For years, North Carolina has bet against a storm like Hurricane Florence.
Even as nationally known insurance companies pulled out of the state's coastal communities, development boomed along the shore, despite the threat from a megastorm like Harvey or Maria.
In the face of warnings that climate change was making such storms more common, the state-created "insurer of last resort" has written policies for thousands of coastal properties worth tens of billions of dollars.
With Hurricane Florence headed straight for North Carolina, the state faces not only a natural disaster but a financial reckoning.
According to the most recent totals available, from 2017, the state-created insurance plan had access to about $3 billion in reserves, reinsurance, and contributions from insurance companies to repair and rebuild damaged homes and properties. It could need a lot more than that if it were to be hit by a storm comparable to Harvey, which devastated Houston last year. Insurers estimate that the total payout from claims related to Harvey will reach $19.4 billion, according to the Texas Department of Insurance.
"I hate to say it, but all of us who want to live on the coast, we are living on borrowed time," said David Redwine, a vice president of Coastal Insurance in Shallotte, North Carolina, and a former state representative. "We've been lucky, but will we be lucky in the future? There's no guarantee of that."
Today, the Coastal Property Insurance Pool, which was created by North Carolina legislators and is run by a nonprofit association of commercial insurers, insures more than three-quarters of all coastal property. As of June, the beach plan, as it's called, had 198,039 coastal policies representing roughly $74 billion in potential liability. Over the last 12 years, the plan has taken on an additional $20 billion in exposure.
There are safeguards: Private insurers promise to pay a portion, and the plan has a reserve fund and buys an insurance policy of its own. But if a large enough coastal disaster strikes, every person who insures property in North Carolina, from tobacco farmers hundreds of miles from the coast to the wealthy second-home owners who chose to build stilted cottages dipping into ocean waves, will also have to help foot the bill.
North Carolina officials say that is unlikely to happen. They say the plan is prepared to handle billions of dollars in losses, and they also point to historical trends that show the worst storms have occurred inland, and not on the coast. The North Carolina Insurance Underwriting Association, which administers the coastal insurance pool, said it "believes that it is prepared" for a major storm or series of storms. Alvin Ashworth, the association's assistant general manager, said via email that based on analysis of multiple weather models, the organization had concluded that the likelihood of a storm disaster big enough to trigger the statewide surcharge was "nearly de minimis," or so low that it that it hardly merited consideration.
But climate change has made those patterns less reliable predictors of future weather. Scientists and experts who work with data to predict storm patterns for the insurance industry all say future storms will be stronger and develop faster. Recent research even suggests a "Category 6" may be in the making — the strongest hurricanes are currently rated as Category 5.
Hurricane Harvey, which deluged Houston and the Texas coast, is ample evidence of the limits of traditional storm prediction. The storm and the ensuing floods — which had less than a 0.2 percent chance of occurring in a given year and had no historical precedent — caused around $125 billion in damage, including the $19.4 billion in insured losses. While much of the destruction was caused by flooding, which is covered by a federal insurance program, the scale of the storm was enough to make any state reconsider even the best-funded plans.
Harvey's insured losses were more than five times more than what North Carolina's coastal plan is currently financially prepared to handle. So if a storm with comparable consequences struck North Carolina, tens of billions of dollars in costs could be spread among every insurance customer in the state for years.
"States aren't intending to mislead people about the risk," said Cynthia McHale, director of insurance at Ceres, a sustainability advocacy group. "[But] it does mask the fact that the risks are increasing. The consequence is that action is delayed, people aren't getting the signal."
Florence, the first hurricane to hit North Carolina this season, is massive. The eye of the storm was 28 miles wide as Florence made landfall as a Category 1 hurricane Friday morning. Up to a million people had evacuated from the path of the storm, officials said, and more than 120 shelters were providing refuge for at least 12,000 people across the state. More than 320,000 people were already without power, as weather officials issued dozens of flash flood warnings Thursday evening. The National Hurricane Center, for days, forecasted that Florence would bring "life-threatening" storm surges and "catastrophic" floods.
"Today, the threat becomes a reality," Gov. Roy Cooper said during a press conference Thursday. "We cannot underestimate this storm."
North Carolina is a prime example of how states are pushing aside the difficult task of dealing with climate change by subsidizing insurance and blunting free-market signals that might discourage building new properties along the coast's most vulnerable areas.
Traditionally, residents and businesses would turn to the private market to buy property insurance. But where the market won't go, state legislatures can step in to fill in the gaps.
Fair Access to Insurance Requirements, or FAIR, plans were created as part of a congressional push in the late 1960s to inoculate cities from blight caused by race riots and allow people living in those areas to obtain reasonably priced insurance. Around the same time, several states along the Atlantic and Gulf coasts created plans to provide windstorm coverage for residents.
In 1990, these "markets of last resort" held just $54.7 billion in exposure. By 2011, that jumped to nearly $1 trillion, tracking development and the rise in tax base along with it.
Insurers considered shifting their business away from coastal areas after a series of intense storms battered the Atlantic and Gulf coasts in the early 2000s. There seemed to be no way to predict which storms would become "mega-hurricanes," insurers said, and that rattled an industry that is all about predictability. From Hurricanes Charley, Frances and Ivan to Katrina in New Orleans, insurers said their risk projections far exceeded what they were permitted to charge in premiums.
"People who live on the coasts oftentimes believe they should not be subjected to premiums that fully reflect their risk," said Robert Hartwig, former president of the Insurance Information Institute, an industry association. "They believe they should be entitled to some form of subsidy."
Even as insurers pulled back from vulnerable coastlines, states continued to see those same regions as prime real estate. Whether those states had climate change policies in place or not, many of them accepted the increased risk as they reaped the benefits of more development. In Florida, the financial strain of this arrangement has become a subject of considerable public concern.
If officials bend to pressure from real estate developers who want to build in coastal areas, "you end up with states suppressing rates so you can expand swampland or coastal development," said Robert Gordon, senior vice president of policy research at the Property Casualty Insurers Association of America, a lobbying group.
States all along the coast insure property some private companies wouldn't touch.
In Florida, a perennial target of hurricanes, Citizens Property Insurance Corp. — the state's insurance pool — saw its insurance liabilities balloon alongside investment in South Beach. By 2012, Citizens insured much of Florida's coastline, with exposure of $500 billion.
Florida has since taken steps to shift more policies to private insurance companies, but in other states, the plans still shoulder an enormous financial liability. In 2011, this exposure peaked at nearly $1 trillion, according to the Insurance Information Institute.
The federal National Flood Insurance Program, which allows property owners in flood-prone areas to insure their properties, is the best known government-backed disaster insurance program. Experts said the program, by insuring homes in flood plains, counters the market forces that would otherwise make such policies prohibitively expensive for most homeowners. State-backed coastal insurance plans do the same thing for people living in coastal areas, said Professor Kyle Logue of the University of Michigan Law School, who wrote a paper on state insurance plans and said he is concerned by the effects of such policies.
"The hope is that the private market would dominate, but … that's not how it's worked out," he said. "The government insurer winds up providing the only policies that people actually buy."
Beyond the market, what truly kept coastal states like North Carolina from financial disaster was an unusual calm in the Atlantic hurricane patterns in recent years.
"We are just at the front end of discovering what the impacts are when these risks come home to roost," said Rachel Cleetus, lead economist and policy director at the Union of Concerned Scientists.
Coastal North Carolina's vulnerability to hurricanes has long made it an expensive bet for insurers. But as concerns grew about climate change in the early 2000s, the industry sought to self-correct.
Allstate and North Carolina Farm Bureau Mutual Insurance shrunk the number of policies they wrote covering wind damage in 2005; State Farm stopped writing new homeowner policies for houses within a mile of the ocean in 2006. By the end of 2008, Farmers Insurance and Encompass Insurance announced they, too, were backing away from the coast. The companies continued to write policies in the state's interior.
Companies blamed the state coastal insurance plan — and the potential uncapped liabilities they faced after a disaster — as reason enough to flee the area.
In 2008, an actuarial firm commissioned by an insurer trade group found that the coastal insurance plan was not financially prepared to weather a catastrophic storm. The plan already insured some $70 billion worth of property, and was adding about $1 billion in exposure every month, according to reports, yet it had no more than $1.5 billion in cash on hand to pay for claims.
That meant if a storm hit, private insurers could be forced to make up the difference.
"When we added it up, our executives saw our liability — that we'd be paying double what we collect," a Farmers Insurance spokesman said at the time.
