Court records show the federal government gave $20 million in contracts to a company partly controlled by a man with a history of shady business practices.
This article was first published on Thursday, July 9, 2020 in ProPublica.
Desperate to acquire masks to slow the spread of the novel coronavirus, two federal agencies gave nearly $20 million in contracts to a newly formed California company without realizing it was partly run by a man whose business activities were under sanction by the Federal Trade Commission, court records show.
On Tuesday, a U.S. District Court judge froze the company's assets, most of which had come from the Department of Veterans Affairs in a $5.4 million mask deal. A story by ProPublica revealed Jason Cardiff's role in operating VPL Medical LLC in June.
Cardiff was sued by the FTC in 2018 in connection with an alleged fraudulent scheme involving smoking cessation strips and male sexual enhancement pills and was under court order to report his income to a receiver. Cardiff was recently held in contempt for violating that court order. By not disclosing his involvement with VPL, court records allege Cardiff was essentially hiding information from the FTC about money his company was getting from another federal agency, the VA.
California business filings show that VPL was incorporated just four days before it won the VA deal in April, and it went on to win a $14.5 million no-bid contract the next day from the federal office in charge of the national stockpile. Those filings do not mention Cardiff as a company owner. The FTC alleges in court records that Cardiff and a partner, Bobby Bedi, were equal partners and had each paid themselves at least $420,000 from the VA money.
In May, when ProPublica asked VPL officials about Cardiff's role, Bedi said Cardiff was "a consultant." In a recent filing, the court receiver said that characterization "strains credibility" and included photos of a company organizational chart showing the two co-leading VPL.
When the VA signed the VPL deal, the agency had been told by a company representative that Cardiff was the CEO of the company, according to emails included in the FTC's latest court filings.
That VPL representative, Stacey Barker, was paid more than $257,000 for helping to close the VA deal.
While the company is not on the list of banned federal contractors, a quick Google search reveals Cardiff had been repeatedly accused of fraudulent schemes.
The attorney representing Cardiff and VPL, James B. White, argued that the FTC filings are the agency's perception, not the truth, and said corporate filings do not include Cardiff's name.
"What I'm suggesting to you is that is not the only interpretation of the documentary trail," White told ProPublica. "Is it not possible in your world that the payments to Mr. Cardiff were for a consultancy?"
The VA, which has struggled to provide protective equipment to medical workers at the largest hospital system in the country, said the company successfully provided 8 million surgical masks. VPL has yet to deliver under its separate contract with the U.S. Department of Health and Human Services, according to the company's lawyer and court records.
The federal government and states have fueled an unregulated, chaotic market for masks ruled by oddballs, ganjapreneurs and a shadowy network of investors.
Cardiff and Bedi did not respond to requests for comment. A VA spokeswoman said VPL met basic criteria for a contract award.
"If you have concerns about the federal laws governing the federal contracting process, you should direct them to the relevant congressional committees of jurisdiction," said the spokeswoman, Christina Noel.
In 2018, the FTC sued to shut down Cardiff and a different company operated by him and his wife, describing it as a pyramid scheme. It alleged that the firm involved robocalling people and making "false and unsubstantiated claims for dissolvable film strips advertised for smoking cessation, weight loss, and male sexual performance."
A federal court issued an injunction, shutting down the Cardiffs' business and freezing their assets. In March, Cardiff was found in contempt of court for, among other things, hiding 1.5 million Canadian dollars (about $1.1 million) in assets. The case is ongoing, with the most recent injunction freezing VPL assets.
The FTC alleged that Cardiff was funding a lavish lifestyle through an account he had opened in the name of his 90-year-old father.
"The Cardiffs are spending nearly $17,000 per month," court records state. "On Bentley, Porsche, and Range Rover lease payments, private elementary school tuition, restaurants, phone and cable bills, salons and spas, pet grooming, a 5-star hotel in New York City, music lessons, taekwondo lessons, ride shares, movie theaters, and other lavish expenditures."
After months of asserting pregnant women were not at high risk for the coronavirus, the CDC recently released a study with sobering findings for expectant mothers. Experts say the data gaps are almost as worrisome as the results.
This article was first published on Monday, July 6, 2020 in ProPublica.
By Nina Martin
In late June, after three months of near silence on the topic, the Centers for Disease Control and Prevention finally weighed in on a question of critical importance to millions of American women and families: How dangerous is the coronavirus for pregnant women and new mothers?
The CDC had been asserting that pregnant women don't seem to be at higher risk for severe complications from the virus. As recently as late May, a spokesperson told ProPublica, "Current evidence shows pregnant women have the same risk of severe illness from COVID-19 as adults who are not pregnant."
Then, the agency abruptly changedits tone. In its first examination of U.S. data on COVID-19 in pregnancy, the CDC found that expectant mothers with the virus had a 50% higher chance of being admitted to intensive care and a 70% higher chance of being intubated than nonpregnant women in their childbearing years.
Pregnant Latina and Black women were infected at significantly higher rates than white women, researchers reported. As of July 2, at least 30 expectant and new mothers with the virus had died.
That news was sobering enough. But what many experts found really worrisome were the glaring gaps in data that the study exposed.
The CDC acknowledged that crucial health information was missing for about three-quarters of pregnant women with the virus, including whether they had preexisting conditions or required an ICU stay or mechanical ventilation. For the vast majority of U.S. women of reproductive age who tested positive — about 326,000 women through June 7 — there was no information about pregnancy status at all.
Researchers couldn't even say how many of the hospitalized mothers-to-be — 31.5% of the pregnant women in the study — had been admitted because of COVID-19, versus how many were in the hospital for other reasons, such as giving birth.
The flawed CDC report highlights a problem that OB-GYN providers and researchers in the U.S. have been fretting about since the pandemic began. Because emerging diseases can have catastrophic consequences for pregnant women and their babies, close monitoring of new illnesses in this vulnerable population is important. So is rapid communication with providers trying to keep their patients safe.
But the U.S. public health system's efforts to understand the impact of the coronavirus in mothers and babies have been flat-footed, scattershot and agonizingly slow.
The holes in the CDC's data are "startling. I won't lie," said Cindy M. P. Duke, an OB-GYN who runs the Nevada Fertility Institute in Las Vegas. "It's shocking to realize that we do not have a uniform system in place" for collecting and analyzing basic maternal and infant health information during times of crisis.
"By the time we get the best data available," said Christina Han, a maternal-fetal specialist who is on the clinical faculty at the University of California, Los Angeles, medical school, "this pandemic will be over."
To track the coronavirus in pregnant women and their babies, the CDC is instructing local health departments to check a box on the standard Case Report Form if a patient is currently pregnant. Jurisdictions can also complete an "optional, supplemental form" providing information about disease severity and outcomes in mothers and babies, a spokeswoman said.
It's a system that guarantees there will be huge data inconsistencies, time lags and gaps. "We're talking about millions of cases that are having to be reported back to the CDC right now," Han said, "And the clinicians who are taking care of these patients don't have the time to be filling out the full case report forms."
The CDC has "initiated COVID-19 pregnancy surveillance," according to its study, working with local health departments to improve data collection going forward. But researchers didn't give any details.
"We need to be set up prior to an outbreak to capture information about how any new or emerging or reemerging pathogen affects pregnant women and their infants," said Denise Jamieson, who spent 20 years at the CDC studying reproductive infectious disease and now heads the OB-GYN department at Emory University medical school in Atlanta. "And I think it's clear … that [the CDC] are not well poised to do that."
It Doesn't Have to Be This Bad
When COVID-19 arrived in Europe this winter, researchers in the United Kingdom were ready.
Caught unprepared by the H1N1 outbreak of 2009, and determined not to let that happen again, the National Institute for Health Research issued a call for studies in 2011 that could be up and running as soon as the next pandemic hit. Nine proposals were chosen, all focusing on flu but adaptable to other types of outbreaks; then they were "hibernated" — put on hold, the protocols periodically reviewed and revised, pending government action.
When the sirens began blaring this February, eight of the studies launched, including one by the U.K. Obstetric Surveillance System, a research platform devoted to rare disorders of pregnancy. "I was told to activate [it] on a Friday," said Marian Knight, a professor of maternal and child population health at the University of Oxford, "and by Monday, we were collecting the data."
The UKOSS design was ambitious — a comprehensive, prospective study of COVID-19-infected pregnant women at the National Health Service's 194 obstetric hospitals; it was also straightforward, based on a two-page electronic form, with all patient information kept anonymous. The careful planning allowed researchers to move quickly without being overly rushed, Knight wrote in a blog post for The BMJ journal, "minimizing the risks of publication of, at best, misleading, or, at worst, erroneous, information" — problemsthat have bedeviled other high-profile COVID-19 studies.
By mid-May, UKOSS releasedits first findings from an analysis of every pregnant woman hospitalized in Britain from March through mid-April who tested positive for the virus, 427 in total. Mothers-to-be did not seem to get as sick overall from COVID-19 as they had from H1N1 flu and SARS, but Black and Middle Eastern women were far likelier to be hospitalized with the virus than white women were. About 1 in 10 women became so ill they required respiratory support. Five mothers and five babies died.
The study provided the kind of high-quality data that doctors and policymakers value most: populationwide, scientifically rigorous, immediately actionable. British medical organizations quickly issued new guidance about the heightened risks for women of color.
Medical groups alsoreaffirmed earlier recommendations that women in their third trimester should avoid job settings, such as working as a doctor or nurse on the front lines, that could expose them to the virus. That's a much more conservative position than American medical organizations and employers have taken, citing a lack of research that would suggest a different approach. Knight said the UKOSS findings support stringent social distancing in late pregnancy. "That's where we see the majority of women with critical disease. The good news is that women now know when they should start to be particularly vigilant."
Public health experts say UKOSS' proactive, big-picture approach is exactly what was needed in the U.S., which has nearly 4 million births annually — about five times as many as Britain — and wide racial disparities in maternaland infant outcomes that COVID-19 has likely only widened. By one estimate, more than 16,000 American women could be infected with the coronavirus when they give birth this year.
But the U.K. has universal health care, which gives the government access to vast amounts of patient data, making large-scale research like the UKOSS study more feasible. The U.S. health care system is fragmented and inefficient, much of its data hidden in black boxes.
