3 trial that will finally show whether the vaccine works. They've selected trial locations and are currently testing it on a smaller subset of patients, those with HIV.
Jeremy Farrar, chief scientist at the WHO, said he's more optimistic than he's ever been in his career that we'll have a new TB vaccine this decade.
Gates MRI and GSK declined to say who had the rights to sell the vaccine in which countries, but Gates MRI said it will "work with partners to ensure the vaccine is accessible for people living in high TB-burden lower- and middle-income countries," and GSK acknowledged that its rights extend to South America and Eastern Europe, two regions with significant pockets of TB.
As expected, Gates MRI will be reliant on GSK to supply the adjuvant, which concerns vaccine hopefuls because of the lack of transparency surrounding its availability. One of the key ingredients, the bark extract, comes from a tree whose harvest and export has been controlled by the Chilean government since the 1970s because of overexploitation. A megadrought and forest fires continue to threaten native forests today. The main exporter of the bark says it has resolved previous bottlenecks, and GSK said it is working on a synthetic version as part of its long-term plan.
In response to questions about why it retained control of the adjuvant, GSK said it was complicated to make, would not be economical to produce in more than one place, and was a very important component in many of the company's vaccines, so it wasn't willing to share the know-how.
The adjuvant is only growing in value to the company, as it adds yet another lucrative vaccine to its portfolio that requires it. In May, the FDA approved a GSK vaccine for the respiratory virus known as RSV. Analysts project that the shot will bring in $4 billion annually at its peak. GSK continues to study the adjuvant in additional vaccines.
GSK strongly insists that it has enough of the adjuvant to fulfill its forecasted needs for the RSV, shingles, malaria and TB vaccines through 2035.
The company and Gates MRI said their agreement includes enough adjuvant for research and the initial supply of the TB vaccine, if it is approved. The organizations declined, however, to specify how many people could be vaccinated. GSK also said it was willing to supply more adjuvant after that, but further negotiations would be necessary and Gates MRI would likely need to pay to increase adjuvant manufacturing capacity. For its part, Gates MRI said it is evaluating several strategies to ensure longer term supply.
Several experts said that Gates MRI should test other adjuvants with the vaccine's antigen. That includes Farrar, who said it would be "very wise" to start looking for a new adjuvant. He is one of the few people who has seen the agreement between Gates MRI and GSK as a result of his previous role as director of the Wellcome Trust. Farrar is now helping to lead a new TB Vaccine Accelerator Council at the WHO and said he believes one of the group's roles would be to find solutions to any future problems with the adjuvant.
Gates MRI declined to answer when asked if it was considering testing other adjuvants with the vaccine's antigen. GSK, along with several other scientists and regulators that ProPublica spoke with, expressed that using a new adjuvant would require redoing all of the long and expensive clinical trials.
U.S. government officials, meanwhile, are working to identify adjuvants that aren't already tied up by major pharmaceutical companies.
For a corporation, the primary concern is "what is this adjuvant doing for my bottom line," said Wolfgang Leitner, who began his career working at Walter Reed Army Institute of Research on the malaria vaccine as a consultant for GSK. Now the chief of the innate immunity section at the National Institute of Allergy and Infectious Diseases, his job is to encourage the development of new adjuvants and to make sure that researchers have access to ones that aren't tightly controlled by individual companies.
The WHO has also been helping to build a global network of vaccine manufacturers who can develop and supply vaccines to less wealthy countries outside of the shadow of Big Pharma; it is using a technology debuted during the COVID-19 pandemic called mRNA, which deploys snippets of genetic code to trigger an immune response. Reed, an inventor of GSK's TB vaccine, co-founded the company at the center of that effort, Afrigen, after growing concerned about the fate of the vaccine he made for GSK.
Reed helped create a second TB vaccine, which Afrigen has the rights to manufacture for sale in Africa. But that vaccine has yet to start a proof-of-concept trial.
Over the past five years, an average of just $120 million a year has been spent on all TB vaccine research globally, including money from governments, pharmaceutical companies and philanthropic organizations, according to annual surveys conducted by the Treatment Action Group. For perspective, the U.S. alone spent more than $2 billion developing COVID-19 vaccines from 2020 to 2022. At a special UN meeting on tuberculosis in 2018, the nations of the world pledged to ensure $3 billion was spent on TB vaccine research and development over the next five years. Just 20% of that was handed out.
While that mRNA hub holds promise, it will be years before an mRNA TB vaccine enters a proof-of-concept trial, according to people involved. The pharmaceutical companies that made successful COVID-19 vaccines have refused to share the technology and manufacturing techniques that make mRNA vaccines work. One company, Moderna, has said it won't enforce its patents on mRNA vaccines Afrigen creates for COVID-19, but it's not clear what it'll do if Afrigen applies those techniques to a disease like TB. (Paul Sagan, board chairman of ProPublica, is a member of Moderna's board.)
To date, the GSK tuberculosis vaccine — which does not use mRNA technology — is the only one that meets a set of characteristics the WHO believes are necessary for a viable TB vaccine.
The phase 3 trial is set to begin early next year. In the time between the two trials, approximately 9 million people will have died from TB.
Health insurers reject millions of claims for treatment every year in America. Corporate insiders, recordings, and internal emails expose the system and its harm.
by Cheryl Clark for ProPublica
Health insurers reject millions of claims for treatment every year in America. Corporate insiders, recordings and internal emails expose the system and its harm.
Have you ever had a health care claim denied by your insurer? Ever tried to appeal it? Did you wind up confused, frustrated, exhausted, defeated?
I’ve been a health care reporter for more than 40 years. And when I tried to figure out how to appeal insurance denials, I wound up the same way. And I didn’t even try to file an actual appeal.
ProPublica came to me earlier this year with what might have seemed like a simple proposition. They wanted me to create an interactive appeals guide that would help readers navigate their insurers’ maze. (A team of reporters at ProPublica and The Capitol Forum has been investigating all the ways that insurers deny payments for health care. If you’ve got a story to share, let them know here.)
Over the next several weeks, I spoke with more than 50 insurance experts, patients, lawyers, physicians and consumer advocates. Nearly everyone said the same thing: Great idea. But almost impossible to do. The insurance industry and its regulators have made it so complicated to file an appeal that only a tiny percentage of patients ever do. For example, less than two-tenths of 1% of patients in Obamacare plans bothered to appeal claims denied in 2021.
The central problem: There are many kinds of insurance in the U.S., and they have different processes for appealing a denial. And no lawmakers or regulators in state and federal governments have forced all insurers to follow one simple standard.
I tried to create a spreadsheet that would guide readers through the appeals process for all the different types of insurance and circumstances. When a patient needs care urgently, for instance, an appeal follows a different track. But with each day of reporting, with each expert interviewed, it got more and more confusing. There was a point when I thought I was drowning in exceptions and caveats. Some nights were filled with a sense that I was trapped in an impossible labyrinth, with signs pointing to pathways that just kept getting me further lost.