In an effort to keep the companies writing policies, North Carolina went to great lengths to insulate insurance companies from the risks.
In 2009, the legislature put a $1 billion cap on the assessments the plan could collect from its members, and it directed profits from premiums to the plan's cash reserve to pay for losses, operating expenses and reinsurance. But legislators also created a mechanism to pass along big bills to the public; property insurance policyholders statewide could be assessed up to 10 percent of their annual premium each year until the claims were settled.
The plan bought $1 billion in reinsurance to bolster its finances, and in total, these measures provided nearly $3 billion in financial protection. Insurers and other experts agree that the changes strengthened the beach plan's finances.
"It didn't remove the bomb," Wayne Goodwin, former North Carolina insurance commissioner, said. "But it did extend the fuse quite a bit. It bought us some time."
Though some smaller insurers moved into North Carolina, the bigger insurance companies, by and large, have never returned to the coast.
Meanwhile, building in coastal North Carolina only accelerated.
Developers flocked to the area, constructing 113,231 new homes between 2000 and 2014, according to Zillow data. Taxable property values — including real estate, vehicles and other personal property — in the 18 coastal counties grew by $479.6 billion between 2004 and 2016.
The worst storm to hit North Carolina in recent memory was in 2016.
Hurricane Matthew made landfall at the South Carolina border and brought heavy rains and flooding to southeastern North Carolina. It dropped nearly 19 inches of rain in some communities, inundating homes and roads. The state emergency management agency found that Hurricane Matthew caused an estimated $4.8 billion in damage to property, roads, public facilities and agriculture.
Climate scientists, however, say Matthew isn't representative of North Carolina's risk. It had weakened considerably by the time it approached the state, and the storm's eye skirted the Outer Banks. Instead, experts point to two smaller storms — Bertha and Fran — in 1996, which delivered successive blows to the state's vulnerable coast.
Bertha hit the state that July as a Category 2 hurricane, but it quickly lost steam as it crossed the state. Still, the storm brought heavy rains, gusting winds and 10-foot storm surges that eroded beaches along Cape Fear and Cape Lookout. A main road in North Topsail Beach collapsed, and a quarter of the town's homes lost their roofs. Statewide, more than 400,000 people were left without power. Surveys found the storm destroyed more than 1,100 homes and damaged an additional 4,000. The losses totaled $1.2 billion in North Carolina.
Then, just two months later, as the state was still recovering, Fran hit.
At the time, local news reports compared Fran to Hurricane Hazel, the Category 4 storm that struck on the border of the Carolinas in 1954. South Carolina officials told tourists and residents to evacuate for Fran; those who refused "were asked to disclose their next of kin."
Fran crossed over Bald Head Island, North Carolina, as a Category 3 hurricane and then meandered north, taking 90 minutes to carve a 35-mile path of destruction from Cape Fear to Wilmington. Fran's top wind speed whipped at 124 miles per hour. With the storm came a 12-foot storm surge and overwash that destroyed dunes and drowned beaches from Carolina Beach to Wrightsville Beach and Topsail Island in up to 8 feet of water. In North Topsail Beach, a double-wide trailer doubling as police headquarters was lost.
"Everything that Bertha didn't get, Fran got from a different direction," the mayor of North Topsail Beach at the time, Marty Bostic, told the Charlotte Observer.
The twin impact of Bertha and Fran caused more than $10 billion in damage to North Carolina alone. That matches what both climate scientists and the insurance industry's modelers say is far more likely in the future as storms become more frequent, and more intense.
Dr. José Baselga, the hospital's chief medical officer, stepped down days after a report by ProPublica and the New York Times that he failed to disclose millions of dollars in payments from the health care and drug industry in research articles.
This article first appeared September 13, 2018 on ProPublica.
Dr. José Baselga, the chief medical officer of Memorial Sloan Kettering Cancer Center, resigned on Thursday amid reports that he had failed to disclose millions of dollars in payments from health care companies in dozens of research articles.
The revelations about Baselga's disclosure lapses, reported by The New York Times and ProPublica last weekend, have rocked Memorial Sloan Kettering, one of the nation's leading cancer centers, in recent days. Its top executives scrambled to contain the fallout, including urgent meetings of physician leaders and the executive committee of its board of directors.
In his resignation letter released Thursday, Baselga, who also served as the physician-in-chief, said he feared that the matter would be a distraction from his role overseeing clinical care and that he had been "extremely proud" to work at Memorial Sloan Kettering.
"It is my hope that this situation will inspire a doubling down on transparency in our field," he said, adding that he hoped the medical community would work together to develop a more standardized system for reporting industry ties.
In an email sent to the staff Thursday evening, Dr. Craig B. Thompson, the hospital's chief executive, said that Baselga had made "numerous" contributions to Memorial Sloan Kettering, patients and cancer treatment. Dr. Lisa DeAngelis, the chairwoman of neurology, will take over as acting physician-in-chief until Baselga's successor is hired.
The resignation was effective immediately, and he will have no continuing role at the cancer center, although he will stay for two weeks to ease the transition, said Christine Hickey, a spokeswoman for the cancer center.
Thompson echoed comments he made to the hospital staff on Sunday, saying that the cancer center had "robust programs" in place to manage employees' relationships to outside companies, but that "we will remain diligent." He added, "There will be continued discussion and review of these matters in the coming weeks."
Baselga, a prominent figure in the world of cancer research, omitted his financial ties to companies like the Swiss drugmaker Roche and several small biotech start-ups in prestigious medical publications like the New England Journal of Medicine and the Lancet. He also failed to disclose any company affiliations in articles he published in the journal Cancer Discovery, for which he serves as one of two editors in chief.
All told, ProPublica and The Times found that Baselga had failed to report any industry ties in 60 percent of the nearly 180 papers he had published since 2013. That figure increased each year — he did not disclose any relationships in 87 percent of the journal articles that he co-wrote last year.
In an interview and later statement, Baselga said he planned to correct his conflict-of-interest disclosures in 17 journal articles, including in the New England Journal and the Lancet. But he contended that in dozens of other cases, no disclosure was required because the topics of the articles had little financial implication. He also said his failed disclosures were unintentional and should not reflect on the value of the research he conducted.
Baselga and Memorial Sloan Kettering said that he had disclosed his industry relationships to the cancer center.
The New England Journal and the Lancet, as well as professional societies like the American Society of Clinical Oncology and the American Association for Cancer Research, said they were conducting reviews of Baselga's disclosure practices after inquiries from The Times and ProPublica. Baselga was president of the AACR in 2015 and 2016 and appears to have violated disclosure rules for reporting conflicts of interest during that period.
In his statement Thursday, Baselga said that he took full responsibility for his disclosures and that he had already submitted updates to medical journals "and will continue to do so until the record is complete."
A spokeswoman for the New England Journal, Jennifer Zeis, said in an email Thursday that Baselga had submitted changes to his disclosures but that editors had questions for him before the articles could be corrected. A spokeswoman for the AACR said that organization was continuing to review Baselga's disclosures.
Baselga, 59, is an expert in breast cancer research and played a key role in the development of Herceptin, which was developed by Genentech, a subsidiary of Roche. He came to Memorial Sloan Kettering in 2013 after serving as chief of hematology and oncology at Massachusetts General Hospital in Boston. Before that he was a leader at the Vall d'Hebron Institute of Oncology in Barcelona, Spain.
Medical journals and professional societies have imposed stricter rules about reporting relationships to industry after a series of scandals a decade ago in which prominent physicians failed to disclose payments from drug companies. But medical journals have said they don't routinely fact-check authors' disclosures, and much is left to the honor system.
Ethicists say that outside relationships with companies can shape the way studies are designed and medications are prescribed to patients, allowing bias to influence medical practice. Reporting those ties allows the public, other scientists and doctors to evaluate the research and weigh potential conflicts.
Jeffrey S. Flier, who was dean of the Harvard Medical School from 2007 to 2016, said medical leaders should be held to a higher standard.
"The higher you are in the organizational structure, the more important it is that you fulfill those obligations," he said. "You're not just another faculty, you're also a faculty to whom other people look up and your reputation is tied to the institution's reputation."
That said, he added, relationships between academic faculty members and the health care industry are essential to developing new drugs.
Baselga has extensive ties to a range of companies, including sitting on the board of the large pharmaceutical company Bristol-Myers Squibb and serving as a director of Varian Medical Systems, which sells radiation equipment and for whom Memorial Sloan Kettering is a client.