The two nations also have very different approaches to maternal health, exemplified by how they confront pregnancy-related complications and deaths. The U.K. treats every mother's death like a public health disaster; the U.S. can barelykeep track of its maternal mortality problem.
Women's health in general tends to be an afterthought for American researchers and policymakers, said Barbara Levy, former vice president for health policy at the American College of Obstetricians and Gynecologists, now a consultant in the Washington, D.C., area. In a public health system that's beenunderfunded for decades, pregnancy-related issues get especially short shrift.
"If we're not seeing a red-hot button to raise our concern, then we just aren't particularly curious about what might be going on." Yet the stakes of this kind of population-based research couldn't be higher, Levy said. "This is the future of our world. This is the next generation."
Patching Together a View
Starting with the first, very limited case reports from China, there's been a deluge of studies seeking to fill the information void about COVID-19 and pregnancy. In the U.S., much of the research has come from hot spots like New York City,Seattle and Chicago, where physicians in the throes of the pandemic have reported on their own patients and pushed out their findings with breakneck speed.
The general trend has been somewhat reassuring: COVID-19 can make pregnant women very sick, but many seem to remain asymptomatic or become only mildly ill. There have only been a few cases of suspected "vertical transmission" — mothers passing the virus to their babies in the womb — but those remain under investigation, and most infants born to COVID-19-positive women have done fine. Some red flags have also emerged: A couple of cases of heart-related complications, indications ofplacental abnormalities and reports of asymptomatic women who spiraled after giving birth.
The underlying data in many of these case reports is overlapping and confusing, with little or no peer review to vet the findings. "In none of these series can we be certain of the underlying population denominators nor the degree to which they are affected by the biases" inherent in small-scale studies conducted in a single hospital or city, Knight wrote in her BMJ commentary. "The results are thus almost impossible to interpret."
As coronavirus spread through the nursing home where Molly Baldwin is a social worker, management wouldn't let her work remotely. That forced her to choose between staying safe while in her third trimester and getting her paycheck.
Meanwhile, numerous efforts are underway to do larger scale, longer-term, more scientifically meticulous studies that could give a fuller picture of how the virus affects pregnant women and babies in different parts of the U.S. (which is likely to be different from how it affects women in the U.K. or Sweden or Iran). In late May, the National Institute of Child Health and Human Development announced a sweeping initiative, a series of studies at the 12 academic institutions in its Maternal-Fetal Medicine Units Network, the preeminent obstetric research collaborative in the U.S. The network, which dates to the mid-1980s and stretches from the Rhode Island to Utah, is "a very well-oiled machine that can put protocols into place very quickly," said Diana Bianchi, a prenatal geneticist who heads the NICHD, which is one of the National Institutes of Health.
One big study will compare women who delivered at the various sites between March and December of this year with women who delivered in the same hospitals in the same period in 2019, Bianchi said. "They're asking, first of all, is there a difference in the number of deaths? Is there a difference in the number of cesarean sections that have been performed? Is there a difference in terms of the maternal near misses?... If we see any increased incidence of complications, death, whatever, then the presumption is the difference is due to COVID." Another study will follow 1,500 COVID-19-positive pregnant women to understand the course of the disease and its treatment.
A different approach, the PRIORITYstudy, originates at the University of California, San Francisco, and UCLA. The idea is to build a large nationwide registry of women who contracted COVID-19 at any point in their pregnancy and to follow them for at least a year after they give birth, miscarry or have an abortion. A key goal is to make the registry more geographically, racially and economically diverse than is typical of many academic-based studies, "because we want the results to accurately reflect the true representation of pregnant people that are being impacted by COVID 19," said Vanessa Jacoby, an associate professor at UCSF who is one of the lead investigators. To that end, the researchers are working with birth advocates in communities of color around the country to get the word out to potential participants directly; they don't need a doctor or hospital to take part. In the first few weeks, many of the women enrolled were pregnant health care workers.
Another UCSF-based study, the ASPIRE registry, will focus on early pregnancy, when the risks are greatest for birth defects and miscarriages, and aims to eventually enroll 10,000 participants.
"This disease is so humbling because it's new to humans, and we keep learning more and more about its manifestations in real time," Bianchi said. "We have not gone through a nine-month cycle with pregnant women. And so I'm very concerned about the consequences of infection in the first trimester." She points to Zika, a mosquito-borne virus that was once thought to be harmless because the symptoms in men and nonpregnant women were often quite mild. Only after newborns exhibited devastating neurological disabilities did researchers realize how dangerous the virus really was.
Recent reports of COVID-19's unexpected effects — like a life-threatening inflammatory syndrome in children — have intensified providers' unease. On a Facebook group for OB-GYNs with 4,400 members, doctors have recently been trading stories about an alarming, if highly anecdotal, increase in miscarriages and stillbirths in some of their practices. But the OB-GYNs didn't know whether what they were seeing was a real spike caused by COVID-19, an increase caused by something else or a statistical fluke magnified by their own anxiety. And what, they worried, might the reports about clotting disorders in younger, nonpregnant adults mean for expectant and new mothers, who are already more susceptible to life-threatening blood clots?
"The gap in knowledge — it's chilling," said Jane van Dis, a Los Angeles-area OB-GYN who is the medical director at theMaven women's health telemedicine platform and helps administer the Facebook group. "It's very distraught-provoking to be expected to be an expert on a topic that we've spent our whole lives dedicated to, but for which we don't have the answers right now, and they're really important answers to be able to have."
The truth is, answers may be elusive for a long time. "This virus keeps surprising us," said Sonja Rasmussen, former director of the CDC's Office of Infectious Diseases, now a professor of pediatrics and epidemiology at the University of Florida medical school. "That was true for Zika and Ebola, too." One of the most important lessons of past outbreaks, she said, is that "you can't be too confident early on. It just shows the importance of collecting data and not being too sure about what you think you're going to see before you collect those data. You've got to keep an open mind."
Texas was one of the first states in the nation to ease social distancing mandates. In Houston, the number of patients hospitalized with COVID-19 has quadrupled since Memorial Day. "It's time to be alarmed," one expert said.
This article was first published on Wednesday, July 1, 2020 in ProPublica.
HOUSTON — At Lyndon B. Johnson Hospital on Sunday, the medical staff ran out of both space for new coronavirus patients and a key drug needed to treat them. With no open beds at the public hospital, a dozen COVID-19 patients who were in need of intensive care were stuck in the emergency room, awaiting transfers to other Houston area hospitals, according to a note sent to the staff and shared with reporters.
A day later, the top physician executive at the Houston Methodist hospital system wrote to staff members warning that its coronavirus caseload was surging: “It has become necessary to consider delaying more surgical services to create further capacity for COVID-19 patients,” Dr. Robert Phillips said in the note, an abrupt turn from three days earlier, when the hospital system sent a note to thousands of patients, inviting them to keep their surgical appointments.
And at The University of Texas MD Anderson Cancer Center, staff members were alerted recently that the hospital would soon begin taking in cancer patients with COVID-19 from the city’s overburdened public hospital system, a highly unusual move for the specialty hospital.
These internal messages highlight the growing strain that the coronavirus crisis is putting on hospital systems in the Houston region, where the number of patients hospitalized with COVID-19 has nearly quadrupled since Memorial Day. As of Tuesday, more than 3,000 people were hospitalized for the coronavirus in the region, including nearly 800 in intensive care.
“To tell you the truth, what worries me is not this week, where we’re still kind of handling it,” said Roberta Schwartz, Houston Methodist’s chief innovation officer, who’s been helping lead the system’s efforts to expand beds for COVID-19 patents. “I’m really worried about next week.”
What’s happening in Houston draws eerie parallels to New York City in late March, when every day brought steep increases in the number of patients seeking care at overburdened hospitals — though, so far, with far fewer deaths. But as coronavirus cases surge in Texas, state officials here have not reimplemented the same lockdown measures that experts say helped bring New York’s outbreak under control, raising concern among public health officials that Houston won’t be able to flatten the curve.
“The time to act and time to be alarmed is not when you’ve hit capacity, but it’s much earlier when you start to see hospitalizations increase at a very fast rate,” said Lauren Ancel Meyers, a professor of integrative biology who leads the University of Texas at Austin COVID-19 Modeling Consortium. “It is definitely time to take some kind of action. It is time to be alarmed.”
Even as new cases and hospitalizations soar, the number of daily deaths in Texas has remained relatively low. On Tuesday, the state reported nearly 7,000 new cases, a record, but only 21 new deaths. All told, New York state has reported nearly 25,000 confirmed deaths from COVID-19. Texas has recorded fewer than 2,500, including 378 in Harris County, which includes Houston.
But experts caution that rising hospitalizations today will likely result in a spike in deaths in the coming weeks, and those who require ICU care for COVID-19 but recover often leave the hospital with lasting health problems.
Meyers and others said that while hospitals across the United States generally are more prepared than they were in March and April — personal protective equipment is more plentiful, advances in therapeutics have helped patients and ventilators aren’t in short supply — the lack of government measures to slow the spread in Texas and other states puts them at a disadvantage.
Texas was one of the first states in the nation to ease social distancing mandates, beginning two months ago when daily coronavirus cases remained relatively low compared with some states. Restaurants reopened first, with gradually loosening capacity restrictions; bars, hair salons, bowling alleys and other businesses soon followed. In Houston, where Gov. Greg Abbott had until recently blocked local officials from issuing public mask requirements, it was common to see the majority of people shopping at neighborhood supermarkets or big-box hardware stores with no face coverings.
But to date, Abbott has resisted a return to the lockdown, other than an order last week closing bars and further limiting the capacity at restaurants. This week, after the top elected leader in Dallas County asked for the authority to issue a new stay-at-home order locally, Abbott dismissed the idea, saying the official was asking to “force poverty” on people.
“Closing down Texas again will always be the last option,” the governor said last week, emphasizing his commitment to protecting the state’s economy.
Experts noted that it can take two weeks or longer for social distancing measures to lead to decreases in cases and hospitalizations.
“The hospitalizations you see today, they’re not just going to linearly increase in the next two weeks,” said Dr. Clay Johnston, dean of the Dell Medical School at the University of Texas at Austin. “They’re going to accelerate. When you overwhelm the hospitals, you’re in big trouble. That to me is the impossible task that the governor faces. It’s like steering a giant tanker through a tiny strait without any maps.”