Here are some of the issues that make it so confusing:
First, people have to know exactly what kind of insurance they have. You may think that UnitedHealthcare is your insurer because that’s the name on your insurance card, but that card doesn’t tell you what kind of plan you have. Your real insurer may be your employer. Some 65% of workers who get their coverage through their employers are in what’s known as “self-funded plans,” according to KFF (formerly Kaiser Family Foundation). That means the employer pays for medical costs, though it may hire an insurance company like UnitedHealthcare to administer claims.
The other main type of insurance that companies provide for their workers is known as a “fully insured plan.” The employer hires an insurer to take all the risk and pay the claims. With that kind of plan, the name on your card really is your insurer. Why does this difference matter? Because the route you follow to challenge an insurance denial can differ based on whether it’s a fully insured plan or a self-funded one.
But all too often people don’t know what kind of plan they have and aren’t really sure how to find out. I’m told that some employers’ human resources departments don’t know either — although they should.
“It is a little scary, because people honestly don’t really know what they have,” said Karen Pollitz, a senior fellow at KFF who specializes in health insurance research. “I’m just going to warn you that if you set up the decision tree with an A: yes, B: no, or C: not sure, you’ll find a lot of people clicking not sure.”
Government insurance is its own tangle. I am a Medicare beneficiary with a supplemental plan and a Part D plan for drug coverage. The appeals process for drug denials is different from the one for the rest of my health care. And that’s different from the process that people with Medicare Advantage plans have to follow.
A spokesperson for the Centers for Medicare & Medicaid Services, the federal agency that oversees Medicare, wrote in an email that the agency “has been actively engaged in identifying ways to simplify and streamline the appeals process and has worked with stakeholders and focus groups to identify ways to better communicate information related to the appeals process with the beneficiaries we serve.”
And we can’t forget about Medicaid and the Children’s Health Insurance Programs, which together covered 94 million enrollees as of April, more than a quarter of the U.S. population. The federal government sets minimum standards that each state Medicaid program has to follow, but states can make things more complicated by requiring different appeal pathways for different types of health care. So the process can be different depending on the type of care that was denied, and that can vary state to state.
And don’t even get me started on how baffling it can be if you’re one of the 12.5 million people covered by both Medicare and Medicaid. As far as which appeals path you have to take, Abbi Coursolle, a senior attorney with the National Health Law Program, explains: “It’s Medicare for some things and Medicaid for others.”
I sought help from Jack Dailey, a San Diego attorney and coordinator for the California Health Consumer Alliance, which works with legal-aid programs across the state. On a Zoom call, he looked at an Excel spreadsheet I’d put together for Medi-Cal, California’s Medicaid program, based on what I had already learned. Then he shook his head. A few days later, he came back with a new guide, having pulled an all-nighter correcting what I had put together and adding tons of caveats.
It was seven single-spaced pages long. It detailed five layers of the Medi-Cal appeals process, with some cases winding up in state Superior Court. There were so many abbreviations and acronyms that I needed to create a glossary. (Who knew that DMC-ODS stands for Drug Medi-Cal Organized Delivery System?) And this was for just one state!
Dr. Christianne Heck, a neurologist specializing in epilepsy with Keck Medicine of the University of Southern California, said her health system has a team of professionals dedicated to appealing denials and making prior-authorization requests — where you have to call the insurer and get approval for a procedure beforehand.
“It’s a huge problem,” Heck said. “It usually takes multiple attempts. We have to play this horrible, horrible game, and the patients are in the middle.”
It’s especially complicated in oncology, said Dr. Barbara McAneny, a former president of the American Medical Association who runs a 6,000-patient oncology practice in Albuquerque, New Mexico.
“My practice is built on the theory that all the patients should have to do is show up and we should manage everything else … because people who are sick just cannot deal with insurance companies. This is not possible,” she said.
McAneny told me she spends $350,000 a year on a designated team of denial fighters whose sole job is to request prior authorization for cancer care — an average 67 requests per day — and then appeal the denials.
For starters, she said bluntly, “we know everything is going to get denied.” It’s almost a given, she said, that the insurer will lose the first batch of records. “We often have to send records two or three times before they finally admit they actually received them. … They play all of these kinds of delaying games.”
McAneny thinks that for insurance companies, it’s really all about the money.
Her theory is that insurance companies save money by delaying spending as long as possible, especially if the patient or the doctor gives up on the appeal, or the patient’s condition rapidly declines in the absence of treatment.
For an insurance company, she said, “you know, death is cheaper than chemotherapy.”
I asked James Swann, a spokesperson for AHIP, the trade group formerly known as America’s Health Insurance Plans, what his organization thought of comments like that. He declined to address that directly, nor did he answer my question about why the industry has made appealing denials so complex. In a written statement Swann said that doctors and insurers “need to work together to deliver evidence-based care and avoid treatments that are inappropriate, unnecessary, and more costly. Most often, a claim that is not immediately approved just requires the provider to submit additional information to appropriately document the request, such as the diagnosis or other details. If a claim is not approved after correct and complete information is submitted, there are several levels of appeal available to the patient and their provider.”
Swann outlined some of the appeals steps available, including a review by a doctor who wasn’t involved in denying the claim initially, the chance to submit additional clinical rationale and a review by an entity that’s independent of the insurer. He also noted that Medicare Advantage and Part D programs have multiple levels of appeals before winding up in court, including a step that requires a review by an outside, independent organization.
Domna Antoniadis is a health care attorney in New York who co-runs the Access to Care nonprofit, which educates patients and providers on their health insurance rights. She spent hours helping me navigate various appeal systems.
She offered up one important tip for people who use commercial insurance: Get the full plan document for your policy and read it. It’ll be around 100 pages and will tell you what medical services are covered and detail all the steps needed to appeal a denial. Don’t rely on the four-page summary, she said. It probably won’t help.
Likewise, Medicare, Medicare Advantage and Medicaid denial letters should explain the steps to appeal the decision.
When you can, enlist the help of your medical provider. Sometimes an insurer says no to a claim because a doctor’s office submitted it under the wrong code, and that can be fixed quickly.
Antoniadis acknowledged the challenges but believes that consumers have a lot more power than they realize. They can push back to advocate for themselves.
“The appeals process is not always handled properly by the plans, which is why consumers need to report and complain to their relevant government regulators when they believe they’ve been unfairly denied,” she said. “That’s integral to changing the system.”
It was a multibillion-dollar strike, so stealthy and precise that the only visible sign was a notice that suddenly vanished from a government website.
In August 2017, a federal agency with sweeping powers over the healthcare industry posted a notice informing insurance companies that they weren't allowed to charge physicians a fee when the companies paid the doctors for their work. Six months later, that statement disappeared without explanation.