Baselga has served on the boards of at least four other companies since 2013, and the positions required him to assume a fiduciary responsibility to protect the interests of those companies, even as he oversaw the cancer center's medical operations. Baselga and Memorial Sloan Kettering have said the cancer center has put firewalls in place to prevent any conflicts.
Baselga received nearly $3.5 million in payments from drug, medical equipment and diagnostic companies from August 2013 through 2017, according to Open Payments, a federal database that tracks payments to physicians from health care companies. Most of that amount, about $3 million, involved a payment from Genentech for Baselga's ownership interest in a company it acquired, Seragon Pharmaceuticals, in 2014.
But the $3.5 million in the Open Payments database does not include payments from companies that don't have products approved by the Food and Drug Administration. Such companies are not required to report their payments under federal law.
For instance, Infinity Pharmaceuticals, a start-up with no approved drug, paid Baselga nearly $250,000 in cash and stock options for serving on its board from 2015 to 2017. He declined to disclose how much he received from such companies.
Baselga was one of the highest-paid staff members at Memorial Sloan Kettering, earning more than $1.5 million in 2016, the most recent year for which the nonprofit's financial filings are available.
The move comes after ProPublica and The New York Times reported that one of its top executives failed to report payments from drug and health care companies in dozens of medical journal articles.
This article first appeared September 31, 2018 on ProPublica.
By Charles Ornstein, ProPublica, and Katie Thomas, The New York Times
The chief executive of Memorial Sloan Kettering Cancer Center sent an email to all staff members on Sunday saying that the institution and its faculty "need to do a better job" of disclosing their relationships with the drug and health care industries.
"The matter of disclosure is serious," wrote the executive, Dr. Craig B. Thompson, along with Kathryn Martin, the chief operating officer.
The email, which was labeled an "important message," referred directly to an article published this weekend by ProPublica and The New York Times about the failure of Dr. José Baselga, the cancer center's chief medical officer, to disclose his extensive industry relationships in dozens of research articles since 2013.
The Times and ProPublica found that Baselga had received millions of dollars in consulting fees and in ownership interests in health care companies, but had often failed to disclose those ties in appearances at scientific conferences and in journal articles. His reporting failures included articles in prestigious publications like the New England Journal of Medicine and the Lancet as well as in Cancer Discovery, a journal for which he serves as one of two editors in chief.
Baselga acknowledged that he had frequently failed to disclose industry connections, and said he planned to correct the record in 17 recent articles. But he disputed whether he should have disclosed his ties in dozens of other cases, saying that the articles involved early-stage research for which there was little financial implication for companies.
Several institutions, including the New England Journal of Medicine and the American Society of Clinical Oncology, have said they are looking into his disclosures. The American Association for Cancer Research said it had also begun a review of Baselga's reporting practices. Baselga appears to have violated disclosure rules while he was president of that organization in 2015 and 2016. The AACR also publishes Cancer Discovery.
In the email, Thompson and Martin described the guidelines for reporting industry relationships as "nebulous," adding that "we need to work with journal publishers and professional societies to standardize the reporting process." They said they had been discussing the issue with ASCO, the cancer group, which has pushed for more standardized disclosure.
A decade ago, a series of scandals relating to hidden payments by drug companies to prominent physicians prompted medical journals and professional societies to beef up their reporting requirements. But as Baselga's case and others demonstrate, much is still left to the honor system. Medical journals have said they don't routinely fact-check authors' disclosures.
In comments to The Times and ProPublica, the New England Journal of Medicine acknowledged that the problem of failed disclosures is "widespread" and said it was putting in place a better system to track authors' disclosures. Two of the articles that Baselga said he planned to correct were published in that journal.
Baselga has served since March on the board of Bristol-Myers Squibb, a major manufacturer of cancer drugs, and since 2017 on the board of Varian Medical Systems, which sells radiation equipment to cancer centers, including to Memorial Sloan Kettering.
Baselga received nearly $3.5 million in payments from drug, medical equipment and diagnostic companies from August 2013 through 2017, according to Open Payments, a federal database that tracks payments to physicians from health care companies. The bulk of that amount, about $3 million, involved a payment from Genentech, a subsidiary of the Swiss pharmaceutical giant Roche, for Baselga's ownership interest in a company it acquired, Seragon Pharmaceuticals, in 2014.
But that total amount does not include many companies with which Baselga has ties that do not report physician payments to the federal database because they are biotech start-ups without any products approved by the Food and Drug Administration. Baselga declined to provide a tally of the money he has received from such companies.
Memorial Sloan Kettering employs about 17,000 people and conducts hundreds of clinical trials.
In the email to staff, Thompson and Martin closed by affirming the value of working with the health care industry.
"Collaboration with industry leaders, from early stage start-ups to large corporations, is necessary to focus on bringing better treatments to patients," they said.
Christine Hickey, a spokeswoman for Memorial Sloan Kettering, said the cancer center had no further comment.
The CMS inspector's notes suggest a tense and dysfunctional transition more than two years ago as the heart transplant program, long known as one of the best in the nation, made staffing changes aimed at improving care.
This article first appeared September 31, 2018 on ProPublica.
For months, officials at Baylor St. Luke's Medical Center have declined to specify the factors behind a rash of patient deaths in the hospital's heart transplant program three years ago.
But a newly released federal document describes program leaders as more blunt in their assessment when regulators questioned them privately in December.
In an interview with the Centers for Medicare and Medicaid Services, one of the hospital's top heart transplant physicians blamed the program's struggles, at least in part, on "a retiring surgeon" — a "legend" — who "wouldn't stop performing transplants," according to typed notes prepared for CMS.
The notes, obtained by ProPublica and the Houston Chronicle under the Freedom of Information Act, do not identify anyone by name, but the descriptions make clear that the physician being interviewed could only be Dr. Andrew Civitello, the program's top cardiologist. And there was only one retirement-age transplant surgeon at St. Luke's in 2015 who could be described as a legend in the field of heart surgery: Dr. O.H. "Bud" Frazier, who is one of the world's most prolific heart transplant surgeons.
Civitello acknowledged through a hospital spokeswoman that he spoke with CMS about changes in staffing at the transplant program but said the notes did not accurately reflect his remarks. Frazier did not respond to messages seeking comment for this story.
A spokesman for CMS said the agency stands behind the findings documented in its inspection reports and the notes that support them.
The inspector's notes shed new light on how doctors at the hospital accounted for poor transplant outcomes that triggered federal scrutiny and led to the loss of Medicare funding. Combined with other details made public in recent months, the notes suggest a tense and dysfunctional transition more than two years ago as the heart transplant program, long known as one of the best in the nation, made staffing changes aimed at improving care.
Additional records reviewed by ProPublica and the Chronicle reveal this was not the first time the renowned transplant program has had an unusually high rate of patient deaths and considered changes.
According to the CMS inspector's notes, the unnamed physician whose job description matches that of Civitello explained that a "very good" surgeon was hired to replace an aging surgeon, but the replacement "eventually left in frustration." Dr. Hari Mallidi joined St. Luke's as a top transplant surgeon in 2012 and left in mid-2015 for a job at a Harvard-affiliated teaching hospital.
"That left the program with an old surgeon and an inexperienced surgeon. Had many deaths in a short period of time," the notes said of Civitello's commentary, apparently referring to Frazier, 78, and Dr. Steve Singh, a junior surgeon at the program until 2016 and the only St. Luke's physician from that time who matches that description. Singh did not respond to requests for comment.
In a statement provided by St. Luke's, Civitello said: "The notes you provided are not my words and do not accurately reflect my comments. My conversation with the surveyor focused on the new policies and procedures we put in place to strengthen the heart transplant program, including the addition of intensivists in the ICU, internal lab analysis for consistency, and other measures."
In response to questions for this story, CMS said inspectors take handwritten notes during hospital visits and that it has the "highest confidence" that they accurately reflect what they see and hear.
In 2015, seven out of 21 heart transplant recipients at St. Luke's died within a year of their surgeries, significantly more than would have been expected. During a meeting with reporters in January about what led to the deaths, hospital leaders said only that the program slowed down that year and identified subtle ways to improve care. At the start of 2016, the hospital brought in a new surgeon, Dr. Jeffrey Morgan, to lead the program.
The CMS notes were written in December when at least one inspector visited the hospital to evaluate its poor transplant outcomes. The resulting report, obtained early this year by ProPublica and the Chronicle, referred to a St. Luke's physician who "explained that issues were identified with the major issue being surgical technique with one of the heart transplant surgeons, who was no longer practicing." The document did not provide any additional details, but the newly released notes suggest that the statement referred to Frazier.