Although hospital executives in Houston stress that they have the ability to add additional intensive care beds in the region to meet the growing demand — for a few more weeks, at least — the strain on hospitals is already being felt in other ways.
Houston Fire Chief Samuel Peña said his paramedics sometimes have to wait for more than an hour while emergency room workers scramble to find beds and staffers to care for patients brought in by ambulance — a bottleneck that’s tying up emergency medical service resources and slowing emergency response times across the region.
Part of the problem, Peña said, is that when his crews arrive at a hospital with a patient suspected of having COVID-19, the hospital may have a physical bed open for them, but not enough nurses or doctors to staff it. That’s a problem that’s likely to deepen as a growing number of medical workers have been testing positive for the virus, according to internal hospital reports. Just as New York hospitals did four months ago, some Houston hospitals have posted on traveling nurse websites seeking nurses for “crisis response jobs.”
“If they don’t have the nursing staff, then you can’t place the patient,” Peña said. “Then our crews have to sit with the patient in the ER until something comes open. It has a huge domino effect.”
The crisis in Houston has accelerated rapidly in recent weeks, at times resulting in muddled messaging from both hospital leaders and public officials.
On June 24, several hospital executives affiliated with the Texas Medical Center — a sprawling medical campus that’s home to most of Houston’s major hospital systems — issued a statement warning that COVID-19 hospitalizations were growing at an “alarming rate” and could soon put an unsustainable strain on hospital resources.
But the following day, after Abbott issued an executive order directing hospitals to limit elective surgeries — a measure intended to preserve hospital capacity but one that also hurts hospital revenues — the CEOs of four hospitals in the medical center abruptly dialed back their earlier warnings at a hastily organized news conference. They said they hadn’t meant to alarm the public. The hospitals still had room to add ICU beds, they said, both to treat COVID-19 and to continue caring for other patients.
“I think the Texas Medical Center’s purpose was to really urge people to do the right things in the community, and do so by talking about capacity, but really ended up unintentionally sounding an alarm bell too loudly,” Dr. Marc Boom, president and CEO of Houston Methodist, which is part of the Texas Medical Center, said at the news conference. “We clearly do have capacity.”
The shifting messages upset Harris County Judge Lina Hidalgo, the county’s top elected official. She vented her frustrations Monday during a virtual news conference from her home, where she’s on self-quarantine after a member of her staff tested positive for the coronavirus. Hidalgo said the “diluted” messaging from some hospital leaders “weakens our community’s ability” to stop the virus.
“The goal is not to have doctors and nurses that we’re bringing in from out of town,” Hidalgo said. “The goal is not to have basic general population beds that we need for dialysis and heart attacks and strokes and pregnant women who need to give birth turned into ICU beds. The goal is not to see how much room we can make for people to go and be there and die in a hospital bed. That is not the point of any of this.”
In an interview Tuesday, Boom said he didn’t intend to suggest that there wasn’t reason to be deeply concerned about the number of COVID-19 patients filling hospital wards. He said he and other executives were trying to thread the needle between sounding the alarm about the growing but still manageable strain on hospital resources, while trying to reassure people who might need to come to the hospital for other ailments.
“Honestly, in a way, it’s backfired, and I’m very sorry for that because what has happened has actually been the exact opposite of what we were trying to accomplish,” he said of his attempt to clarify the earlier warning about hospital capacity. “I never wanted to confuse the public. The message really was, ‘Hey guys, we don’t want panic, because when people panic, bad things happen.’”
Hospitals in Houston and elsewhere in the country temporarily halted outpatient visits and elective surgeries in March and April as the coronavirus pandemic took hold on the East Coast — a move that not only hurt hospital revenues, Boom said, but also forced many patients to delay critical procedures, including heart surgeries.
Boom and other hospital leaders said the earlier restrictions also led some patients to avoid going to the hospital after suffering symptoms of heart attacks or strokes, leading to potentially deadly delays in care.
Vivian Ho, an economics professor at Rice University, said hospitals want to protect their fiscal health and the health of patients, both those with COVID-19 and those with other conditions, while also preventing themselves from becoming overwhelmed down the line.
Elective surgeries deliver a far better financial return than ICU wards full of patients with COVID-19.
“They would prefer to tell the public that this is extremely dangerous,” she said, “but they can’t, in part, because they have to keep performing these elective surgeries, and for the most part, that is safe.”
Not all hospitals are equally equipped to respond to a surge in COVID-19 demand, accompanied by a loss of more profitable business, Ho said. Hospital systems like Houston Methodist have “the financial resources to sort of convert anything into an ICU just because they have more money, more cash on hand,” she said.
Houston’s public hospitals, Ben Taub and Lyndon B. Johnson, don’t have those same resources.
“The problem is that, of course, there are going to be more patients who are going to be going to Ben Taub” because the virus is disproportionately affecting Black and Latino people in low-income communities, and Ben Taub is traditionally the safety net for those without health insurance, Ho said. “I don’t know to what extent they are able to send patients to the other hospitals.”
The Sunday note to the staff at Lyndon B. Johnson said that the hospital had reached maximum occupancy in its COVID-19 units. That day, nearly 50% of the patients tested for the virus had it, more than double the rate from a week before. The hospital had run out of remdesivir, an antiviral drug that’s shown some effectiveness in treating COVID-19. And for now, all elective surgeries were being canceled to preserve bed and staffing capacity.
There appeared to be no letup in sight; the note to the staff warned that Monday would likely be worse.
“Sunday,” it said, “is typically a lower volume day.”
The faulty lab equipment sold by a company whose owner has faced fraud allegations is being investigated by the Department of Homeland Security's inspector general.
This article was first published on Friday, June 26, 2020 in ProPublica.
The Federal Emergency Management Agency has warned states not to use COVID-19 testing supplies it bought under a $10.2 million contract after a ProPublica investigation last week showed the vendor was providing contaminated and unusable mini soda bottles.
A FEMA spokeswoman said the agency is working with the U.S. Food and Drug Administration and the Centers for Disease Control and Prevention to analyze test tubes filled with saline and sold to the government by Fillakit LLC, whose warehouse is near Houston.
“Out of an abundance of caution, we recommend this media not be used at this time,” spokeswoman Alex Bruner said.
ProPublica reported on June 18 that Fillakit was using plastic preforms, which are expanded with heat and pressure to become 2-liter soda bottles, to fulfill FEMA’s contract for testing supplies to be used by states. The bottles were shoveled into the warehouse, then filled with saline in what workers described as unsanitary conditions. Some of the states receiving the lab equipment told ProPublica that even if Fillakit’s tubes weren’t contaminated, they were simply too big to be used in lab machinery.
A later story in The Wall Street Journal raised similar allegations. The Journal first reported on Friday that the Department of Homeland Security’s inspector general is now looking into the contractor. Fillakit owner Paul Wexler previously told the Journal that allegations of unsanitary conditions were baseless and came from a disgruntled former employee.
Teresa Green, a retired science teacher and former Fillakit employee, told ProPublica that she spoke with someone identified as a “special agent” with Homeland Security who told her he was looking into Fillakit’s operations. Green declined to elaborate.
A spokesperson for the Homeland Security inspector general’s office said, “As a matter of policy, we do not confirm or deny open investigations.”
The FEMA spokeswoman said the agency continues to provide “critically needed testing supplies in a timely manner to our state and local partners in response to the coronavirus.”
FEMA signed its first deal with Fillakit on May 7, just six days after the company was formed by an ex-telemarketer repeatedly accused of fraudulent practices over the past two decades. Fillakit has supplied a total of more than 3 million tubes, which FEMA then approved and sent to all 50 states.
Wexler has previously declined to comment. A ProPublica reporter visited the facility this month and confirmed that workers were using snow shovels to gather up tubes and filling them, all in the open air.
Fillakit continues to advertise COVID-19 testing supplies on its website, including “Premier Leakproof Tubes.” The photos of tubes on its website look nothing like the larger soda preforms it has sold to FEMA, according to photos provided by state health departments and former employees.
Officials in New York, New Jersey, Texas and New Mexico confirmed they were not able to use the Fillakit tubes. Three other states told ProPublica that they received Fillakit supplies and have not distributed them to testing sites. FEMA had previously asked health officials in several states to find an alternative use for the mini soda bottles.
ProPublica’s data analysis shows that federal agencies hastily awarded more than $2 billion dollars in COVID-19 contracts to vendors who had no prior federal deals.
In total, the federal government has committed more than $16 billion to more than 4,000 contractors in its attempt to address the spread of the novel coronavirus. More than 1,800 of those deals were given without competitive bidding. Many companies, including Fillakit, had no experience sourcing medical supplies.
The Trump administration has doubled down on its claims that coronavirus case counts are up because the U.S. has increased testing. However, a closer look at graphs of testing numbers and positive cases shows that this isn’t the case for many states.
This article was first published on Thursday, June 25, 2020 in ProPublica.
President Donald Trump and Vice President Mike Pence have repeatedly attributed the increase in the coronavirus case count in the United States to an increase in testing.
“We’re doing so much testing, so much more than any other country,” Trump said in an interview with CBN News on Monday. “And to be honest with you, when you do more testing, you find more cases. And then they report our cases are through the roof.”
“I would just encourage you all, as we talk about these things, to make sure and continue to explain to your citizens the magnitude of increase in testing,” Pence said on a call with the nation’s governors last week, according to audio obtained by The New York Times. “And that in most of the cases where we are seeing some marginal rise in number, that’s more a result of the extraordinary work you’re doing.”
These assertions are not backed up by the data, a ProPublica analysis shows.
While it is true that there has been a dramatic increase in testing since the start of the coronavirus pandemic, the increase in positive cases in recent weeks cannot be attributed to the rise in testing alone.
After weeks in which coronavirus cases and deaths were slowly declining, the tide has turned. On Wednesday, the United States surpassed its previous record high number of cases, reached in April when the virus was battering the Northeast, according to data gathered from states by The COVID Tracking Project. Hospitalizations are also increasing, though they are far from their peak nationally in April.
“The tip of the iceberg can’t be growing with the iceberg shrinking,” said Dr. Sten Vermund, dean of the Yale School of Public Health. “It violates laws of physics and oceanography.”
A White House spokesman did not return an email seeking comment.
Deaths have not increased, but they are considered a lagging indicator. It takes several days after exposure for someone with COVID-19 to show symptoms and an additional five to seven days, on average, for the illness to be severe enough to require hospitalization. After that, it can take a couple days to a week to progress to intensive care, and a patient can linger there for some time before recovering or dying.