The vanishing notice was the result of a behind-the-scenes campaign by the insurance industry and its middlemen that has largely escaped public notice — but that has had massive financial consequences that have rippled through the healthcare universe. The insurers' invisible victory has tightened the financial vise on doctors and hospitals, nurtured a thriving industry of middlemen and allowed health insurers to do something no other industry does: Take one last cut even as it pays its bills.
Insurers now routinely require doctors to kick back as much as 5% if they want to be paid electronically. Even when physicians ask to be paid by check, doctors say, insurers often resume the electronic payments — and the fees — against their wishes. Despite protests from doctors and hospitals, the insurers and their middlemen refuse to back down.
There are plenty of reasons doctors are furious with the insurance industry. Insurers have slashed their reimbursement rates, cost them patients by excluding them from their provider networks, and forced them to spend extra time seeking pre-authorizations for ever more procedures and battling denials of coverage.
Paying fees to get paid is the final blow for some. "All these additional fees are the reason why you see small practices folding up on a regular basis, or at least contributing to it," said Dr. Terence Gray, an anesthesiologist in Scarborough, Maine. Some medical clinics told ProPublica they are seeking ways to raise their rates in response to the fees, which would pass the costs on to patients.
"It's ridiculous," said Karen Jackson, who until her retirement in March was a veteran senior official at the Centers for Medicare & Medicaid Services, the federal agency that posted, then unposted, the fee notice. Doctors, she said, shouldn't have to pay fees to get paid.
But that's precisely what's happening. Almost 60% of medical practices said they were compelled to pay fees for electronic payment at least some of the time, according to a 2021 survey. And the frequency has increased since then, according to medical clinics. With more than $2 trillion in medical claims being paid electronically each year, these fees likely add up to billions of dollars annually.
Huge sums that could be spent on care are instead being siphoned off to insurers and middlemen. The fees can cost larger medical practices $1 million a year, according to an April poll by the Medical Group Management Association, which represents private medical practices. The figure sometimes runs even higher, according to a 2020 complaint to CMS from a senior executive of AdventHealth, which has 53 hospitals in nine states: "I have to pay $1.8M in expenses that I could use on PPE for our employees, or setting up testing sites, or providing charity care, or covering other community benefits." Most clinics are smaller, and they estimated annual losses of $100,000 or less. Even that figure is more than enough to cover the salary of a registered nurse.
The shift from paper to electronic processing, which began in the early 2000s and accelerated after the Affordable Care Act went into effect, was intended to increase efficiency and save money. The story of how a cost-saving initiative ended up benefiting private insurers reveals a lot about what ails the U.S. medical system and why Americans pay more for healthcare than people in other developed countries. In this case, it took less than a decade for a new industry of middlemen, owned by private equity funds and giant conglomerates like UnitedHealth Group, to cash in.
How these players managed to create this lucrative niche has never previously been reported. And the story is coming to light in part because one doctor, initially incensed by the fees, and then baffled by CMS' unexplained zigzags, decided to try to figure out what was going on. Dr. Alex Shteynshlyuger, a urologist who runs his own clinic in New York City, made it his mission to take on both the insurers and the federal bureaucracy. He began filing voluminous public records requests with CMS.
What he discovered in internal emails and government documents, which he shared with ProPublica, was a picture sharply at odds with the image of CMS as a hugely powerful force in healthcare. The records showed, again and again, federal officials deferring not only to a single company, but to a single executive.
Over the past five years, CMS adopted that company's positions on fees. Shteynshlyuger discovered that, when it comes to the issue he cares about, the most powerful decision-maker wasn't a CMS official. It was the chief lobbyist for a middleman company called Zelis. And that man just happened to be a former CMS staffer who had authored a key federal rule on electronic payments.
For Shteynshlyuger, the intersection of medicine and money has a particular resonance. He was born in the Soviet Union, in what is now Ukraine, and his brother nearly died of pneumonia as an infant because doctors refused to administer an antibiotic. The doctors wanted his family to pay a "bribe," according to Shteynshlyuger. His grandmother ended up finding a different doctor to pay off and his brother got the medicine. Shtenynshlyuger's parents emigrated to the U.S. in 1991, when he was an adolescent, and they settled in Brooklyn's Brighton Beach area.
Today, Shteynshlyuger sees the fees for electronic payment through a similar lens. He's a gadfly, but one with a wry, sometimes humorous disposition and an intellectual bent. He studied biology and economics in college and is capable of both rage at perceived unfairness and dispassionate observations about health policy. The unjust fees, as he sees them, threaten his medical practice, which he designed to serve middle-class patients. He prices his services at a discount. "Low cost is what keeps me in the business," he said.
As a result, administrative combat has become a big part of his life. Unmarried, Shteynshlyuger, 45, stays up into the wee hours, writing lengthy memos to regulators. One recent missive spanned 155 pages, including appendices.
This New Year's, he joined his family for a week off at his parents' condo near Miami. Shteynshlyuger arrived with a desktop computer, which he set up in one of the bedrooms alongside two monitors that he keeps at the condo. While his nieces and brother enjoyed the beach, Shteynshlyuger sat indoors, drafting a 38-page memo to aid in one of two lawsuits he has filed in an effort to pry documents out of CMS.
Shteynshlyuger's accent, with its distinctive Brooklyn-Russian mix, is unmistakable in calls with customer service representatives at insurance companies and payment processors. (He recorded many of the calls and shared them with ProPublica.) The calls follow a similar pattern: Posing questions in the manner of a genial but persistent litigator, Shteynshlyuger asks why he's being charged a fee.
Ultimately, he's informed that there's no way to have an electronic funds transfer, or EFT, sent straight to his bank account without paying a fee. When the calls get escalated, representatives sometimes offer to shave a tiny amount off the fees — charging, say, 2.1% rather than 2.5%, a proposal made on one recent call with Zelis — but rarely is he offered a free transfer.
A spokesperson for Zelis, the payment-processing company that Shteynshlyuger has tangled with most often, said the company refers requests for free electronic payments to the insurers, but recordings and transcripts of recent calls show that did not happen when Shteynshlyuger called.
Shteynshlyuger and other doctors say payment processors routinely sign them up for high-fee payment methods without their consent. A brochure for one payment company, Change Healthcare, boasted of automatically enrolling 100,000 doctors and hospitals in a plan to receive virtual credit cards and sharing some $8 million a year in revenues with the large insurer it was working for. (Virtual credit cards are a form of electronic payment in which a payer sends a string of numbers that are typed into a credit card reader to generate a one-time payment. Fees for VCCs run as high as 5% versus a typical 2.5% for other kinds of electronic payments.)