In April, a St. Luke's spokeswoman told reporters that "we did not discuss the technique of any individual surgeon with CMS" and that it would be "presumptuous to infer that the surgeon CMS referenced is Dr. Frazier."
Civitello was not the only St. Luke's physician interviewed by CMS in December who discussed the program's surgical staffing.
The inspector also interviewed a St. Luke's heart transplant surgeon, according to the newly released notes, who "explained that one surgeon had bad outcomes" in 2015 and that the deaths that year were due in part to the way in which the hospital was selecting patients eligible for transplants as well as the donor hearts it accepted for them. The unnamed doctor told the inspector that he was hired after the rash of poor outcomes in 2015 and that he reviews all organ offers; only Morgan matches that description.
It is not clear, based on the details provided, which surgeon Morgan was blaming for the poor outcomes that occurred prior to his arrival at the program. Morgan did not respond to a request for comment and the hospital did not provide one on his behalf.
In the January interview, Morgan, 44, spoke glowingly of his predecessor, saying that it had been "very, very special" to work with him and learn from him on a daily basis. During that same interview, Civitello told reporters that Frazier "is the heart and the soul of our organization."
In the written statement this week, Civitello said, "We are grateful for Dr. Frazier's decades of service, innovation and sacrifice to our patients, our community and the advancement of treatments for those who are critically ill facing heart failure."
Frazier, who started the heart transplant program in 1982, stopped operating as its lead surgeon sometime in 2015. In a previous interview, Frazier said that he merely consulted on heart transplants during the period in question and that he personally made the decision to stop operating that year because of his age.
"I told them I was getting tired of being up all night," Frazier said in April of his exit from the operating room three years ago. "I was 75, and I just told them I wasn't going to do that anymore."
ProPublica and the Chronicle sent the hospital and its affiliated Baylor College of Medicine a list of questions about its interactions with Frazier and his outcomes, but the hospital declined to answer them "given the pending litigation between Dr. Frazier and the two of you, the Houston Chronicle, and ProPublica." Frazer is suing the news organizations and its reporters following an article published about him in May.
That article detailed, among other things, below-average one-year survival among Medicare patients who received an implantable heart pump from Frazier between 2010 to 2015, his final years operating. ProPublica and the Chronicle did not assess Frazier's transplant outcomes.
In previous interviews, as well as in the legal complaint, Frazier has emphasized his willingness to operate on "mortally ill" patients who have been turned away by other surgeons and are often at a higher risk of dying after surgery.
Frazier has remained active in the heart program after 2015, conducting research and sometimes advising surgeons during complex operations.
A newly published book, "Ticker," which details Frazier's decades-long quest to develop an artificial heart, touches on the hospital's concerns about his surgical outcomes prior to Morgan's arrival.
"Depending on who you ask," the book's author, Mimi Swartz, wrote, "Bud either asked to operate less because of his back or his knees, or the hospital tried to ease him out of the operating room. Baylor brought in a much younger man from the Northeast who was supposed to take control; at least now he had most of the titles Bud had always been so proud of."
Swartz, who reported spending many hours interviewing Frazier for the book over the course of several years, describes the relationship between Frazier and Morgan.
"(He) was exceedingly deferential to Bud, treading lightly, as if he were almost embarrassed to be nearby," Swartz wrote, without identifying Morgan by name. "It was like sending in the waterboy to give instructions to the star quarterback."
St. Luke's leaders say the hospital's heart transplant survival rate improved significantly after Morgan took over, though some of his colleagues raised concerns about his surgical performance.
In an interview in April, Frazier made clear that he was not asked to play a role in selecting his replacement: "I didn't hire Jeff. He was hired by the people at Baylor without even consulting me. And the people that hired him never did a transplant. … But he's, you know, he's a hard worker academically."
Some St. Luke's physicians have blamed the heart transplant program's issues in recent years on administrative changes that came after the hospital was purchased by Catholic Health Initiatives in 2013 and, a year later, entered into a joint-operating agreement with Baylor College of Medicine.
But documents reviewed by ProPublica and the Chronicle show that St. Luke's has had poor heart transplant outcomes in the past.
Between 2000and2003, when the hospital was known as St. Luke's Episcopal and the heart transplant program was still run by Frazier, only about 77 percent of the hospital's heart transplant recipients survived at least a year, according to reports published in 2003, 2004 and 2005. Based on an analysis by the Scientific Registry of Transplant Recipients that took into account the severity of patient conditions and the quality of donor organs, about 86 percent of St. Luke's heart recipients should have survived at least a year over that period.
St. Luke's was one of a small number of hospitals nationally to be singled out for statistically worse-than-expected heart transplant outcomes at that time — the same finding that landed the program in trouble with regulators this year. But that was a couple of years before the Centers for Medicare and Medicaid Services began taking punitive action against centers based on their performance, and the hospital faced no public consequences.
The hospital did not respond to questions about its performance in those years, citing Frazier's lawsuit against the news organizations.
In 2007, Dr. James Young, a prominent Cleveland Clinic cardiologist, was hired to review the hospital's heart transplant and mechanical heart pump program. Young's report, which primarily focused on compliance with federal research protocols, concluded that the transplant and mechanical pump program "was rather autocratic with a leader who is opinionated and commanding in authority, but also an incredibly skilled surgeon and driving force." Those issues, along with a willingness to operate on "futile patients," likely contributed to "less than stellar" outcomes after heart transplantation, Young wrote.
Young's confidential report was made public in July when it was filed in Harris County District Court as part of the lawsuit against ProPublica and the Chronicle.
"These issues seem related to an appearance of 'chaos and confusion' that emerged," Young wrote in his 2007 report. "Though leadership of the effort has been well meaning, with the interests of saving the lives of horribly ill patients, the program is in a vulnerable position."
Young identified problems with research practices and documentation, but said "it does not appear that any egregious professional misconduct has occurred."
It's not clear what changes were made at that time.
Mallidi — referred to in the CMS inspector notes as the "replacement surgeon" — was hired five years later, in 2012, around the same time the program's longtime No. 2 surgeon, Igor Gregoric, left St. Luke's to start a heart transplant program at neighboring Memorial Hermann hospital. Frazier continued to serve as the surgical director of heart transplants at St. Luke's, and Mallidi was put in charge of lung transplants.
Mallidi said recently that his relationship with Frazier did not factor in his decision to leave in 2015.
Morgan joined the hospital six months later, in January 2016, and Frazier formally transitioned to a non-surgical leadership post focused on research.
In their communication with federal regulators since then, St. Luke's leaders have said the heart transplant program's outcomes improved in 2016 and 2017, posting one-year survival rates at or above 94 percent, better than the national average.
As a result, St. Luke's can no longer bill Medicare or Medicaid for heart transplants, a move that could lead private insurance companies to follow suit. Experts say the losses could threaten the program's long-term viability and force the hospital to restart the historic program from the ground up.
Administrators say the program remains open and continues to treat the 83 patients on its heart waiting list, but the program — which historically has performed about 45 heart transplants each year — did not perform any in June or July, the latest months for which public data is available.
Hospital officials did not answer Thursday when asked if the program had performed any heart transplants since then.
Memorial Sloan Kettering Cancer Center CMO José Baselga has received millions of dollars in payments from companies that are involved in medical research. His omissions expose how weakly conflict-of-interest rules are enforced by journals.
This article first appeared September 08, 2018 on ProPublica.
One of the world's top breast cancer doctors failed to disclose millions of dollars in payments from drug and health care companies in recent years, omitting his financial ties from dozens of research articles in prestigious publications like The New England Journal of Medicine and the Lancet.
The researcher, Dr. José Baselga, a towering figure in the cancer world, is the chief medical officer at Memorial Sloan Kettering Cancer Center in New York. He has held board memberships or advisory roles with Roche and Bristol-Myers Squibb, among other corporations; has had a stake in start-ups testing cancer therapies; and played a key role in the development of breakthrough drugs that have revolutionized treatments for breast cancer.
According to an analysis by ProPublica and The New York Times, Baselga did not follow financial disclosure rules set by the American Association for Cancer Research when he was president of the group. He also left out payments he received from companies connected to cancer research in his articles published in the group's journal, Cancer Discovery. At the same time, he has been one of the journal's two editors in chief.