“Just speaking as an epidemiologist, if I saw rising testing, rising case numbers and declining hospitalizations and deaths, I would say that Donald Trump and Vice President Pence are correct,” Vermund said. Conversely, if those measures are rising, “I would say that they are blowing smoke.”
ProPublica looked at changes in the seven-day average of COVID-19 tests performed and the change in the overall number of positive tests in each state from Memorial Day, May 25, to Tuesday. By Memorial Day, most states had reopened and news reports noted that groups were congregating again.
In some states, such as New York, Illinois and Indiana, testing has stayed about the same or increased while the share of positive tests has dropped.
In recent days, for instance, New York has performed, on average, more than 64,000 tests, about 50% more than it was performing in the seven days leading up to Memorial Day. But only about 1% of those cases have been positive for the coronavirus, indicating that community spread of the virus in the state has greatly decreased.
To be sure, the virus exacted a tremendous toll on New York state and on New York City. Though COVID-19 now appears to be under control, more than 389,000 residents of New York state were infected and more than 24,700 died.
In other states, including Arizona, Texas and Florida, which did not see a wave of early cases and deaths, the increase in positive results has far surpassed testing growth. In Florida, testing has even decreased a bit comparing the seven days through Tuesday to the same period before Memorial Day. (Florida recorded an abnormally high number of new tests on May 20, which may have inflated the rolling average on May 25.)
Texas and Florida each logged more than 5,000 new cases Wednesday. Hospitalizations are also on the rise in these states.
Florida Gov. Ron DeSantis told reporters on Saturday that testing alone does not account for the increase in COVID-19 cases in his state. “Even with the testing increasing or being flat, the number of people testing positive is accelerating faster than that,” DeSantis said at a briefing at the state Capitol. “You know that’s evidence that there’s transmission within those communities.”
Texas Gov. Greg Abbott acknowledged Wednesday that the state is experiencing a “massive outbreak” and that additional restrictions may be needed to ensure hospitals don’t become overloaded. On Thursday, he paused the state’s reopening and ordered a halt to elective surgeries in four large counties.
As of Thursday morning, the state reported that 4,739 patients were hospitalized with confirmed COVID-19 infections. That compares to 1,511 on Memorial Day. The Texas Medical Center, which encompasses several major teaching hospitals in Houston, reported that 97% of its 1,330 ICU beds were full on Wednesday. It expects to exceed its ICU capacity by Thursday and then run through its “sustainable surge capacity” in about 12 days. The situation is so dire that Texas Children’s Hospital is now admitting adult patients because of the spike in cases in the Houston region.
A handful of states, including California and North Carolina, saw increases in both testing and in positive results that roughly tracked each other, though the increase in positive cases outpaced the increase in testing. In the case of California, the share of positive results has recently pulled away from any increase in testing. California reported more than 7,000 new infections on Wednesday.
Caitlin Rivers, an assistant professor at Johns Hopkins Bloomberg School of Public Health, said she considers three factors when assessing the pandemic’s direction in a state: the number of new cases, the percentage of tests that are positive and hospitalizations.
If cases are going up and everything else is declining or remaining flat, Rivers said, there may not be reason to be concerned.
“For the states that we know are in trouble and it looks like exponential growth has resumed, it looks like those other indicators are headed in the wrong direction,” she said.
It’s difficult to compare what’s happening in states experiencing current waves with what occurred in New York, New Jersey and Michigan in late March and early April. Because of severe shortages in testing and problems with the accuracy of tests, many people who were sick or exposed to someone who was sick weren’t able to get tested.
Even still, this image tweeted Thursday by New Jersey Gov. Phil Murphy shows the shape of the curve of positive tests. At one point, one in every two tests came back positive for the coronavirus.
If anything, experts say, the increase in testing over the past two months should bring with it a lower rate of positive results. Now that tests are readily available, people can get tested, whether they have symptoms of COVID-19 or not. This includes the “worried well,” meaning people with no known exposure and no symptoms who are nervous that they may have the virus.
If the virus is under control, “the likelihood of an increasing positivity rate with substantial increase in testing is low,” Vermund said.
The former official, Zach Fuentes, is refusing to take back the masks even though IHS said they did not meet FDA standards. His company’s lawyer says the IHS is trying to cancel the order for "political reasons."
This article was first published on Thursday, June 25, 2020 in ProPublica.
The Indian Health Service, which purchased Chinese-made KN95 masks from a former Trump White House official through a $3 million contract, is now trying to return the masks but facing resistance, the agency told ProPublica.
The contractor, former White House Deputy Chief of Staff Zach Fuentes, “refused this request and submitted a certified claim for payment” instead, the agency said.
A lawyer for Fuentes’ firm, Benjamin Keime, said in an email to ProPublica that the company is insisting on payment because it “fulfilled all of its obligations to IHS under the contract.”
Government agencies have been under intense pressure to buy protective equipment to guard employees against the coronavirus. In their haste, several agencies have spent millions of dollars on Chinese-made masks without knowing who made them. Without those details, it can be hard to assess whether the masks filter as many dangerous particles as advertised.
ProPublica reported last month that Fuentes received a contract to provide 1 million KN95 respirator masks just 11 days after he created his company, Zach Fuentes LLC. The IHS later told ProPublica that the masks it bought from Fuentes do not meet Food and Drug Administration standards for use in health care settings.
Fuentes previously told ProPublica that political connections to the Trump White House played no role in his company’s selection for the contract, which was granted with limited competitive bidding.
The U.S.-based agent originally listed for two of the Chinese companies from which Fuentes procured masks, CCTC Service Inc., is named as the representative for nearly 1,600 devices listed with the FDA this year. In a federal court complaint filed June 5 against another Chinese mask manufacturer, King Year Printing and Packaging Co. Ltd., by the Justice Department, an FDA special agent said that there is “probable cause to believe CCTC is a fictitious corporation.”
Several members of Congress have demanded investigations into the Fuentes contract, and the Government Accountability Office plans to review the deal, a spokesman said last week.
“After completing inspection of the product, the Indian Health Service sent a letter to the contractor proposing to return the masks through a no-cost termination,” the agency said in a statement on Wednesday evening. “The contractor refused this request and submitted a certified claim for payment. The Indian Health Service will continue to work with the contractor and the HHS Office of the General Counsel to resolve this issue.”
Keime said that IHS originally accepted all the masks in writing on May 22, the same day ProPublica published its first story on the contract, and did not try to return them until June 10. Fuentes’ firm has offered to replace any defective masks, Keime said.
“Yet, to date, almost two months after the first shipment was received, IHS has not identified a single defect or flaw in the masks,” Keime said. “Instead, it seeks to cancel the order for what appear to be political reasons.”
Using TaskRabbit and Venmo, a Silicon Valley investor and his business partner had workers repackage non-medical KN95 masks so he could sell them to Texas emergency workers.
This article was first published on Thursday, June 25, 2020 in ProPublica.
Lucas Rensko was making money through a popular handyman-for-hire app called TaskRabbit, doing odd jobs and delivering groceries, when he picked up a task that led him to a leaky-roofed warehouse on a tattered road in northwest San Antonio.
Inside, a man named Jaime Rivera had set up long tables where five or six other "Taskers" earning about $20 an hour were ripping Chinese masks out of plastic bags and stuffing them into new ones that were identical but for one potentially deadly difference. The old packages were labeled in all caps "MEDICAL USE PROHIBITED," meaning not to be used by doctors and nurses who need the strongest protection from tiny particles carrying the novel coronavirus. The new bags, intended to make their way to Texas hospitals, simply omitted that warning.
This seemingly small deception highlights a huge problem for medical workers whose best defense against a virus that ravages the body with horrifying complexity is a simple, but trustworthy, mask. That trust has eroded as Chinese-made masks claiming, sometimes falsely, to be 95% effective at filtering virus-laden particles made their way into hospitals and now local convenience stores. You might have bought them: KN95s.
Texas officials have tried to block ineffective masks from making their way to hospitals with screenings and by rejecting anything labeled as non-medical, yet at the same time, the mysterious brokers sourcing millions of masks were working hard to evade those safeguards. The operation Rensko witnessed had the potential to push faulty masks into the Texas supply chain just as Gov. Greg Abbott eased lockdown restrictions and COVID-19 infections began to soar.
"He kind of takes us on this tour of his facility, which is essentially a shelled out warehouse," Rensko, 36, told me over the phone, detailing how Rivera described the work at the warehouse. "He was saying they were designated for personal or residential use, not for medical. And so what he was doing was basically putting them into other packaging where the city of San Antonio and the state of Texas are able to look at them and then sell them for medical purposes."
Rensko knew something wasn't quite right and walked away from the TaskRabbit gig. He told his wife, who told a friend, who told another friend, who told me.
Over weeks of reporting, I'd learn that Rensko had scratched the surface of a larger scheme involving a Silicon Valley investor named Brennan Mulligan to sell what Texas health officials later flagged as "fraudulent" masks to the agency directing protective equipment to hospitals. Mulligan had enlisted Rivera, who was desperate for money after the pandemic had sapped his primary source of income, building furniture and manual labor via TaskRabbit. As countless others have, the two had a chance to make money off of the country's public health nightmare.
When I caught up with Mulligan, he emphasized that he didn't break any U.S. laws in his mask business. Rivera would acknowledge it was a gray area that had caught the attention of federal investigators. Both would defend their actions as simply cutting through onerous red tape put up by the Chinese and U.S. governments to get masks to those desperate for them.
The absurdity, greed and incompetence surrounding the distribution of coronavirus-era masks has taken me to Chicago, California and, now, Texas. The federal government's efforts to get protective equipment out quickly to essential workers had failed spectacularly, and the supply chain that normally moves products from producers to vendors to end users had almost completely broken down. Counterfeit masks were flooding the market, and prices for even unreliable masks had skyrocketed.
I did what due diligence I could from my Washington, D.C., apartment before buying a plane ticket. I researched Rivera and saw on Facebook that he was a father of six who danced in his driveway and camped on the beach with the kids.
But his Facebook page also told part of the supply-chain story. Rivera had posted several photos in late April of beaten up boxes bursting at the seams with masks labeled as KN95s, similar to the American-made N95 masks produced by 3M and other manufacturers. But the Chinese masks often don't pass muster with U.S. regulators, who screen for effectiveness in blocking small particles and certify masks that meet their standards.