Payment processors often boost insurers' revenues by sharing the fees from virtual credit cards. One processor, VPay, says in its marketing materials that insurers can "make money on every virtual card transaction." In response to questions from ProPublica, UnitedHealth, which owns Change and VPay, asserted that its services help medical clinics streamline recordkeeping, reduce administrative burdens and accelerate payments.
Zelis and other payment processors say they offer value in return for their fees: Doctors can sign up to receive reimbursements from hundreds of insurers through a single payment processor, and they can also get services that help match up electronic payments and receipts. Zelis asserted in a statement that its services remove "many of the obstacles that keep providers from efficiently initiating, receiving, and benefitting from electronic payments." Zelis and other companies insist that it's easy to opt out of their services, but Shteynshlyuger and other doctors say otherwise.
When Shtyenshlyuger embarked on his mission of fighting the fees in 2017, his first step was research. He quickly came across an article from the American Medical Association that said the law was on his side.
Shteynshlyuger then approached the companies. He emailed senior executives of Zelis and VPay, asserting that the fees violated CMS rules. The companies denied breaking any rules and wouldn't budge on the fees.
So Shteynshlyuger started filing complaints with CMS. The responses he received struck him as curious. CMS itself usually didn't offer an opinion. Instead, it forwarded letters from a Zelis executive named Matthew Albright, who answered Shteynshlyuger's complaints on at least five occasions. (The agency said this passive approach is part of its "informal" complaint resolution process.)
When Shteynshlyuger pressed a CMS official to articulate the agency's position after it passed along Albright's answer, the official wrote that the agency receives the "identical legal response" from Zelis to all such complaints. She added: "They believe that, according to their interpretation of the regulation, they are compliant."
Shteynshlyuger was flummoxed. Who was Matthew Albright? A quick Google search revealed that Albright had once worked for CMS. That only piqued Shteynshlyuger's interest. Had Albright been involved in the removal of the CMS notice prohibiting fees?
To Albright, the 2010 passage of the Affordable Care Act was a historic event of a magnitude akin to the moon landing. Then a policymaker with Washington state's healthcare Authority, Albright was awed by the importance of the looming rewrite of U.S. healthcare rules. He felt he had to be part of it. "This is the Apollo 11 for regulators," he recalled thinking, in an interview with ProPublica. "I've got to get to D.C. and write regulations."
Now 55, Albright had unusual training for his new role. Instead of following the typical path through law school, he had studied sacred texts, first at the Pontifical University of St. Thomas Aquinas in Rome and later at Harvard University, where he earned a master's degree in divinity. Those studies, Albright said, fostered what he called a "scholastic fascination with words and how they're used to tell people what to do," whether those words are in the Ten Commandments or the Code of Federal Regulations.
Articulate and cheerful, today Albright can still sound more like a divinity professor than a lobbyist when he describes his current job as studying laws and rules. "Hermeneutics," he said, "it's just like Bible study, right? Breaking it down into its understandable parts. And then, frankly, turning around and teaching it or turning around and explaining it in the vernacular, if you will. So I think that most of my job is looking at regulations and reading them and then explaining them to internal and external audiences."
At CMS, Albright drafted a rule, published in 2012, that laid out standards for paying doctors via electronic funds transfers. The Affordable Care Act required all insurers to offer EFTs and encouraged doctors to accept them, and electronic payments quickly became the go-to method for handling medical claims. A CMS analysis predicted that eliminating the labor of manually processing paper checks and receipts would lead to savings of $3 billion to $4.5 billion over 10 years.
Albright became the agency's point man on the issue. He looked every bit the government bureaucrat in a gray shirt and dark suit as he extolled the virtues of "administrative simplification" in earnest-but-stiff video segments that emulated a talk show. (Albright also created a personal YouTube channel when he taught a philosophy course. It had bite-sized explanations of, among other things, Kantian ethics — "do not use people" — and Ayn Rand's philosophy — "selfishness is good.")
Albright's work at CMS, by his description, became a "turning point" for healthcare payments. The shift to electronic funds transfers facilitated the growth of an industry of payment processors. It also made Albright's skill set very valuable. In 2014, he was recruited to the industry he previously regulated. Two years later, he landed at Zelis. The company had just been created via a merger of four businesses owned by Parthenon Capital, a private equity firm. Zelis is now co-owned by private equity giant Bain Capital and headed by a former Bain partner. (Parthenon declined to comment; Bain referred a request for comment to Zelis.)
Zelis, which once described itself as having a "regulatory-based business model," touted Albright's government resume when it hired him as vice president of legislative affairs. Albright said at the time he would "advocate for rational regulatory approaches."
Rational regulatory approaches, from Zelis' perspective, included the right to charge doctors for electronic payments. That was a crucial revenue stream for the company, but it could dry up if CMS enforced a rule prohibiting such fees. Who better than Albright, the man who had drafted rules on electronic payments, to help the company navigate the situation?
When Shteynshlyuger began to receive documents from CMS in response to his Freedom of Information Act requests, he was first struck by how deferential CMS officials seemed to be to Albright. In July 2019, for example, as Shteynshlyuger continued to complain about Zelis, a CMS official named Gladys Wheeler contacted Albright. "You may be familiar with Dr. Alex Shteynshlyuger," Wheeler wrote. "To assist with resolution of the complaints, I have a few questions. Can I send the questions to you, or can you redirect me?" She added, "Just let me know the best approach. Thanks, and take care, Gladys." (Wheeler did not respond to requests for comment.)
The tone of the conversations between Albright and CMS could be downright chummy. "Should we respond to it as per usual?" Albright asked in another July 2019 email about a new complaint filed by a doctor in Washington state. "Send the Zelis response for documentation purposes," Wheeler responded in between banter that she and Albright exchanged about Chicago's winter weather (bad) and architecture (great).
Shteynshlyuger was growing more frustrated. He didn't understand why CMS had yanked the notice about the prohibition on fees from its website. If his months of effort couldn't extract clear answers, how could other doctors with less inclination for bureaucratic battle figure out what to do?
What Shteynshlyuger didn't know was that, less than two years earlier, a lobbying campaign had begun behind the scenes at CMS. The documents that he eventually obtained would provide a rare, nearly day-by-day glimpse into how one lobbyist — Albright — managed to bend the agency to his will with an artful combination of cajoling, argument and legal threats.
On Aug. 11, 2017, CMS' website had posted the notice that EFT fees were prohibited. Such notices, presented in the form of answers to frequently asked questions, are meant to explain the agency's complex rules in plain language. CMS based the notice on a rule from 2000 that banned fees in excess of normal telecommunication costs (such as, say, the tiny fractions of a penny to cover the cost of an email) that a doctor would incur if they were receiving the bill "directly" from an insurer.
The notice triggered an immediate protest from Zelis, according to emails and an internal CMS memo. Albright had "multiple conversations" with CMS staff and demanded that the agency revise the notice.