At a conference this year and before analysts in 2017, he put a positive spin on the results of two Roche-sponsored clinical trials that many others considered disappointments, without disclosing his relationship to the company. Since 2014, he has received more than $3 million from Roche in consulting fees and for his stake in a company it acquired.
Baselga did not dispute his relationships with at least a dozen companies. In an interview, he said the disclosure lapses were unintentional.
He stressed that much of his industry work was publicly known although he declined to provide payment figures from his involvement with some biotech startups. "I acknowledge that there have been inconsistencies, but that's what it is," he said. "It's not that I do not appreciate the importance."
Baselga's extensive corporate relationships — and his frequent failure to disclose them — illustrate how permeable the boundaries remain between academic research and industry, and how weakly reporting requirements are enforced by the medical journals and professional societies charged with policing them.
A decade ago, a series of scandals involving the secret influence of the pharmaceutical industry on drug research prompted the medical community to beef up its conflict-of-interest disclosure requirements. Ethicists worry that outside entanglements can shape the way studies are designed and medications are prescribed to patients, allowing bias to influence medical practice. Disclosing those connections allows the public, other scientists and doctors to evaluate the research and weigh potential conflicts.
"If leaders don't follow the rules, then we don't really have rules," said Dr. Walid Gellad, an associate professor of medicine at the University of Pittsburgh and director of its Center for Pharmaceutical Policy and Prescribing. "It says that the rules don't matter."
The penalties for such ethical lapses are not severe. The cancer research group, the AACR, warns authors who fill out disclosure forms for its journals that they face a three-year ban on publishing if they are found to have financial relationships that they did not disclose. But the ban is not included in the conflict-of-interest policy posted on its website, and the group said no author had ever been barred.
Many journals and professional societies do not check conflicts and simply require authors to correct the record.
Officials at the AACR, the American Society of Clinical Oncology and The New England Journal of Medicine said they were looking into Baselga's omissions after inquiries from The Times and ProPublica. The Lancet declined to say whether it would look into the matter.
Christine Hickey, a spokeswoman for Memorial Sloan Kettering, said that Baselga had properly informed the hospital of his outside industry work and that it was Baselga's responsibility to disclose such relationships to entities like medical journals. The cancer center, she said, "has a rigorous and comprehensive compliance program in place to promote honesty and objectivity in scientific research."
Asked if he planned to correct his disclosures, Baselga asked reporters what they would recommend. In a statement several days later, he said he would correct his conflict-of-interest reporting for 17 articles, including in The New England Journal of Medicine, the Lancet and the publication he edits, Cancer Discovery. He said that he did not believe disclosure was required for dozens of other articles detailing early stages of research.
"I have spent my career caring for cancer patients and bringing new therapies to the clinic with the goal of extending and saving lives," Baselga said in the statement. "While I have been inconsistent with disclosures and acknowledge that fact, that is a far cry from compromising my responsibilities as a physician, as a scientist and as a clinical leader."
The Corporate Imprint on Cancer Research
Baselga, 59, supervises clinical operations at Memorial Sloan Kettering, one of the nation's top cancer centers, and wields influence over the lives of patients and companies wishing to conduct trials there. He was paid more than $1.5 million in compensation by the cancer center in 2016, according to the hospital's latest available tax disclosures, but that does not include his consulting or board fees from outside companies.
Many top medical researchers have ties to the for-profit health care industry, and some overlap is seen as a good thing — after all, these are the companies charged with developing the drugs, medical devices and diagnostic tests of the future.
Baselga's relationship to industry is extensive. In addition to sitting on the board of Bristol-Myers Squibb, he is a director of Varian Medical Systems, which sells radiation equipment and for whom Memorial Sloan Kettering is a client.
In all, Baselga has served on the boards of at least six companies since 2013, positions that have required him to assume a fiduciary responsibility to protect the interests of those companies, even as he oversees the cancer center's medical operations.
The hospital and Baselga said steps had been taken to prevent him from having a say in any business between the cancer center and the companies on whose boards he sits.
The chief executive of Memorial Sloan Kettering, Dr. Craig B. Thompson, settled lawsuits several years ago that were filed by the University of Pennsylvania and an affiliated research center. They contended that he hid research conducted while he was at Penn to start a new company, Agios Pharmaceuticals, and did not share the earnings. Thompson disputed the allegations. He now sits on the board of Merck, which manufactures Keytruda, a blockbuster cancer therapy.
Hickey said the cancer center cannot fulfill its charitable mission without working with industry. "We encourage collaboration and are proud that our work has led to the approval of novel, life-saving cancer treatments for patients around the world," she said.
Some Disclosures Are Required; Others Aren't
After the scandals a decade ago over lack of disclosure, the federal government began requiring drug and device manufacturers to publicly disclose payments to doctors in 2013.
From August 2013 through 2017, Baselga received nearly $3.5 million from nine companies, according to the federal Open Payments database, which compiles disclosures filed by drug and device companies.
Baselga has disclosed in other forums investments and advisory roles in biotech start-ups, but he declined to provide a tally of financial interests in those firms. Companies that have not received approval from the Food and Drug Administration for their products — projects still in the testing phases — do not have to report payments they make to doctors.
Serving on boards can be lucrative. In 2017, Baselga received $260,000 in cash and stock awards to sit on Varian's board of directors, according to the company's corporate filings.
ProPublica and The Times analyzed Baselga's publications in medical journals since 2013, the year he joined Memorial Sloan Kettering. He failed to disclose any industry relationships in more than 100, or about 60 percent of the time, a figure that has increased with each passing year. Last year, he did not list any potential conflicts in 87 percent of the articles that he wrote or co-wrote.
Baselga compiled a color-coded list of his articles and offered a different interpretation. Sixty-two of the papers for which he did not disclose any potential conflict represented "conceptual, basic laboratory or translational work," and did not require one, he said. Questions could be raised about others, he said, but he added that most "had no clinical nor financial implications." That left the 17 papers he plans to correct.
Early-stage research often carries financial weight because it helps companies decide whether to move ahead with a product. In about two-thirds of Balsega's articles that lacked details of his industry ties, one or more of his co-authors listed theirs.
Baselga defended the articles, saying that "these are high-quality manuscripts reporting on important clinical trials that led to a better understanding of cancer treatments."
The guidelines enacted by most major medical journals and professional societies ask authors and presenters to list recent financial relationships that could pose a conflict.
But much of this reporting still relies on the honor system. A study in August in the journal JAMA Oncology found that one-third of authors in a sample of cancer trials did not report all payments from the studies' sponsors.
"We don't routinely check because we don't have those kind of resources," said Dr. Rita F. Redberg, the editor of JAMA Internal Medicine, who has been critical of the influence of industry on medical practice. "We rely on trust and integrity. It's kind of an assumed part of the professional relationship."
Jennifer Zeis, a spokeswoman for The New England Journal of Medicine, said in an email that it had now asked Baselga to amend his disclosures. She said the journal planned to overhaul its tracking of industry relationships.
The American Association for Cancer Research said it had begun an "extensive review" of the disclosure forms submitted by Baselga.
It said that it had never barred an author from publishing, and that "such an action would be necessary only in cases of egregious, consistent violations of the rules."
Among the most prominent relationships that Baselga has often failed to disclose is with the Swiss pharmaceutical giant Roche and its United States subsidiary Genentech.
In June 2017, at the annual meeting of the American Society of Clinical Oncology in Chicago, Baselga spoke at a Roche-sponsored investor event about study results that the company had been counting on to persuade oncologists to move patients from Herceptin — which was facing competition from cheaper alternatives — to a combination treatment involving Herceptin and a newer, more expensive drug, Perjeta.
The results were so underwhelming that Roche's stock fell 5 percent on the news. One analyst described the results as a "lead balloon," and an editorial in The New England Journal called it a "disappointment."
Baselga, however, told analysts that critiques were "weird" and "strange."
This June, at the same cancer conference, Baselga struck an upbeat note about the results of a Roche trial of the drug taselisib, saying in a blog post published on the cancer center website that the results were "incredibly exciting" while conceding the side effects from the drug were high.
That same day, Roche announced it was scrapping plans to develop the drug. The news was another disappointment involving the class of drugs called PI3K inhibitors, which is a major focus of Baselga's current research.
In neither case did Baselga reveal that his ties to Roche and Genentech went beyond serving as a trial investigator. In 2014, Roche acquired Seragon, a cancer research company in which Baselga had an ownership stake, for $725 million. Baselga received more than $3 million in 2014 and 2015 for his stake in the company, according to the federal Open Payments database.