The masks Rivera posted photos of were face masks with earloops that don't fit securely around the head, as the U.S. Food and Drug Administration recommends. While the earloop-masks might offer some protection, the FDA warns that they're not effective enough to be used in a medical setting.
The 6-foot stack of boxes were labeled as coming from a Chinese manufacturer, Guangzhou Aiyinmei Co. Ltd., which had been identified by the FDA as one of the companies producing ineffective KN95s. The masks filter as little as 39% of particles, according to testing by the Centers for Disease Control and Prevention. They're so ineffective that Canada issued a recall. The FDA had hastily approved them and others for health care use at the beginning of the pandemic, but it changed its mind last month, even as millions of the masks circulated in the U.S.
New information from the Indian Health Service calls into question why the agency purchased expensive medical gear that it now cannot use as intended.
Rivera also posted an intriguing screenshot of a $2,000 payment he had received via Venmo, the person-to-person payment app, from a sender with the initials BM.
The payment memo read: "4/17 kn95 37.5 drop off and 50k hand-off …"
"A day's work!" Rivera boasted about April 17, the day he used a U-Haul rental truck to deliver nearly 100,000 masks to two buyers.
Beneath his Facebook post, a friend commented, "Looks like code for a drug deal."
Back when I had friends and could go places, I used Venmo to split restaurant and bar tabs, sometimes offering cheeky comments that I mark as private so random people can't see. But Rivera left all of his transactions and comments public, allowing anyone to see them on a smartphone. Venmo showed that Rivera's payments from Mulligan, aka BM, included one for "131 boxes to TDEM," an acronym for the Texas Division of Emergency Management, the state's version of the Federal Emergency Management Agency. TDEM supplies lifesaving gear to hospitals coping with COVID-19 cases.
Mulligan, the investor, also left his payments public. They showed that he and Rivera had paid several other people for services including deliveries of masks and "repackaging."
Mulligan turned up in an internet scrub as a successful San Francisco businessman. He founded a company whose proprietary software allowed brands like Reebok and Nike to customize products, then sold that enterprise. He is now the CEO of SKYOU Inc., a "manufacture on demand" business whose online 3D design software allows companies to create unique shirts and hoodies and have them shipped from China.
At first, it seemed odd that a tech entrepreneur would wade into mask trading, but it jibed with my previous reporting, which found that behind every mask sale, there's a mystery investor.
After the mask supply crisis first surfaced, federal agencies and states went into business with nearly anyone who said they could deliver protective equipment. Masks were the first priority. Here and abroad, textile factories switched to stitching masks. Hundreds of new companies popped up and won government contracts, including some with shady records. My reporting found a high-end juicer salesman, a former state attorney general and dozens in the marijuana business who had become mask brokers.
Thus was born an unregulated market fueled by unprecedented scarcity and unending demand.
The Lone Star State
I met Rensko at a Starbucks around the corner from the warehouse where the mask operation went down. It was only 96 degrees, but it felt hotter, that first day Texans know that the weak spring is turning to summer scorch.
He said Rivera had called him the day after he walked away from the TaskRabbit gig. Rivera "apologized, so he knew something was up."
Sweaty and caffeinated, we hopped into a Dodge minivan and whipped around the corner to the warehouse. Rivera wasn't there, but two men stood outside talking — one peeking out of a blue taxi, the other gesturing emphatically with a bottle of cologne in one hand.
They told me they knew Rivera and had watched his mask repackaging operation come and go.
"They just disappeared," said the man with the cologne, who wouldn't provide his name. He said he had seen the mask operation in the warehouse next door for about two weeks, with U-Haul trucks coming in and out. The operators didn't want him to come inside, he said.
The man said he met Mulligan and tried to set him up with a private buyer he knew, a guy named Sam. He wouldn't give Sam's last name, but I asked him to pass along my business card.
Lamenting the heat, the man spritzed the neckline of his blue Burberry shirt with the cologne he'd been holding, "Obsession For Men."
"It's because I'm sweaty," he quipped, pointing next to his hands. "Look, it works as hand sanitizer, too."
"We're Taking Off Anything That Says 'Non-medical'"
Rivera took my calls and originally agreed to meet in person, but he cut off communication as I asked more questions. In our first encounter, he said he met Mulligan innocuously on TaskRabbit in April and the two forged a business relationship.
After a few successful mask deliveries, Brennan and Rivera cut out the digital middleman and went into business directly, using Venmo as their money exchange.
"So I went from picking up packages in San Antonio to Houston to Dallas to Austin, bringing them back over for processing and that's pretty much it," he explained. By early May, Rivera said he was in charge of hiring workers and monitoring their hours.
Mulligan shipped boxes on a Southwest cargo jet for Rivera to pick up. Rivera shared some receipts: 94 boxes and 2,444 pounds of masks came in from Los Angeles on April 29, an additional 52 boxes and 1,300 pounds on May 4. Mulligan ships a few different brands, none of which were approved by the FDA for medical use, according to pictures Rivera shared.
Rivera described the repackaging operation as common sense. "All we're doing is we're just omitting," he said. "We're taking off anything that says 'non-medical.'"
He blamed China for the confusion. Mulligan told him that China was requiring that some mask batches be labeled non-medical, while other batches of the very same mask cleared export inspections without the disclaimer. Rivera said his workers were just clearing up the mess so states like Texas could buy masks without worry.
Without repackaging, state inspectors would simply see the warning and reject the shipment, he said.
"Before it gets to the hospital level it has to get past the red tape," he said.
Rivera said he delivered more than a million SKYOU masks to Texas' emergency agency. Receipts Rivera shared also showed he was delivering to private companies that resell KN95s.
Rivera spoke of his work as a noble pursuit, that he was helping to deliver lifesaving gear to the front lines despite the federal government. The reason he was traversing Texas to meet cargo jets was because Mulligan had the shipments coming from different routes each time, through Minneapolis and Atlanta to Dallas or Houston for example, to evade FEMA, which was seizing masks to stop counterfeits and to shore up the national stockpile.
"These masks are being taken and are being denied for arbitrary reasons," he said. "Those are lives that are being impacted."
Government employees at several agencies are relying on KN95 masks that the agencies cannot guarantee offer the most protection. Some agencies have paid little attention to important manufacturing details and been tripped up by shifting regulations.
By mid-May the repackaging had stopped, Rivera said, in part because the warehouse was too small and "there were leaks everywhere."
Rivera couldn't explain why anyone needed to repackage masks if it weren't to hide the medical use disclaimer. There seemed to be nothing stopping SKYOU from selling the masks to general consumers for non-medical uses, just the same as the patterned or branded cloth masks that are becoming a fashion statement.
It wasn't until our fourth and final phone call that Rivera mentioned he and Mulligan had been contacted by the U.S. Department of Homeland Security.
"His analogy was you're telling somebody you have a Ferrari but you're selling a Honda," Rivera said of his face-to-face chat with an investigator.
The investigator's visit had led him to wonder if repackaging masks for sale to unsuspecting customers was not kosher.
That's when I asked, "Are you worried you were complicit in a crime?"
"The more we talk about it, yes," he said.
Before he hung up and cut off communication, he added: "I'm not the brains of the operation, and I'm definitely not the wallet for it."
Whiplash in the Mask Market
When I first contacted the Texas emergency agency, it said it hadn't purchased any masks from either SKYOU or Mulligan. But when I sent over photos of KN95s that Rivera had shared with me and posted on Facebook, the agency recognized them.
A purchase order number on those beaten up boxes tracked to a different company, Eminent Commercial LLC, which landed a deal in mid-April to hunt down KN95s for as much as $6 a piece, more than six times what they cost before the pandemic. Eminent was essentially a master contractor, working with about a dozen subcontractors, including SKYOU, to ship in masks quickly.
TDEM canceled its deal with Eminent and its cadre of subcontractors May 20 "because the products we were receiving were fraudulent," spokesman Seth Christensen said.
Christensen said TDEM weeds out bad masks during inspections at its San Antonio warehouse. It tests the filtration rate of sample masks from each shipment, a scientific safeguard many government agencies and hospitals lack.
Vendors with subpar products are turned away, he said, and don't get paid. Anything labeled as non-medical use is instantly rejected, he said.
Brokers I talked with for this story described TDEM's vetting process as far more rigorous than some federal agencies and many other states, raising concerns that faulty masks might be flowing freely elsewhere.
The agency shared a photo of a packaged mask SKYOU attempted to sell, which is identical to a photo Rivera shared, only with the medical disclaimer removed. The brand, Wentianchang, was never on the FDA's list of masks approved for emergency use, according to the agency's database.
Ted Coleman, Eminent's owner, confirmed that Mulligan's company had repeatedly tried to sell masks that didn't pass the TDEM test. But SKYOU wasn't alone.
"We have had millions and millions of masks that were rejected by the state of Texas," Coleman said. "Probably a total of 10 to 15 different vendors that were just sending us anything that they could send us in hopes of getting it accepted through TDEM."
Coleman said he tried to be "the interceptor," making sure only masks that would pass testing got through. But he said Mulligan and Rivera went "above and beyond" to work around him and bring ineffective masks to the warehouse under Eminent's deal.
Eminent was paid about $14.8 million for masks that TDEM accepted, according to Texas purchasing data, before the agency stopped ordering from the company. Coleman blames Mulligan for losing Texas' business.
He said Mulligan caused "a very large scene" with officials at the agency's Austin headquarters after SKYOU masks were rejected.
Mulligan did not return calls, but in a few brief emails he expressed the same frustration I had heard from numerous importers, brokers and government agencies: The FDA inadvertently created a glut of subpar Chinese masks, which investors can't sell and most governments can't buy, by first permitting use of some Chinese masks, then reversing itself.
Meanwhile, Chinese officials required that some masks have disclaimers that they're not for medical use — an attempt, brokers say, to avoid liability if bad masks allowed wearers to become sick.
Mulligan said companies like his got caught in limbo. Masks that Texas had accepted in April were suddenly rejected by May. Repackaging, he said, was the "only solution," and he had been told other vendors were doing the same. He did not believe that the company broke U.S. laws, but that it probably broke Chinese customs law.
By the time Mulligan got all the masks repackaged, TDEM was no longer interested in buying from him.