The nub of Albright's argument was that CMS' 2000 rule prohibited insurers from charging excessive fees for "direct" transactions. But, he argued, the rule was meant to apply to insurers dealing with doctors. Albright represented payment processors who work for insurers; those weren't direct transactions between insurers and doctors. Thus, he argued, the fee prohibition couldn't apply to EFT payments.
CMS, which took months or longer to respond to Shteynshlyuger, quickly complied with Albright's request and removed the fee notice on Aug. 14, 2017, only three days after it was posted.
CMS published an updated notice in late September 2017. But the agency stood firm on the key point: The new document stated that insurers and payment processors "should not charge providers communications fees" for EFTs.
Shortly after the revised notice went up, Albright emailed the director of the CMS division that issued it. "Hope the kids have settled into the school year okay," he began. He then asked for "our day in court to educate" the agency. He suggested that Zelis was preparing to escalate its complaints but offered to "work through this without causing too much noise."
Two days before Thanksgiving, Albright confronted Christine Gerhardt, then deputy director of the CMS division that issued the fee notice. In a phone call, Albright demanded that CMS revise the document again, according to Gerhardt's summary of the call. Gerhardt refused. Albright began debating her on the legal differences between the explainer and the regulation that it summarized.
The following week, Albright pressed harder, asking Gerhardt whether the prohibition on fees was enforceable. He told Gerhardt that if she did not answer, that itself would be an answer. It would, Albright said, "give me a sense of what steps need to be taken next" to challenge the agency's notice. Gerhardt, who is now retired, said she assured him that the agency wasn't implementing a new rule; only clarifying existing rules. Albright was pushing hard, but at that point, Gerhardt hadn't bent.
Then, in January 2018, Zelis brought in the lawyers. A firm called Nixon Peabody wrote to CMS, demanding that the agency "withdraw or correct the offending language" in its notice. Nixon Peabody argued that the fee prohibition wasn't a restatement of existing rules but that it amounted to a new rule that should have been issued via the formal rulemaking process. Nixon Peabody threatened to sue if CMS didn't comply with Zelis' demand. (Nixon Peabody did not reply to a request for comment.)
The legal threat set off a scramble within CMS. "Let's just take it down," Gerhardt wrote in a Feb. 9, 2018, email to colleagues. Her division not only removed the notice saying that fees were prohibited but also went so far as to institute a moratorium on any new notices. CMS was essentially depriving all medical providers of guidance on these issues because one company had complained.
The response puzzled even some within CMS. "What was the basis for withdrawal if the request was from a single entity and potentially harms providers?" Jackson, then CMS deputy chief of operations, wrote in an email.
Albright, his goal accomplished, sought to soothe Gerhardt and two of her colleagues. "I know I butted heads with all three of you," he wrote a few weeks later. Albright offered to meet to explain why Zelis is not "one of the bad guys in this area." (Zelis did not address detailed questions about Albright's interactions with CMS.)
In March 2018, after Zelis complained and CMS removed a notice saying that payments to doctors couldn't carry fees, Albright emailed three key agency staffers to patch things up. Credit:Email exchange provided by Alex Shteynshlyuger
CMS told ProPublica in a statement that it reversed its position because it concluded that it had no legal authority to "flat-out prohibit fees." The agency declined to comment on Shteynshlyuger's complaints, but said it takes seriously any allegations of noncompliance with its rules. As for Zelis' lobbying, CMS said it "receives feedback from a wide range of stakeholders on an ongoing basis. The information received helps the agency understand where guidance and clarification of existing policy may be needed."
The American Medical Association and over 90 other physician groups have urged the Biden administration to reinstate guidance protecting doctors' right to receive EFTs without fees. For its part, the massive Veterans Health Administration system has been refusing to pay the fees, which it has described as illegal in letters to Zelis and insurers.
So far the protests have had no visible effect. In fact, when CMS finally issued a new explainer that addressed fees in July 2022, more than four years after erasing the previous one, the agency made explicit what had previously been implicit: EFT fees are allowed.
Shteynshlyuger is continuing his lonely campaign. Two months after CMS stated that fees are OK, a Zelis customer service representative contacted him. Shteynshlyuger had just submitted his 80th complaint to CMS. Emails show the rep offered to help him get signed up for no-fee EFTs — but the offer only applied to payments from one of the more than 700 insurers and other payers that Zelis represents. Shteynshlyuger demurred, saying he did not want the issue resolved without CMS' intervention because then other doctors could not get the same assistance. As often as not, Shteynshlyuger and other doctors are left with little recourse; many insist on being paid by paper check rather than allowing Zelis to take a cut.
In mid-December, Shteynshlyuger finally got the long-awaited replies to eight other complaints he had filed over the years. CMS dismissed all eight because Shteynshlyuger didn't file them against insurers but instead against companies like Zelis, which CMS referred to as "business associates" of the insurers. CMS said it now believes its oversight extends only to insurers, not to their business associates. The phrasing may have been bureaucratic, but the news was dramatic: CMS had fully surrendered, giving up on regulating payment processors entirely.
Shteynshlyuger hasn't filed a new document request yet to uncover whether Zelis or perhaps another company influenced that decision. He has his suspicions.
Cezary Podkul is a reporter for ProPublica who writes about finance.
Medical boards, a health department and even federal investigators have scrutinized Dr. James McGuckin's vascular clinics. Today he still practices, despite a decade-long string of sanctions, fines and lawsuits.
This article was published on Wednesday, August 9, 2023 in ProPublica.
Cheryl Lee Carr clutched her phone, willing it to ring. The last time she'd answered it, a hospital surgeon told her he didn't know if he could save her mother's leg, let alone her life. But he would try to stop the hemorrhaging from her major leg artery, punctured by a doctor at a nearby clinic.
Carr had spent that morning in February 2020 at the Lehigh Valley Vascular Institute in Bethlehem, Pennsylvania, waiting as her 82-year-old mother underwent what was supposed to be a simple procedure to clear plaque from her arteries. More than four hours in, Carr knew something was wrong. She pushed past the front desk to find her dazed mother in a recovery room, two clinic employees holding a bloody compress over a leg that had turned deep purple.
"Where's the doctor?" Carr recalled yelling. "Call 911 right now!"
Now, as Carr braced for news about her mother's fate, her thoughts turned to the clinic's doctor who, she recalled, was nowhere to be seen as his patient bled. Carr pulled up a search engine and typed in his name: James McGuckin.
A deluge of results poured in.
What the hell? she seethed as she scrolled. Why is he still practicing?
For more than a decade, the Pennsylvania doctor and his national empire of vascular clinics had been scrutinized by agencies at every level — state medical boards, the Food and Drug Administration, the Department of Justice — for conducting experimental or unnecessary procedures on patients, putting their lives and limbs at risk.