From 2013 to 2017, Roche also paid Baselga more than $50,000 in consulting fees, according to the database.
These details were not includedin the conflict-of-interest statements that are required of all presenters at the American Society of Clinical Oncology conference, although he did disclose ownership interests and consulting relationships with several other companies in the prior two years.
ASCO said it would conduct an internal review of Baselga's disclosures and would refer the findings to a panel.
Baselga said that he played no role in the Seragon acquisition, and that he had cut ties with Roche since joining the board of a competitor, Bristol-Myers, in March. As for his presentations at the ASCO meetings in the last two years, he said he had also noted shortcomings in the studies.
The combination of Perjeta with Herceptin was later approved by the FDA for certain high-risk patients. As for taselisib, Baselga stands by his belief that the PI3K class of drugs will be an important target for fighting cancer.
Carolyn Dineen King, a senior U.S. Circuit Court judge, resigned from the St. Luke's board on May 30, two weeks after ProPublica and the Houston Chronicle detailed deaths and complications in the famed heart program.
This article first appeared September 04, 2018 on ProPublica.
A prominent federal judge quietly resigned from the board of directors at Baylor St. Luke's Medical Center this year after the Houston Chronicle and ProPublica detailed a high rate of patient deaths and unusual complications following heart transplants at the hospital.
Carolyn Dineen King, a senior U.S. Circuit Court judge, confirmed that she stepped down from the St. Luke's board on May 30, two weeks after the investigation was published. King joined the board in January 2014 and chaired the committee that oversees quality and patient safety at the hospital.
A reporter asked King, 80, if she quit because she hadn't been fully informed by the hospital about problems in the heart transplant program. She responded: "I don't want to talk about it any further than what you just laid out, what you've acquired. I don't really want to get into it."
In a follow-up email, King said it would inappropriate to discuss St. Luke's business since she no longer serves on the board.
On May 16, the Chronicle and ProPublica published the first in a series of stories about the famed heart program. In recent years, the stories revealed, the program performed an outsized number of transplants resulting in deaths or unusual complications while continuing to market itself based on its storied past. Several top physicians left the program after raising concerns, including a couple of cardiologists who started sending some of their patients to other hospitals for transplants.
In a written response, St. Luke's said King was the only board member who resigned this year. Marilyn Gerry, a hospital spokeswoman, said administrators took steps to "correct and improve" the heart transplant program during the past three years and kept board members informed of their progress.
"We shared periodic updates with the board and various committees over this time, and began providing additional updates and further details over the past year as board members wanted more information about our ongoing progress," Gerry wrote.
The hospital also noted that a special committee of the board, appointed after the ProPublica and Chronicle investigation was published, is focused on improving the heart transplant program and "committed to ensuring the high level of excellence that everyone envisions at Baylor St. Luke's."
Marc Shapiro, chairman of the St. Luke's board, praised King in a written statement and said he was pleased that she remains on the board of Baylor College of Medicine, which co-manages St. Luke's as part of a joint venture with the hospital.
"Judge King has made significant contributions to our hospital over many years," Shapiro wrote. "Our entire organization benefited enormously from her wisdom and insight."
Hospital leaders did not address the reasons for King's resignation in its responses to questions.
In the past, boards that govern nonprofit hospitals were primarily concerned with the financial health of their institutions. But increasingly, according to health policy experts, boards are taking a more active role in monitoring and improving the quality of care and patient safety.
Dr. Arnold Epstein, a professor of health policy and management at Harvard University, said it's essential that board members are fully informed about a hospital's performance. Epstein has conducted research that shows hospitals with boards that aggressively monitor outcomes and set goals to improve them score better in health care quality metrics.
"The board should be identifying areas of care in need of improvement and setting annual performance goals," Epstein said. "And, oh by the way, Mr. CEO, your salary is going to be partially dependent on how you perform on this."
King's resignation had not been disclosed publicly, and although many nonprofit hospitals list their board members online, St. Luke's does not. The hospital provided the list on Thursday after reporters asked for comment on King's resignation.
King, appointed to the U.S. Court of Appeals for the 5th Circuit in 1979, is a prominent figure in Houston, where she has volunteered for several educational and health care organizations. She was the first female chief judge of the 5th Circuit and was appointed by the late Chief Justice William Rehnquist to the executive committee of the Judicial Conference of the United States, which oversees the federal court system. She chaired that group from 2002 through 2005.
St. Luke's officials previously have said problems with the heart transplant program were confined to 2015, when seven out of 21 heart recipients died within a year of their transplants. But the program has struggled in other ways since then: Multiple heart transplant recipients have suffered unusual complications, including two who had major veins stitched closed during surgery, according to physicians and other health care professionals who spoke to ProPublica and the Chronicle. Another patient's heart transplant failed this year after operating-room equipment malfunctioned during a key stage of surgery.
On June 1, two days after King's resignation, St. Luke's administrators voluntarily suspended the heart transplant program to study what led to two additional patient deaths in May but then reopened it two weeks later, saying they had made policy and staff changes. Days later, the Centers for Medicare and Medicaid Services announced it would cut off federal funding to the program on Aug. 17 because the hospital failed to demonstrate it had done enough to improve outcomes.
Following the federal termination, St. Luke's is no longer allowed to bill Medicare and Medicaid for heart transplants, a move that could lead private insurance companies to follow suit. The deadline to appeal Medicare's decision is Sept. 14, but hospital administrators have not said if they plan to do so.
The program is continuing to treat patients, hospital officials said. As of Friday, 84 people were listed as awaiting heart transplants at St. Luke's.
The heart transplant program at Baylor St. Luke's Medical Center is set to lose federal funding today, a serious blow to a Houston hospital long regarded as one of the nation's best for cardiac surgery.
By Charles Ornstein, ProPublica, and Mike Hixenbaugh, Houston Chronicle
This article was originally published August 17, 2018, by ProPublica.
The Centers for Medicare and Medicaid Services announced in Junethat it would cut off funding for heart transplants this month after concluding that the hospital had not done enough to correct issues that led to a high rate of patient deaths in recent years. The federal action came weeks after an investigation by ProPublica and the Houston Chronicledetailed the depth of the problems and revealed that several physicians had left the program in recent years after raising concerns.
Barring a last-minute delay by the agency, which would be highly unusual, the hospital will no longer be allowed to bill Medicare and Medicaid for heart transplants, and experts say the termination could affect the hospital in more far-reaching ways.
With the federal sanction looming, some patients awaiting heart transplants at St. Luke's have transferred their care to neighboring Houston Methodist and Memorial Hermann hospitals, officials at both said; at least two patients have already received new hearts since switching to Methodist. Meanwhile, St. Luke's spokeswoman Marilyn Gerry said in an email that the hospital "is continuing to communicate with CMS about possible options" to maintain federal approval.
"We have taken steps to make sure all of the critically ill patients in our heart transplant program continue to receive the care they need," Gerry wrote. "We have advised all of our Medicare and Medicaid patients on the heart transplant wait list of their options. Many of them have chosen to continue their care at Baylor St. Luke's with the physicians and staff they have come to know."
Gerry downplayed the impact of federal termination, saying that it "only affects how Medicare pays for heart transplant costs" and that it won't affect patients in need of lung, liver or kidney transplants.
But experts say once Medicare refuses to cover heart transplants at a hospital, private insurance companies often follow suit. If that happens, most of the 87 patients on the program's heart waiting list would have to either pay out of pocket for their surgeries, transfer to another hospital or hope that St. Luke's is willing to perform the procedure at no cost.
The transplant program has remained open since Medicare announced its intentions, but it performed no heart transplants in June or July, an unusual gap for a program that historically has done about 40 each year. St. Luke's administrators suspended the program for two weeks in June to study what led to two patient deaths in May but then reopened it after saying they had made policy and staff changes.
St. Luke's officials declined to say if the program has performed any heart transplants in August.
Hospital leaders also would not say if they intend to formally appeal the termination or whether they will seek recertification from Medicare, a costly process that can sometimes take several months or years. The deadline to appeal to an administrative law judge is Sept. 14.
The federal termination could affect St. Luke's in a number of ways beyond heart transplants. For example, federal rules require hospitals to have a written agreement with a Medicare-approved heart transplant program before implanting mechanical heart pumps in Medicare patients who would eventually require a new heart — a common treatment known as "bridge-to-transplant." Without such an agreement, St. Luke's much-celebrated left ventricular assist device program could suffer.