While many of the masks that lost the FDA's initial approval were purchased, including by the federal government, mask importers and brokers tell me millions more are collecting dust in storage.
As Mulligan would, investors with ineffective mask stockpiles are likely trying to find other ways to unload their product, potentially getting them to hospitals.
A Techie, an Embroiderer and a Tasker Walk Into an IHOP
I had to go to Houston to look into a guy who got a $10 million contract to supply COVID-19 testing tubes to FEMA and was instead delivering unusable tiny soda bottles. But before I left San Antonio, I wanted to follow up on what Mulligan's warehouse neighbor, the guy with the cologne, said about another potential buyer: a guy named Sam.
Mulligan's neighbor had alluded that Sam wasn't far away, so I went to the warehouse and typed "Sam" into Google Maps and eventually came upon Samy's Embroidery Club, just 8 miles away. It was worth checking out, since so many people in this trade seem to be either connected to apparel and textiles or the marijuana industry.
When I entered the shop, it was alive with the thrum of industrial sewing machines that stitched together baseball team jerseys, biker gang hats and, lately, face masks.
When I mentioned Mulligan, Sam, whose true name is Bassam Hasan, said through the noise that he had a strong vibe that something was off.
"The guy, you could tell from the first minute he was hiding something," Hasan said.
Hasan said he had become a modest personal protective equipment supplier for the city of San Antonio and the local jail, and he was trying to find medical-grade masks to potentially sell to a hospital system in Illinois. His cousin, the guy with the cologne, hooked him up with Mulligan.
"If they are 100% approved, I said why not," he said.
According to text messages Hasan showed me, Mulligan offered a couple different brands of mask. "... they were on the CDC [Emergency Use Authorization] list before," one text from Mulligan's number reads. "They've since been removed so we can't say whether they will meet the KN95 standard."
Mulligan "wanted to do the deal immediately," Hasan said. "This was like a million dollars, and I said you can't do that."
Instead, on Memorial Day, Hasan met Mulligan and Rivera at an IHOP a couple blocks from the mask warehouse.
"When he told me he was repackaging them, I was out," Hasan said. "I'm not a little kid. I've been in business for 27 years. C'mon, man. This guy — I can tell you he's not doing it right."
Hasan said he left the IHOP and stopped responding to Mulligan's calls and texts.
In the end, Mulligan told me all the effort and expense of repackaging the masks was a waste. He shared photos of scores of boxes outside a self-storage locker, millions of masks he says he's stuck with. He has since made his Venmo transactions private.
"We did not sell ANY repackaged KN95s to TDEM or any other customers in the U.S.," he said.
If true, then the only people who made money on the repackaging shenanigans were Rivera and other Taskers he paid over a couple weeks.
Mulligan said SKYOU continues to sell hand sanitizer and fabric masks, but he's given up on selling KN95s because they're "not worth the headaches."
A spokesperson with Homeland Security Investigations, HSI, responded to my inquiry about SKYOU and Rivera's operation with a comment that left more questions than answers.
"At this time, HSI, along with its law enforcement partners, is assessing these allegations in an effort to determine if any violations exist and/or if mishandling occurred," the statement said.
Federal regulators are investigating a New Mexico hospital accused of racial profiling. This comes as hospital staff said administrators appeared to hide documents and discouraged cooperation with an initial state inquiry.
This article was first published on Monday, June 22, 2020 in ProPublica.
ALBUQUERQUE, N.M. — Federal regulators are ramping up scrutiny of a prominent women’s hospital here after clinicians’ allegations that Native Americans had been racially profiled for extra COVID-19 screening, leading to the temporary separation of some mothers from their newborns.
The U.S. Centers for Medicare and Medicaid Services will refer findings from state investigators about a violation of patient rights at Lovelace Women’s Hospital to the U.S. Department of Health and Human Services’ Office for Civil Rights, state officials said. The state Department of Health declined to specify details of the violations it had found.
The HHS Office for Civil Rights enforces federal laws banning discrimination in the provision of medical care and investigates violations of patient privacy rights.
“The allegations against Lovelace Women’s Hospital are very serious,” said New Mexico Department of Health Secretary Kathyleen Kunkel. The department “continues to be concerned that individuals will not access the medical care they need and are entitled to due to fear or mistrust.”
The state and federal actions were announced after an investigation by New Mexico In Depth and ProPublica found that Lovelace had a secret policy of designating Native American women as under investigation for coronavirus based on their appearance and a list of ZIP codes, regardless of their symptoms. The ZIP code list, known informally as the “Pueblos List,” a reference to New Mexico’s 19 Pueblo tribes, contained ZIP codes that corresponded with tribal reservations, some of which have suffered high rates of COVID-19 outbreaks. Other tribes on the list, however, have had few cases. Ethicists have described the practice as a case of racial profiling.
The decision to elevate the investigation comes as hospital workers told New Mexico In Depth and ProPublica that the hospital appeared to hide documents and discourage cooperation with state investigators.
Hospital employees said documents were removed from nursing stations, including COVID-19 screening and treatment protocols. In one internal communication viewed by the news organizations, a hospital official reminded workers that they did not need to talk to the investigators and provided a short script as a sample response.
“They told us that DOH might be calling to ask us questions about the policy, and they told us we don’t have to talk to them,” one clinician said. “They suggested we could just not answer the phone.”
Kunkel, the state’s highest-ranking public health official, said such an instruction would be a potential violation of the hospital’s operating agreement with CMS, as would removing documents with relevant information from inspectors’ review. She promised the Health Department would assist federal investigators in any ongoing reviews.
It was not clear on Monday whether state inspectors obtained access to any documents employees said had been moved. The state’s report to CMS was not immediately released, and a state official did not immediately confirm that the hospital had given investigators all of the documents they sought. Once the hospital is notified of the findings, it will have 14 days to respond.
A hospital spokeswoman said Friday that the hospital had not yet received notification of the results of the inspection. She declined to respond to repeated requests for comment regarding accusations that hospital administrators had attempted to impede the investigation.
“We continue to modify screening and testing protocols based on” guidelines from the Health Department and the U.S. Centers for Disease Control and Prevention “as this pandemic continues and as the country continues to learn more about this disease,” hospital spokeswoman Whitney Marquez said in a statement.
The allegations of profiling have angered New Mexican political leaders and Native American activists. Gov. Michelle Lujan Grisham demanded an investigation into the hospital after the article by New Mexico In Depth and ProPublica.
The hospital’s practices were “significant, awful allegations and, if true, a disgusting and unforgivable violation of patient rights,” Lujan Grisham wrote on Twitter on June 13.
Malia Luarkie, a birth and breastfeeding advocate for the reproductive justice organization Indigenous Women Rising, said the policy was detrimental to the health of Native Americans.
“The first minutes and days of birth are important to a baby’s development and to bonding with their parent(s),” Luarkie said in a press release. “This is an atrocious and racist move by Lovelace Women’s Hospital.”
Seven clinicians who worked at Lovelace described the now-abandoned policy to single out pregnant Native Americans as “persons under investigation” for COVID-19 testing. Pregnant women who gave birth before the return of test results were separated from their infants as a precaution, two clinicians told the news organizations.
A spokeswoman acknowledged that the hospital used geographic regions as a criterion for additional COVID-19 testing but did not respond to questions about the use of a list of ZIP codes linked to Native American tribes. Hospital policy requires that expectant mothers being investigated for COVID-19 infection be separated from their newborns. But the spokeswoman said mothers were educated about the pros and cons for the baby and given a choice to separate. Some patients opted to keep their babies with them, she said.
It is unclear how the hospital’s ZIP code list was developed. The Navajo Nation and several Pueblo tribes in New Mexico have recorded some of the highest per capita rates of COVID-19 infection in the nation. But most ZIP codes and associated tribes on the list have had relatively few positive COVID-19 cases and several fell outside of state-designated hot spots.
In April, the hospital’s policy called for screening anyone from New Mexico Indian Pueblos and reservations, according to internal communications and documents newly obtained by the news organizations.
“We will now be screening all patients who are from the Indian reservations,” stated an internal communication from late April reviewed by New Mexico In Depth and ProPublica. Clinicians should look at patients’ home addresses rather than asking them if they live on an Indian reservation in order to “avoid them feeling singled out,” that communication stated.
An April 22 staff communication to Lovelace Women’s Hospital providers similarly identified “Native American Reservation/Pueblo/Navajo Nation” as one of a set of three “high-risk classifications” that would trigger COVID-19 testing upon admission. Other high-risk classifications noted in the communication included patients undergoing dialysis and those who reside in congregate living facilities like nursing homes. People classified as under investigation were to be assigned to “appropriate COVID-19 isolation,” the communication said.
The hospital has not publicly explained why it did not simply test all patients for COVID-19. Two other major hospitals in Albuquerque, the University of New Mexico and Presbyterian, said they did not carry out any screening based on ZIP codes.
In an internal memo to staff on June 16, Lovelace CEO Sheri Milone defended the hospital’s actions. She acknowledged that the hospital had screened people based on whether they lived in “geographic hot spots,” among other risk criteria. She said such screening was needed to triage the hospital’s limited supply of COVID-19 tests to populations most at risk for the coronavirus.
She said the screening policies resulted in COVID-19 tests for 15 expectant mothers “from a variety of ethnic backgrounds.” Two women were separated from their infants at birth as a precaution since results had not yet come back. One of those women was Native American, Milone wrote. The hospital spokeswoman declined on Monday afternoon to say how many of the 15 mothers were Native American or to answer other questions.
One clinician who initially told the news organizations that six Native American women had been separated from their infants as a result of the policy is now no longer willing to quantify an exact number of separations but says that the practice did occur.
“We were not made aware of a patient, family member, staff member, or clinician objecting to the screening and testing process,” Milone’s letter said.
Bryant Furlow is a reporter for New Mexico In Depth.
Update, June 23, 2020: New Mexico state health officials said that Lovelace Women’s Hospital had provided all documents requested by state inspectors.
Despite Trump's declared exit from the WHO, officials continued working toward reforms and to prevent withdrawal. This week, they were told they must justify any cooperation with the WHO on the grounds of national security and public health safety.
This article was first published on Saturday, June 20, 2020 in ProPublica.
Right before President Donald Trump unveiled punitive measures against China on May 29, he inserted a surprise into his prepared text.