He'd been disciplined by medical boards in over a dozen states, lost privileges in multiple hospitals and settled federal allegations of fraud, admitting that his company had performed procedures without any documented need. Pennsylvania had tried to shut his clinics down. Just a few months ago, federal attorneys announced a case against him, claiming he put "profits over the health and safety of his patients" when performing invasive artery procedures, regardless of symptoms or need.
And yet, after all of that, McGuckin is still seeing patients today, still adding to the nearly $50 million he has earned in the past decade in federal insurance reimbursements.
Medical boards are supposed to ensure doctors are not endangering their patients. State health inspectors are supposed to make sure facilities are meeting minimum standards of care. And the federal government is supposed to make sure that doctors are not swindling the nation's largest insurance program, Medicare, by exploiting vulnerable elderly patients.
But the ability of McGuckin to continue practicing, despite scrutiny from each of these regulators, highlights troubling gaps in the public safety net, ProPublica found. Those charged with identifying and stopping problem physicians are often slow-moving, blind to holes in their oversight and frequently unable — and at times unwilling — to stop doctors from practicing, even in cases of egregious harm or brazen fraud. Punishments are often nominal or easy to avoid, especially for well-resourced doctors like McGuckin.
One area that has become perilous for patients is vascular medicine. ProPublica recently uncovered a pattern of excessive and unnecessary vascular treatments in outpatient facilities. Medicare reimburses generously for these invasive treatments, which include using stents and balloons to widen arteries, and spiraling blades or lasers to clear plaque from blocked vessels, in a procedure called an atherectomy. Though they can be done safely outside of hospitals, they carry risks of complications that include clots, bleeding, limb loss and even death.
Over the past decade, federal investigators have accused more than a dozen physicians or companies in the vascular space of performing unnecessary procedures or making false claims. Some have continued to treat patients and profit from government insurance even after settling misconduct claims, only to be accused of committing similar behavior a few years — and millions of dollars — later.
At 61, with eyes that matched his bluish scrubs, McGuckin earned the trust of his patients, many of whom came to him for help with leg pain or circulation problems; several told ProPublica he appeared knowledgeable, caring and charming. One of the perks of going to see him was a limousine service that ferried them to and from appointments, they said.
Several of his patients faced complications after invasive vascular procedures — two lost their legs and several nearly lost their lives, according to interviews and medical and legal records. "The things that have happened to me have been a disaster," Maria Rohena, 69, said in Spanish as she wept. Her leg was amputated five days after a procedure in McGuckin's clinic in July 2021, according to medical records.
McGuckin's attorney David Heim described him as a "very good, skilled surgeon who has helped thousands of patients," many of them at higher risk. "Any effort to portray Dr. McGuckin as some ‘greedy' or ‘bad' doctor would be completely false and defamatory," he said. Heim did not respond to ProPublica's questions about specific patients, citing privacy. McGuckin's attorneys said that he has never been found personally liable for fraud and that the government's most recent allegations are "provably wrong."
Carr could not anticipate, as she waited for the call that winter day, just how bleak it would get. "My mother would never have gone under the knife with that guy if I had known anything about him," she said.
'A Question of Accountability'
From an early point in his career, McGuckin wanted to be calling the shots.
After completing his medical degree in 1987 from Philadelphia's Hahnemann University School of Medicine, now Drexel University College of Medicine, he earned his board certification in radiology, eventually publishing articles in academic journals and participating in several professional societies, including the American Board of Radiology, the Society of Interventional Radiology and the Pennsylvania Medical Society.
While working in hospitals, he felt he was just "a small cog" in the system, he said in an interview. So, in 2002, a few years after completing his medical training in Philadelphia, he opened his first private practice office.
Before long, he would open a chain of facilities, Vascular Access Centers, that would reach a dozen states under his leadership, and thousands of patients.
"Here, the physician gets to be the pitcher or quarterback," he said in the interview, of running an office. "We call the plays, set the schedule, drive the tempo. … There is never a question of accountability or the primacy of the customer."
But there were soon questions of accountability and appropriate care.
Around 2010, McGuckin started offering a controversial procedure: an invasive, experimental treatment for multiple sclerosis, which involved deploying balloons and stents in veins across the body to improve blood flow. The treatment, which lacked substantial evidence that it improved patient symptoms, was rejected by the medical establishment, and the use of devices for the treatment was unapproved by the FDA. Only about 30 doctors performed it, often charging thousands of dollars to do so.
McGuckin became a leading evangelist for the treatment, conducting hundreds of the risky procedures on patients, including a South Carolina woman who, in May 2012, nearly died after a stent dislodged and traveled to her heart. The Milwaukee Journal Sentinel, which wrote about the case, reported that the patient sued McGuckin in 2015 and the case was confidentially resolved two years later.
In July 2012, FDA inspectors showed up at one of his facilities and cited him for multiple violations, which are spelled out in an April 2013 letter. They included enrolling patients in unapproved clinical research; failing to screen for abnormal kidney function, which could have subjected patients to renal failure; and not reporting serious adverse events.
Despite evidence that such treatments put patients in grave danger, none of the medical boards in the more than a dozen states in which he was licensed to practice took action for more than a year. Some boards took four years.
State medical boards serve as the first line of defense against unscrupulous physicians. Typically composed of doctors and laypeople working part time, boards regulate who can practice medicine and investigate complaints of poor care.
But they are not set up for aggressive or speedy detective work. Take the board in McGuckin's home state of Pennsylvania, which oversaw more than 75,000 health care workers as of 2021; it had a budget of roughly $1.2 million to investigate misconduct that year, or about $290 per case opened.
For this reason, boards don't typically seek out investigations; they wait for patients, staff or other doctors to formally complain. They are slow to act and notoriously lax with their sanctions, aware that bold actions may provoke a costly and time-consuming appeals process.
Washington was the first state to sanction McGuckin, in November 2015, after a lengthy investigation that began four years earlier. It charged him with "unprofessional conduct" for performing more than 200 procedures, fined him $17,500, made him return the money patients paid out of pocket and ordered him to stop the treatments.
It also required him to pass an ethics course by writing an essay, which evaluators found unacceptable, saying McGuckin didn't "demonstrate a capacity to think ethically about why he is being held to account." McGuckin filed a second draft, which was also unsatisfactory. He only passed the course with help from a one-on-one tutor.
The Washington Medical Quality Assurance Commission, which oversees doctors in the state, also made him sign a consent decree, admitting that the invasive procedures were inappropriate. Years later, during a lengthy bankruptcy lawsuit involving his chain, he would testify that he signed it because he felt he had to but didn't feel he was guilty of the misconduct.
"It is clear to the Court that McGuckin is willing to sign documents, like the Consent Decree, even if he does not believe that his statements are true," U.S. Bankruptcy Judge Ashely M. Chan, in Philadelphia, would say in 2020. "The Court finds that McGuckin is not truthful and cannot be relied upon for anything that he says."