In addition, private cardiologists might hesitate to send some advanced heart failure patients to a hospital that lacks a Medicare-approved transplant program. And St. Luke's, along with its academic partner Baylor College of Medicine, could have a more difficult time recruiting top physicians, fellows or residents to staff its heart failure program.
"This has far-reaching ramifications beyond just the heart transplant program," said Alexander Aussi, a San Antonio-based transplant consultant who has closely followed the situation at St. Luke's.
Losing Medicare is not unprecedented, but rarely has such a severe sanction been levied against a transplant program of St. Luke's prominence. Some of the world's first heart transplants were performed at the hospital in the 1960s and '70s. Since the heart transplant program was formally established in 1982, only a handful of hospitals in the nation have performed more. And, along with its research affiliate, the Texas Heart Institute, St. Luke's has been credited with numerous advancements in the development of mechanical heart pumps now routinely used to keep patients alive until they can receive a transplant.
"I hope they recover from this," Aussi said. "This is one of those marquee programs that's going to remain in the history books when it comes to innovation. ... We all have a vested interest in it succeeding."
Medicare first raised concerns about the heart transplant program during an inspection in December. At the time, an unidentified St. Luke's transplant physician told a CMS inspector that the hospital had hired a consultant to determine what led to poor outcomes in 2015. The physician "explained that issues were identified with the major issue being surgical technique with one of the heart transplant surgeons, who was no longer practicing," inspectors wrote.
St. Luke's officials have declined to say which surgeon was being blamed for poor outcomes.
In a more detailed written response to regulators a few weeks later, the hospital's CEO, Gay Nord, detailed actions the hospital was taking to improve outcomes. In 2015, Nord wrote, the hospital hired "an international leader in heart transplantation" as the heart program's new surgical director. The new surgeon, she wrote, had "led another renowned heart transplant program to national prominence."
The physician St. Luke's had hired, Dr. Jeffrey Morgan, came from Henry Ford Hospital in Detroit, whose heart program was smaller than St. Luke's. Morgan was not its director and had only been the lead surgeon on 18 heart transplants in the previous five years.
St. Luke's officials say the heart transplant program's one-year survival rate improved in 2016 and 2017 under Morgan's leadership. But multiple heart transplant recipients have suffered unusual complications since 2016, the ProPublica and Chronicle investigation found, including two who had major veins stitched closed during surgery, according to numerous sources. Another patient's heart transplant failed this year after operating-room equipment malfunctioned during a key stage of surgery.
Once Medicare cuts off funding, the program could face an uphill fight if the hospital wishes to regain federal approval, said Laura Aguiar, an Arizona-based transplant consultant who has spent years helping programs navigate regulations.
In most cases, Aguiar said, a program seeking Medicare approval must perform 10 transplants and follow those patients for a year to demonstrate it has the proper medical and administrative infrastructure in place to support a safe transplant program.
"The challenge is going to be finding 10 patients they can transplant who have coverage," Aguiar said, noting that Medicaid and most private insurance companies won't pay for heart transplants at programs that don't have Medicare approval. "Otherwise, the hospital will have to make a decision to absorb those costs."
From the Mayo Clinic to Harvard, sources don't always get the facts right about preeclampsia. Reached by ProPublica, some are making needed corrections.
This article first appeared August 14, 2018 on ProPublica.
Preeclampsia, a dangerous form of hypertension that can develop during pregnancy or in the days and weeks after childbirth, is one of the most common causes of maternal death and severe complications in the U.S. The large majority of deaths occur after delivery, often from strokes.
But you'd never know it from the incomplete, imprecise, outdated and sometimes misleading information published by some of the most trusted consumer health sites in the country.
Instead, you might come away with the impression that, as Harvard Health Publishing says, preeclampsia "occurs only during pregnancy."
From an article on the government-affiliated site MedlinePlus, you might conclude that the "cure" for preeclampsia is delivering the baby. Until this weekend, the Mayo Clinic's site said the same thing. In reality, said Eleni Tsigas, executive director of the Preeclampsia Foundation, even after delivery, "it can still take a while for the mother to get better, and some mothers get worse before they get better." If treatment is delayed because people believe the danger is in the past, mothers can die.
Preeclampsia has been back in the news, thanks to Beyoncé's Vogue interview discussing her recent experience with the condition. That's led to a spike in Google searches of symptoms, preventive measures and treatments. Many of those readers are going to health websites that regularly make Top 10 lists for trustworthiness, and journalists are linking to the same highly regarded sites in their stories. Yet the information on some of those sites — especially about the risks of preeclampsia in the postpartum period — has been "bad or misleading," Tsigas said, something she called "really disturbing."
"It can mean the difference between life and death," she added.
Preeclampsia affects 3 to 5 percent of expectant and new mothers in the U.S., up to 200,000 women a year, and it is responsible for 15 percent of premature births. No one knows what causes it, although the placenta is believed to play a role. As in Beyoncé's case, the risk factors include having twins, being black and being over 35. But it can strike any woman, usually after the 20th week of pregnancy, and it can quickly become a crisis. Around the world, preeclampsia kills about five women every hour. At least 60 percent of preeclampsia deaths are preventable, and patient education is an important part of the solution, experts say.
In affluent countries, the condition is highly treatable. Yet in the U.S., preeclampsia accounts for 7.4 percent of maternal deaths, according to the Centers for Disease Control and Prevention, killing more than 50 mothers a year — one reason the U.S. has the highest maternal mortality rate in the industrialized world. One of those women was Lauren Bloomstein, a neonatal intensive care nurse in New Jersey, whose 2011 death some 20 hours after giving birth was chronicled by ProPublica and NPR as part of our Lost Mothers project.
The greatest risk is to black mothers, who are more likely to enter pregnancy with chronic high blood pressure and to develop preeclampsia. They are more than twice as likely to die from the condition than white women, the CDC Foundation reported this year. Preeclampsia-related complications are the third-leading cause of maternal deaths among African-American women.
Leading Underlying Causes of Pregnancy-Related Deaths, by Race-Ethnicity
After reading reports about Beyoncé, ProPublica took a look at how top health sites discuss preeclampsia. We sent screenshots and links to Tsigas, one of the leading experts on the condition in the U.S., for review last week.
Virtually every site we asked her to look at contained some problematic language, Tsigas noted in her written comments. Her biggest area of concern: A number of sites flubbed how they explained postpartum preeclampsia — sometimes mentioning it only in passing, or sometimes failing to mention it entirely. In the case of the Mayo Clinic, the main overview article that had long been on the site had "no mention of postpartum anywhere," Tsigas wrote. The Mayo Clinic site did discuss post-birth preeclampsia in a separate article, but it didn't link to that information in its main overview, so it was easy to overlook.
Postpartum preeclampsia can be especially dangerous because the symptoms, including swelling, gastric problems and headaches, often mirror the discomforts of normal birth. Meanwhile, new moms are often too tired and overwhelmed to go to the doctor or the emergency room unless they are sure something is wrong. Accurate information about post-birth complications is essential, said Cynthia Gyamfi-Bannerman, a maternal-fetal medicine specialist and co-director of the Columbia University Preterm Birth Prevention Center in New York, "because in that period, women might not have access to a provider, and they will look up their symptoms online."
Tsigas also took issue with sites, including MedlinePlus and (until this weekend) the Mayo Clinic, for using a variation of this language: "The only cure for preeclampsia is delivery of your baby." This idea that the condition goes away after delivery is long-outdated, but — as ProPublica and NPR's reporting has shown — it continues to be all-too-prevalent among providers, including ER staff. The language may also reflect the concern among some medical professionals that if women don't believe their condition is serious, they will resist delivering before their due date or by cesarean section — and put themselves and their babies at risk.
"There's no question that delivery is often indicated, and sometimes quite urgently, to save the life of mother and/or baby," Tsigas wrote. But, she added, "No provider should tell a patient that ‘the cure for preeclampsia is delivery.''' Instead, she said, delivery should be seen as a "critical treatment" along with other measures, such as medication to reduce blood pressure and magnesium sulfate to prevent seizures and strokes. Describing delivery as a cure "lets everybody off the hook. Moms, their partners and even the providers all stop paying attention to mom's health concerns after she delivers her baby. … We need to continue to monitor mom until her blood pressure and other vital signs return to normal."