“We will be today terminating our relationship with the World Health Organization,” he announced during a press conference in the Rose Garden.
Most of the president’s top aides — and even some of his Cabinet secretaries — were blindsided.
Just 11 days earlier, Trump had sent an ultimatum threatening to withdraw from the WHO if reforms were not enacted in 30 days. Some senior officials hoped that he was bluffing or would change his mind about a decision that could hobble efforts to fight dangerous diseases.
Trump’s foreign policy choices are at the center of a forthcoming book by former national security adviser John Bolton, who argues that many of the president’s erratic actions are aimed at boosting his re-election chances.
But while Bolton’s book focuses on revelations about Trump’s past dealings with Turkey, Ukraine and China’s leader Xi Jinping, officials interviewed by ProPublica said the less explored WHO decision may have a more lasting impact.
ProPublica has interviewed senior officials at five federal agencies to understand the repercussions and the behind-the-scenes efforts to contain the damage of a decision in which they had little input.
In the weeks after Trump’s Rose Garden declaration, the White House gave little direction on what to do next. Officials who deal with the WHO knew that withdrawal is a cumbersome process requiring a year’s notice, a multiagency review and payment of unpaid dues.
As a result, Health and Human Services Secretary Alex Azar instructed his department to continue cooperating with the organization. The American ambassador in Geneva, Andrew Bremberg, kept negotiating with the WHO director general on the reforms demanded by the president, including an independent inquiry into the WHO’s response to the pandemic. (The talks were first reported by Vanity Fair.) Dozens of scientists, doctors and public health specialists detailed from the Centers for Disease Control and Prevention kept working at their posts at the WHO’s Geneva headquarters and in the field, fighting Ebola and other diseases in Africa and elsewhere.
But on Monday, the administration made it clear there would be no backing down.
At a meeting at the White House, a director with the National Security Council told diplomats and health officials that they must now justify any engagement with the WHO as being necessary for national security and public health safety, senior government officials told ProPublica. In addition, the State Department has begun preparing formal paperwork to declare the official withdrawal of the United States from the WHO, officials said.
“The president is moving toward a fast withdrawal,” a senior administration official said in an interview this week. Another administration official said on Friday that the White House does not plan to reconsider the decision. National security and health officials confirmed those assertions.
“The President has made clear that the U.S. is terminating its relationship with the World Health Organization, and that process is being expedited,” said Katie McKeogh, an HHS spokesperson, in an email response to a request for comment. “All US-WHO collaborations are being examined through an interagency exercise as part of the termination process to ensure the safety of the American people will be protected.”
The new “no-engagement” policy is a concrete step to curtail the relationship, and it has caused alarm and confusion, other officials said.
“This is sending just unbelievable shock waves through the agencies,” a senior government official said. The official warned that reduced cooperation with the WHO will have “profound and severe repercussions.”
Among the most immediate potential impacts: The move could for the first time cut the U.S. government out of the development of the seasonal influenza vaccine for the Southern Hemisphere, a process coordinated by the WHO in partnership with the United States. And the withdrawal from the WHO could impede access to an eventual COVID-19 vaccine if it is created overseas, current and former officials said.
Leaving the organization could also significantly blind the U.S. to health threats in remote foreign locales that, as the pandemic has shown, have the potential to make their way to the U.S. shores. Experts also fear the impact on major initiatives to combat infectious diseases, such as a WHO-led program that is on the cusp of eradicating polio.
“To do this in the middle of a pandemic is breathtakingly dangerous,” said Nancy Cox, a former CDC virologist, who for 22 years led the agency’s WHO center on influenza surveillance and control. “So I worry a lot about what’s going to happen to so many of the programs at WHO that were strongly supported financially and through expertise and consultation with the U.S. I just think it could be really bad.”
When informed of the NSC directive, a WHO spokesman in Geneva wrote that the organization “hopes the United States will remain part of WHO, as it has been since 1948. Its leadership in global public health as a WHO Member State is important to all people, everywhere.”
The United States is the largest donor among the WHO’s 194 member states, giving about $450 million last year. The WHO said the U.S. cut in funding would affect childhood immunizations, polio eradication and other initiatives in some of the most vulnerable parts of the world.
Trump’s disgust with the WHO is well-founded, administration officials say. The decision to leave wasn’t solely due to the WHO’s stumbles on COVID-19, but because they capped a record of unresolved structural issues and failures during crises, officials said. As the pandemic spread early this year, the WHO reported that only 1% of cases were asymptomatic, while Chinese doctors were privately saying that the number was actually as high as 50%, the senior administration official said.
“The organization had no credibility,” the official said. “It was either clueless or cut out, being manipulated.”
Recent missteps, including conflicting advice about the efficacy of masks, raised further questions, officials said.
The administration plans to fill the void left by its withdrawal with direct aid to foreign countries, creating a new entity based in the State Department to lead the response to outbreaks, according to interviews and a proposal prepared by the department. The U.S. will spend about $20 billion this year on global public health. (About $9 billion of that is emergency aid for COVID response.)
But the senior administration official conceded that important activities led by the WHO, including vaccination initiatives, need to continue. It is not yet clear what will happen to those programs when American funding and participation end, the official acknowledged.
In fact, many aspects of the new policy toward the WHO remain unclear, officials said. At the White House meeting Monday, the NSC director who outlined the policy did not answer a number of questions from the agencies about its implementation and impact, saying responses would come later, the senior government official said.
The new directive will require officials to divert their attention from pandemic response in order to review a list of their WHO-related activities and try to justify them on national security and public health safety grounds, the senior government official said.
Critics warn of potential widespread damage as the United States attempts to extricate itself from an international health infrastructure in which it is entrenched. The timing will cause even more uncertainty, they said.
A case in point: The flu vaccine that Americans receive at drugstores and doctors’ offices is based on work that the CDC and Food and Drug Administration conduct through the WHO.
Since 2004, the U.S. has helped build a global network of WHO flu centers, buying lab equipment and training scientists. The centers in more than 100 countries collect samples from sick people, isolate the viruses and search for any new viruses that could cause an epidemic or pandemic. The CDC houses one of five WHO Collaborating Centers that collect these virus samples, sequence the viral RNA and analyze reams of data on flu cases around the world, while the FDA runs one of the four WHO regulatory labs that help vaccine makers determine the correct amount of antigen, which triggers the immune response, to include in vaccines.
The U.S. and other WHO members meet twice a year to pick the dominant flu viruses that are included in vaccines. The strains for this fall’s flu vaccine in the U.S. were chosen in April. But in September, the WHO flu centers are scheduled to pick the flu strains for the Southern Hemisphere’s vaccine, and months of work at the CDC leads up to that meeting.
The uncertainty has caused concern in the pharmaceutical industry as well as the government, officials said. The CDC could lose access to the data and virus samples that protects Americans from potentially deadly strains of flu from around the world.
“If we pull out of the World Health Organization, we’re going to be flying blind in terms of influenza and other pandemic threats,” said Cox, the CDC flu expert, who retired in 2014. “It’s going to be a lot harder to know what’s going on.”
The onslaught of the coronavirus has hurt immunization activities worldwide, causing a rise in measles and other diseases. American cooperation with the WHO is vital to fighting such threats, according to current and former officials. They fear that the U.S. decision will endanger a WHO-led program that has come tantalizingly close to the eradication of polio. The wild form of the disease now lingers in just two countries, Pakistan and Afghanistan.
“We are using WHO to run an anti-polio campaign and coordinate it,” said Andrew Natsios, a former administrator of the U.S. Agency for International Development and director of the Scowcroft Institute of International Affairs at Texas A&M University. “And we’re almost there. We can’t stop that now.”
The Trump administration’s plan to bypass the WHO and address global health problems directly with foreign governments will run into trouble in the Middle East, South Asia, Africa and other regions where Americans encounter hostility or have difficulty operating, critics said.
“People coming into countries in WHO shirts to work on polio or AIDS are less threatening,” said former Ambassador Jimmy Kolker, a veteran health diplomat who represented the United States at WHO meetings until 2017. “It is easier to get collaboration from a skeptical country or population through WHO. It facilitates access.”
It is fanciful to think that other nations will accept a U.S.-led health initiative as a substitute for the WHO, Kolker said.
“No one is looking for U.S.-based alternatives to WHO,” he said. “Dead on arrival. There is no way they are going to be supported or even accepted.”
The WHO has a history of bringing together ideological rivals. William Foege, a CDC director under Presidents Ronald Reagan and Jimmy Carter, credits the global agency for uniting American scientists and their counterparts from the Soviet Union during the Cold War to eradicate smallpox in a little more than a decade.
“It’s not a failed bureaucracy,” said Foege, who worked on the international fight against smallpox. “If you go there and see all they do every year, and they have a budget for the entire world that’s smaller than many medical centers in this country.”
At the same time, global health experts across the political spectrum admit that the WHO needs reform. The organization does not have the muscle to enforce international health regulations or put pressure on member states, experts say. Its decentralized structure gives the headquarters in Geneva limited power over regional offices, some of which have been fiefs dominated by politics and patronage.
During the U.S. response to the Ebola outbreak in West Africa in 2014, the Obama administration’s displeasure with the WHO led American officials to bypass the agency and join forces instead with other nations and nongovernmental organizations, current and former officials said.
The WHO’s flawed record shows the need for the United States to take the lead in response to health crises, a senior administration official said.
“As U.S. leadership demonstrated in the Ebola and MERS outbreaks, our diplomatic and development efforts enable countries to develop tools for addressing infectious disease,” the official said. “Due to these efforts, we filled gaps created by the WHO’s inaction to prevent, detect and respond to outbreaks immediately.”
Kolker said the calls for reform are legitimate, but he and others said the United States has enough influence to make changes from within. They disagree with the allegations that China controls the WHO and its director general, Tedros Adhanom Ghebreyesus.
“In general, the WHO is deferential to member states,” Kolker said. “Yes, it should have been more aggressive in response to Chinese obstruction. Tedros surely realizes the public statements were too deferential to China. But the organization is not dominated by China. Its weaknesses reflect the challenges we have long faced in international collaboration on public health.”
China will gain control over the organization if Washington really does terminate its membership, current and former officials predicted.