By 2017, 15 other state medical boards had followed Washington in citing McGuckin for the MS treatments. Most of the sanctions, however, constituted minimal fines, often less than what McGuckin could bill for a single two-hour vascular procedure.
Pennsylvania, for instance, charged him $10,000 in 2016. That year, he took in almost $4 million in federal reimbursements alone.
In a letter shared with ProPublica, McGuckin's attorney George Bochetto said the doctor "was not disciplined because he performed a so-called ‘unproven and risky procedure,' but rather was ensnared in a complicated administrative bureaucracy."
While he lost hospital privileges across four facilities in Pennsylvania and New Jersey, no medical board limited his ability to practice.
'Bang 'Em All'
All the while, federal agents were investigating McGuckin for an entirely different set of allegations.
While states regulate medical facilities and doctors, the Department of Justice attempts to protect the nation's largest insurance systems, like Medicare, from fraud. Its investigations are often instigated by whistleblowers, whose inside testimony is crucial to uncovering details of wrongdoing.
Dr. Michael Levine, a seasoned nephrologist with an expertise in hemodialysis vascular access, started working for McGuckin in 2009 at multiple New Jersey clinics that were part of Vascular Access Centers.
"At first, there was no red flag," Levine told ProPublica. The clinics mostly treated patients with renal disease whose vessels occasionally needed treatment related to their dialysis lines. But Levine said he quickly learned that patients were being put into treatment loops where they were regularly booked for unneeded tests and procedures. "They were having the patients come back every three months, which to me is corruption," he said.
While the procedures were relatively low risk, each time a doctor puts a foreign device in a patient's body, it carries a chance of complication. Levine said he was therefore shocked when McGuckin pushed him to do more procedures without a clear clinical need.
McGuckin ordered each dialysis patient to be "squirted with dye," Levine said in court records, implying that all patients should be subjected to an X-ray test to fish for blood clots or narrowed vessels to treat, regardless of whether their primary doctor ordered it.
McGuckin also allegedly told Levine to treat patients' vessels with inflatable balloons and implant stents without a medical need. "Bang 'em all," McGuckin allegedly told him, according to legal filings.
When Levine refused to go along with this practice, he said he was fired. Shortly after, in 2012, he filed a whistleblower lawsuit, which spurred a federal investigation.
"It's not an issue of competency," he told ProPublica. "It's the issue of using his skills for his own self benefit and seeing his patients not as human beings, but as sources of income."
David Stebbins, who was the administrator director of the centers from 2006 through 2018, said he also witnessed McGuckin's drive to increase profits with unnecessary procedures. "McGuckin exerted pressure on all of the MDs working for him to increase procedural ‘acuity,'" he told ProPublica in an email. After more than a decade of working for McGuckin, when Stebbins questioned whether the clinics were possibly violating state regulations, he said he, too, was let go.
"McGuckin is an arrogant Charlatan who expects his senior staff to do whatever they're told, or they may find themselves looking for work," said Stebbins, who filed a separate whistleblower complaint in 2020, which is ongoing. "Under incredible pressure, they comply." Attorneys for McGuckin did not respond to Stebbins' allegations.
Despite allegations that patients might be at risk of unnecessary, invasive procedures, it still took six years for the Justice Department to settle the claims initiated by Levine.
In October 2018, Vascular Access Centers signed a settlement with the federal government, agreeing to a $3.8 million fine. As part of the agreement, the company had to admit that it regularly scheduled, performed and billed for procedures without any evidence of need.
But as is the case with many federal settlements involving doctors, they are rarely held personally liable, or they can just pay steep fines to get out of trouble.
While McGuckin signed the company's agreement with the federal government, as the company's general partner and manager of each of its clinics, he was not held personally responsible for its misconduct. No physicians were specifically called out in the federal settlement; McGuckin's attorney said the government chose not to pursue a case against him because there was no evidence implicating his physician services.
At his clinics across Pennsylvania that were not affiliated with the embattled chain, McGuckin could still continue to treat patients unchecked.
Other doctors have gotten a similar deal.
Take Dr. Feng Qin, a vascular surgeon in New York.
In 2015, he settled allegations of fraud, admitting that he had routinely performed unnecessary procedures on end-stage renal disease patients. He paid a $150,000 fine but was able to continue practicing.
Even after the settlement, Qin performed unnecessary procedures, according to federal legal filings. "The monitoring by the feds, I know how to play Medicare's asses now," he told his billing assistant in 2015, according to a later whistleblower complaint.
Three years later, the Justice Department indicted and arrested Qin for fraud, after which he agreed to another settlement, paying $800,000. Lawyers for Qin, who left the country after the settlement, did not respond to ProPublica's emailed questions.
Though Qin was temporarily excluded from federal health care programs, other doctors have continued to receive government payments even after multiple settlements.
Consider Dr. Mubashar Choudry, a cardiologist in Maryland. He was never found guilty of patient harm, but his medical practices have twice been scrutinized by the Justice Department for alleged misconduct.
In 2014, his medical group agreed to pay about $1.9 million to settle allegations that it was involved in an overbilling scheme. Then in 2020, Choudry and his practices settled allegations of kickbacks with the federal government, paying $750,000. In both cases, neither Choudry nor the companies were required to admit liability.
Kirk Ogrosky, Choudry's attorney, said such arrangements are typical, and his client settled to "avoid the cost and uncertainty of litigation." His attorney emphasized that Choudry's settlement was not about the quality of patient care.
Choudry has not been limited from practicing or accessing federal payment programs. In 2021, the most recent year of public Medicare data, Choudry earned $1.5 million in federal reimbursements.
The settlement against McGuckin's clinics also didn't prevent him from continuing to bill Medicare.
Between 2019 and 2021, the most recent years of federal payment data available, McGuckin made more than $17 million.
Putting 'Profits Over the Health and Safety of His Patients'
While medical boards oversee doctors, state health departments regulate medical facilities, which can include clinics like McGuckin's. Their investigations, too, are largely driven by complaints and rarely result in major consequences.
So it was remarkable that, in 2019, Pennsylvania's Health Department decided to take on McGuckin after officials read about his company's federal settlement in The Philadelphia Inquirer.
At the time, he owned four clinics in the state that weren't affiliated with the chain.
The department reviewed their license applications and found that the clinics had "failed to fully, completely, and accurately" disclose pertinent details about the federal scrutiny involving McGuckin and his other company. In January 2019, the department issued rare orders for four of his private clinics, revoking their licenses and cutting off their ability to operate.
McGuckin appealed the orders and his lawyer argued that a shutdown would expose his clinics' patients to "irreparable harm" without their care. His lawyer also noted that the department had based the order on the assessment that McGuckin was "not a responsible person," instead of relying on claims of patient harm or complaints. His lawyer also said that because McGuckin was not held personally liable in the settlement, he had been exonerated from its "salacious" allegations.