“There’s one country that’s desperate for the United States to leave the WHO, and that’s China,” Sen. Chris Murphy, a Connecticut Democrat, said at a hearing Thursday of the U.S. Senate Committee on Foreign Relations. “They are going to fill this vacuum. They are going to put in the money that we have withdrawn, and even if we try to rejoin in 2021, it’s going to be under fundamentally different terms because China will be much more influential because of our even temporary absence from it.”
The plastic tubes supplied for coronavirus testing by Fillakit, a first-time federal contractor with a sketchy owner, don’t even fit the racks used to analyze samples. And they may be contaminated anyway.
This article was first published on Thursday, June 18, 2020 in ProPublica.
Since May, the Trump administration has paid a fledgling Texas company $7.3 million for test tubes needed in tracking the spread of the coronavirus nationwide. But, instead of the standard vials, Fillakit LLC has supplied plastic tubes made for bottling soda, which state health officials say are unusable.
The state officials say that these “preforms,” which are designed to be expanded with heat and pressure into 2-liter soda bottles, don’t fit the racks used in laboratory analysis of test samples. Even if the bottles were the right size, experts say, the company’s process likely contaminated the tubes and could yield false test results. Fillakit employees, some not wearing masks, gathered the miniature soda bottles with snow shovels and dumped them into plastic bins before squirting saline into them, all in the open air, according to former employees and ProPublica’s observation of the company’s operations.
“It wasn’t even clean, let alone sterile,” said Teresa Green, a retired science teacher who worked at Fillakit’s makeshift warehouse outside of Houston for two weeks before leaving out of frustration.
The Federal Emergency Management Agency signed its first deal with Fillakit on May 7, just six days after the company was formed by an ex-telemarketer repeatedly accused of fraudulent practices over the past two decades. Fillakit has supplied a total of more than 3 million tubes, which FEMA then approved and sent to all 50 states. If the company fulfills its contractual obligation to provide 4 million tubes, it will receive a total of $10.16 million.
Officials in New York, New Jersey, Texas and New Mexico confirmed they can’t use the Fillakit tubes. Three other states told ProPublica that they received Fillakit supplies and have not distributed them to testing sites. FEMA has asked health officials in several states to find an alternative use for the unfinished soda bottles.
“We are still trying to identify an alternative use,” said Janelle Fleming, a spokeswoman for the New Jersey Department of Health.
Fillakit owner Paul Wexler acknowledged that the tubes are normally used for soda bottles but otherwise declined to comment.
The Fillakit deal shows the perils of the Trump administration’s frantic hiring of first-time federal contractors with little scrutiny during the pandemic. The federal government has awarded more than $2 billion to first-time contractors for work related to the coronavirus, a ProPublica analysis of purchasing data shows. Many of those companies, like Fillakit, had no experience with medical supplies.
The U.S. has lagged behind many European countries in its rate of testing people for the coronavirus, partly because of supply shortages or inadequacies. Epidemiologists say testing is vital to tracking the virus and slowing transmission. In at least one state, the shipment of unusable Fillakit tubes contributed to delays in rolling out widespread testing.
“They’re the most unusable tubes I’ve ever seen,” said a top public health scientist in that state, who asked to remain anonymous to protect his job. “They’re going to sit in a warehouse and no one can use them. We won’t be able to do our full plan.”
In a written response to questions, FEMA said it inspects testing products “to ensure packaging is intact to maintain sterility; that the packing slip matches the requested product ordered, and that the vials are not leaking.” It said that “product validation” that medical supplies are effective “is reinforced at the state laboratories.”
The agency did not answer questions about the size and lack of sterilization of Fillakit’s tubes or about why it sought an alternative use for them.
Fillakit is one of more than 300 new federal contractors providing supplies related to COVID-19. A ProPublica analysis last month found about 13% of total federal government spending on pandemic-related contracts went to first-time vendors. FEMA said last month that it only pays for products once they have been delivered, minimizing the risk of wasting taxpayer dollars.
“FEMA does not enter into contracts unless it has reason to believe they will be successfully executed,” it said.
Preforms, the small tubes also known in the plastics industry as “baby soda bottles” or “blanks,” have a following among elementary school science teachers and amateur scientists, but they don’t meet rigorous laboratory standards. They’re much cheaper than glass vials and can be sealed off with a soda bottle cap. When inflated with high-pressure air, the soft plastic expands to the size of a 2-liter soda bottle.
The preforms arrive at Fillakit’s warehouse in a huge shipping container. The tubes are then shoveled into smaller bins. Workers add the saline solution and screw on caps. The tubes are then loosely piled in bags and sent to FEMA, which forwards them to the states. Typically, test tubes are individually packaged to guard against contamination.
Washington state, an epicenter of the first outbreak of the virus, got more than 76,000 Fillakit vials from FEMA. None can be used.
“They were packaged unusually,” said Frank Ameduri, a spokesman for the state Health Department. “Not in a way we’re used to seeing, and they were not labeled. Some of them have been sent to our lab for quality control. None of the vials will be used until we’ve identified what’s in them and that they are safe for use.”
About 140,000 Fillakit tubes are also shelved in Texas, where officials were slow to roll out testing. The number of confirmed cases in Texas has increased by more than one-third in the past two weeks, according to data gathered by The COVID Tracking Project.
“There were issues with the labeling, and they use saline rather than viral transport medium, so we have not used them for our testing efforts,” said Chris Van Deusen, a spokesman for the Texas health department.
The U.S. Food and Drug Administration has only validated one solution, known as viral transport medium, as reliable in preserving the coronavirus RNA from decay or destruction by substances in the container. However, because that medium is in short supply, the FDA has also granted an emergency authorization for other products it believes can keep the virus intact for up to three days.
Fillakit has been squirting one of the alternatives into its tubes, phosphate buffered saline, which the FDA says should be placed into “a sterile glass or plastic vial.”
A spokeswoman for the Maryland-based Association of Public Health Laboratories, a membership organization that writes best practices and helps connect public health labs with government agencies, said it has heard rumblings about Fillakit’s tubes but “nothing deadly.”
“The bigger issue is the size of the tubes,” said the spokeswoman, Michelle Forman. “They are an unusual shape so they don’t fit racks, and we are getting lots of pushback about how difficult it is to work with them from our clinical partners.”
Richard Loeb, a contract law expert at the University of Baltimore, said FEMA has the power to claw back money paid to contractors, remove them from the government’s list of approved vendors or refer them to the agency’s inspector general.
“It’s outrageous enough that they [FEMA] ordered something to test for COVID-19, and they got something that can’t be used to test for COVID-19,” Loeb said. “I still am a little bit troubled as to why FEMA accepted them. ... They may have stupidly accepted something that was nonconforming.”
Wexler, Fillakit’s owner, has a background in law and real estate, not medical supplies. In 2012, the Federal Trade Commission accused Wexler and his telemarketing firm of illegal robocalling, making unauthorized charges to consumers’ bank accounts and falsely claiming to be a nonprofit organization. Wexler’s firm allegedly misrepresented itself as a credit counseling service for several years, charging customers for work it did not do, according to court records.
Wexler, who denied the charges, settled the case a year later. The settlement banned him from offering debt relief services — but not from being a federal contractor — and imposed a $2.7 million judgment.
Fillakit and another Wexler company, Cleargate Labs, operate out of the same warehouse in The Woodlands, a sprawling Houston suburb.
Cleargate describes itself as a “network of primary clinical laboratories” on its website. Last year, the company cold-called an elderly Iowa woman, told her that it was marketing a DNA screening for cancer genes and offered to send her testing supplies in exchange for her Medicare number, the Tampa Bay Times reported. Suspecting a scam, the woman reported the company to local law enforcement. Cleargate did not bill her and was not charged with a crime.
Three former Fillakit employees said that its process was unsterile. Workers shoveled up the tubes from unsanitary surfaces. The liquid that they added to each tube to preserve samples for lab analysis was kept in trays exposed to the air, which was whipped around by large fans.
Standards were compromised in the rush to meet productivity goals, Green said. “At the beginning, they were being picky, saying, ‘You have to make sure it’s at least 2 milliliters.’ And sometimes there were tubes that didn’t have any [solution] in there,” she said.
Wexler would come in and “cuss and scream at everybody in this warehouse about how nobody’s paying attention to what they’re doing,” she said.
Wexler and Stephen Wachtler, a manager at Cleargate and Fillakit, “were telling us, ‘Yeah, we gotta have four bins by lunch,’” Green said. “‘We gotta have 10 bins before you leave at 5 o’clock. Work faster, work faster.’”
Green said that few employees at the company had backgrounds in science or medicine. In May, during Fillakit’s first week of operations, the company did not provide workers with face masks, she said, raising concerns that fluid from their noses and mouths could land inside the tubes. Later, supervisors did hand out masks but did not require employees to wear them.
On June 10, a ProPublica reporter observed workers, some not wearing masks, standing over snow shovels and bins of tiny soda bottles.
Wexler and workers loaded a shipment of tubes into an Enterprise rental truck, which lacked the refrigeration that the Centers for Disease Control and Prevention say is needed to safely transport legitimate testing supplies.
Wexler denied a request to tour the warehouse. Asked about the lack of sterile conditions and the use of soda preforms, Wexler screamed, “What’s your problem, man?”
Michelle Hardy, a retired nurse who worked at Fillakit through June 10, said her concerns about contamination were dismissed by Wachtler. He did not respond to requests for comment.
“I kind of said to Stephen, ‘Is this supposed to be, like, clean technique, or sterile technique or what?’” Hardy said. “He’s like: ‘No, it’s fine. It’s fine what you’re doing because they’re just testing for COVID, and so if there’s any other bacteria or viruses in there then it’s not going to show up.’”
That’s not true, according to Vjollca Konjufca, an associate professor of microbiology at Southern Illinois University. If Fillakit employees were infected, they might have contaminated the tubes with their own virus, potentially causing false test results, she said.
Konjufca was part of a team at her university that manufactured the viral transport solution validated by the FDA. She said they followed strict protocols to ensure tests aren’t contaminated.
“We filter-sterilize, and then we add antibiotics,” Konjufca said. “The whole work is handled under a biosafety hood ... so it does not allow any sort of air from the room, particulates or whatever, to get into your vials.”
There are many ways to mess up medical testing, so careful manufacturing is vital. Some substances in saliva or the plastic vials can damage virus RNA and alter test results, Konjufca said.
“You cannot just makeshift use soda bottles to make tubes,” she said. “You have enzymes in there and you have contaminants that can mess up the results.”