Garrison Gladfelter, who oversees surgical centers for the state, told McGuckin's attorney in letters that, pending the appeal, McGuckin's facilities could continue to operate on one condition: that he not personally perform procedures or provide training to the medical staff.
In response, McGuckin sued Gladfelter as well as the state's health secretary, Dr. Rachel Levine, alleging that his clinics' licenses were unlawfully revoked and their attempt to ban him from working at his own practices infringed on his "constitutional right to practice medicine."
The lawsuit continued for eight months, and in October 2019, it was dismissed with an acknowledgment that the issues between McGuckin and the state had "been settled."
The details of this settlement were kept secret. There's no public evidence of why McGuckin's facilities were allowed to continue to operate, with him performing procedures. The Health Department told ProPublica that, after the confidential settlement, it increased oversight at two of McGuckin's facilities.
But against the tide of litigation, the Health Department largely backed off, and like the state medical boards and the Justice Department before it, it allowed McGuckin to continue to practice.
And so he did, for almost four years.
All the while, federal authorities had more information indicating his patients were at risk.
Two months after the federal settlement, in December 2018, yet another whistleblower filed a complaint: Dr. Aaron Shiloh, who was employed by McGuckin in his private practice in Pennsylvania. In a letter, McGuckin's attorney Bochetto called him "disgruntled." Shiloh's attorney pushed back, requesting further details, but McGuckin's attorneys did not respond to ProPublica's request for more information.
His claims would lead attorneys from the Justice Department to conclude that from 2016 through 2019, McGuckin performed more than 500 medically unnecessary or insufficiently documented procedures, which allowed him to earn at least $6.5 million in Medicare reimbursement. They also found that McGuckin performed several invasive procedures on many patients, regardless of their symptoms, putting "profits over the health and safety of his patients."
The procedures are intended for patients with peripheral artery disease, a condition that afflicts 6.5 million Americans over the age of 40. According to the federal government, McGuckin not only performed procedures on patients with only "moderate" leg pain, against the widely accepted standards of care, he also performed procedures on patients who were disabled and and unlikely candidates for such interventions.
He performed procedures for leg pain in a patient who was paralyzed on one side of her body and did not walk at all, according to the complaint. On another patient, the government said, he conducted "unnecessary below-the-knee procedures in the small portion of what remained of a patient's already amputated leg." One patient told the federal government, according to legal filings, that he felt like McGuckin "was just experimenting on him."
Earl Toler of Long Pond, Pennsylvania, told ProPublica he also felt part of an experiment. He sought treatment at 74 after experiencing weakness in his leg when walking. Over about a year, Toler underwent 10 vascular procedures, according to later legal filings. His condition progressively worsened until his left leg grew swollen and mottled and one of his toes turned dark blue.
To save his life, in November 2018, doctors at a local hospital needed to amputate his leg above the knee. During a malpractice lawsuit against McGuckin and other doctors at his clinic, medical experts who testified on Toler's behalf claimed the doctors had deviated from the accepted standards of care, particularly in not referring Toler to a vascular surgeon for more advanced treatment, which they alleged eventually led to his limb loss. In legal filings, McGuckin denied the allegations. The lawsuit went to trial last year, and the jury sided with McGuckin and his doctors, clearing them of any wrongdoing.
Despite the verdict, Toler, an excavation contractor by trade who can largely no longer work after his amputation, still holds them responsible for his condition. And when he read over the allegations of the current Justice Department lawsuit, he was floored. "It's a pattern," he said. "I knew I wasn't the only one."
Two and half years after Toler's amputation, Rohena, a churchgoing grandmother from the Allentown area, blacked out and had a heart attack in McGuckin's recovery room, according to medical records. The clinic called an ambulance to take her to the nearest hospital, where medical staff found a main artery had been nicked, causing extensive blood loss. Rohena was treated for five days before her leg was amputated.
A lawsuit has been initiated, according to her attorney Frank Mangiaracina. "Maria is stuck living in a nursing home, and she doesn't have her leg or life anymore," he said.
According to clinic medical records, Rohena had undergone four treatments with McGuckin in two months.
A ProPublica analysis of federal payment data from 2017 through 2021 found that McGuckin ranks among the 5% of doctors who perform the most atherectomy procedures like the one Carr's mother, Toler and Rohena underwent before facing complications.
Recent research has shown that a substantial number of doctors who treat peripheral arterial disease are quickly resorting to device interventions in the earliest stages against best practices. Doctors have used scare tactics to convince patients to get these painful and risky procedures; McGuckin, for instance, allegedly told patients the interventions were necessary to "save their leg" or "stop the chop." But patients in early stages of vascular disease have less than a 2% risk of amputation after five years, researchers have found. That risk could surge up to 5% or even 10% with aggressive interventions.
McGuckin's attorneys argued the federal allegations are "baseless" and "irreparably tarnish" his reputation. "McGuckin did not violate any medical standards of care in treating his patients," his attorneys wrote in legal filings. "The Government's medical necessity claims amount to nothing more than a ‘scientific disagreement.'"
Justice Department investigations into whistleblower claims are kept secret until prosecutors are ready to file a lawsuit. They did so in May 2023. Despite McGuckin's arguments that it should be dismissed, it is ongoing.
According to the Health Department, McGuckin has closed or relinquished ownership of his clinics across Pennsylvania in the past few years. When ProPublica called the Lehigh Valley Vascular Institute in July to inquire whether he was still practicing, the receptionist said he was taking appointments.
'Penniless and Paralyzed'
A few weeks ago, Carr pored over the details of the new federal case. It brought her to tears.
Though that phone call back in 2020 brought good news — the hospital surgeon managed to save her mother's life and leg — the aftershocks took a lasting toll.
While recovering at the hospital, her mother, Elaine Micelli, struggled to use her left arm, and one side of her face drooped. Carr suspected her mother had developed a neurological issue. "She asked me to go down the hall and get her a box of tissues from her closet — she thought she was at home," she said.
An assessment at the hospital revealed she had suffered strokes, medical records show, likely due to the low blood pressure, which she had when she was admitted.
Before her visit to McGuckin, the 82-year-old still mowed her 2 1/2 acre lawn in the summer and cleared snow with her blower in the winter. She volunteered for the crime watch at the local fire department and, every week, called bingo numbers at the senior center.
Now, she lives in a nursing home and requires 24-hour care. She no longer walks, requires assistance to eat and wears diapers. She cannot speak fluidly or remember key moments of her past. "He destroyed my mom's life," Carr said of McGuckin. "She's penniless and paralyzed … just waiting to die."
Shortly after her mother's injury, Carr said she filed a formal complaint about McGuckin with both the state's Medicare office and its medical board.
Three years on, she said, she has not received a response.