The Mayo Clinic updated its language over the weekend, saying it had "self-identified the need to refine its preeclampsia content" before ProPublica reached out last Thursday. "All content is reviewed by Mayo Clinic's subject matter experts for medical accuracy, relevance and to ensure a Mayo Clinic-wide interpretation of the best-available evidence from sources such as U.S. federal agencies and guidelines," Dr. Sandhya Pruthi, the Mayo Clinic website's chief medical editor, wrote to us on Friday. "All health information is reviewed on a scheduled, rolling basis, and any critical developments (e.g., FDA pulls drug from market) are processed swiftly to ensure that the content is accurate and relevant."
Before and After: Old Mayo Clinic Language
Left untreated, preeclampsia can lead to serious — even fatal — complications for both you and your baby. If you have preeclampsia, the only cure is delivery of your baby.
Updated Mayo Clinic Language
If you have preeclampsia, the only cure is delivery of your baby. Even after delivering the baby, it can still take a while for you to get better … Rarely, preeclampsia develops after delivery of a baby, a condition known as postpartum preeclampsia.
The Mayo Clinic also updated its language to note that black women have a higher risk of developing the condition. Two other respected sites, of the Cleveland Clinic and MedlinePlus, continue to omit this important fact. That doesn't surprise Monica McLemore, an assistant professor of nursing at the University of California, San Francisco, who studies racial disparities in infant and maternal outcomes. "A lot of the sites are designed by people who don't understand the importance of informing a variety of women about what their risks are," she said.
Victoria Vinci, a Cleveland Clinic spokesperson, said its site would add the risk for black mothers in the next regular update. "Our standard for updating our page articles is every three to four years. This one is coming up on that mark."
Incorrect information on MedlinePlus, which is published by the U.S. National Library of Medicine, is especially problematic because it carries the government's seal of approval. "Medline should be the gold standard," McLemore said.
Yet the site's main preeclampsia article "does not reflect the latest information," Tsigas wrote. In addition to the already-noted problems, she cited the article's suggestion that protein must be present in the urine for a preeclampsia diagnosis to be made. One of the mistakes providers often make is discounting spiking blood pressure and other symptoms because a protein test is inconclusive.
Nor, Tsigas said, is the information about treatment in line with current recommendations from the American College of Obstetricians and Gynecologists and other leading maternal health organizations. "The recommendations for bedrest and salt reduction aren't really evidence-based," Tsigas pointed out.
Medline Plus' Language
Treatment
The only way to cure preeclampsia is to deliver the baby.
Most often, at 37 weeks, your baby is developed enough to be healthy outside the womb.
As a result your provider may want your baby to be delivered so the preeclampsia does not get worse. You may get medicines to help trigger labor, or you may need a C-section.
If your baby is not fully developed and you have mild preeclampsia, the disease can often be managed at home until your baby has matured. The provider will recommend:
Bed rest, and lying on your left side most or all of the time
Drinking plenty of water
Eating less salt
Frequent doctor visits to make sure you and your baby are doing well
Medicines to lower your blood pressure (sometimes)
Medline's article comes from a company called A.D.A.M., part of the Georgia-based health care services conglomerate Ebix Inc., which also provides content to other health sites. "You raise some important points, in particular about postpartum preeclampsia," A.D.A.M.'s editorial director, Brenda Conaway, wrote in an email on Monday. "As it happens, this article" — last reviewed in May 2016 — "is currently in review as part of our editorial review process. I will be talking with the senior medical editor and our medical director about the article today, and we will update it to reflect any needed changes."
When reached by ProPublica, Harvard Health Publishing also agreed to make revisions. The problems with its preeclampsia write-up extend beyond the initial assertion that preeclampsia only occurs in pregnancy, Tsigas said. By focusing on eclampsia — seizures — as the main danger to mothers, it ignores the immediate risk of strokes caused by high blood pressure. Women with preeclampsia also have a much higher risk of heart attacks and strokes later in life.
The site's chief medical editor, Dr. Howard LeWine, said the current language that the condition "occurs only during pregnancy" would be quickly revised. He said the wording is "technically correct" — preeclampsia only occurs in women who've recently been pregnant, and even postpartum preeclampsia is believed to originate during pregnancy. But, he acknowledged, "it gives the wrong impression. It's misguiding people and will get changed."
Democratic lawmakers said they will investigate how three outsiders have been shaping policy and personnel at the Department of Veterans Affairs. A ProPublica investigation Tuesday revealed the vast influence of the trio, who often meet at President Donald Trump's Mar-a-Lago club.
Tim Walz, the ranking Democrat on the House Veterans' Affairs Committee, sent a letter to the agency's new secretary demanding that the VA hand over all records of contacts between agency officials and the three men, who are sometimes referred to as the "Mar-a-Lago Crowd."
"This situation reeks of corruption and cronyism," Walz (D-Minn.) said in a statement. "If these revelations prove true, and VA is being secretly run from the shadows of Mar-a-Lago by individuals with no accountability to taxpayers and who have never served in the United States military or government, then that would amount to an unprecedented, disturbing, and profoundly unacceptable betrayal of our nation's veterans."
The troika is led by Ike Perlmutter, the chairman of Marvel Entertainment who has long known Trump. Another is Bruce Moskowitz, a Palm Beach doctor who caters to the ultra-wealthy. The third is Marc Sherman, a lawyer who serves as an expert witness in white collar trials. While they lack relevant experience to veterans' health care, what they do have is the president's ear.
ProPublica's investigation, based on interviews with former officials and hundreds of documents obtained through the Freedom of Information Act, revealed that VA officials treated their directives as orders. Officials who didn't get along with the Mar-a-Lago Crowd were sidelined or removed.
The top Democrat on the Senate veterans committee, Jon Tester of Montana, also chimed in saying the VA should be listening to veterans, not politics insiders. "Any influence and supervision of taxpayer-funded VA personnel and programs by unelected, unaccountable and politically-motivated advisors is deeply concerning," Tester said in a statement.
Another member of the committee called for a hearing. "It is just astounding to me that this group of totally unaccountable, unelected and behind-the-scenes people can exert this kind of influence," said Sen. Mazie Hirono (D-Hawaii), in an interview on CNN.
The scrutiny comes at a sensitive time at the VA, where Robert Wilkie is serving his first full week as the new secretary. Wilkie has already run into resistance from the Mar-a-Lago Crowd's allies in the agency, according to people familiar with the situation.
Other Democrats voiced their outrage on Twitter:
This is a huge corruption scandal.
Trump gave power to make decisions at the VA - affecting every US veteran - to three men who are neither government officials nor vets.
Their only qualification: membership at Mar-A-Lago, for which they pay Trump.https://t.co/PQvOYRiuTE
Veterans deserve accountability and transparency in how decisions at the VA are being made. Decisions that will impact the care and resources they've earned. https://t.co/q5JgxxVPVD
The White House said the trio do not exercise any direct authority over the VA. In a statement, Perlmutter, Moskowitz and Sherman said their advice was always optional.
In his letter to Wilkie requesting documents, Rep. Walz raised particular concern about the instances in ProPublica's story where the Mar-a-Lago Crowd "may have used their influence for personal gain." He asked for records about former secretary David Shulkin's appearance at the New York Stock Exchange with Perlmutter's company, Marvel, and about Moskowitz's involving his son in an effort to get the VA and Apple to build an app.
The American Legion, the largest veterans service organization, also responded to the article by questioning the Mar-a-Lago Crowd's qualifications to advice Trump on veterans policies.
"We are not about to tell President Trump who he can or cannot take advice from, but we hope that he carefully considers the qualifications and motivations of those offering that advice when it comes to the treatment and wellbeing of America's veterans," National Commander Denise Rohan said in a statement on Twitter.
Last February, shortly after Peter O'Rourke became chief of staff for the Department of Veterans Affairs, he received an email from Bruce Moskowitz with his input on a new mental health initiative for the VA. "Received," O'Rourke replied. "I will begin a project plan and develop a timeline for action."
O'Rourke treated the email as an order, but Moskowitz is not his boss. In fact, he is not even a government official. Moskowitz is a Palm Beach doctor who helps wealthy people obtain high-service "concierge" medical care.
More to the point, he is one-third of an informal council that is exerting sweeping influence on the VA from Mar-a-Lago, President Donald Trump's private club in Palm Beach, Florida. The troika is led by Ike Perlmutter, the reclusive chairman of Marvel Entertainment, who is a longtime acquaintance of President Trump's. The third member is a lawyer named Marc Sherman. None of them has ever served in the U.S. military or government.
Yet from a thousand miles away, they have leaned on VA officials and steered policies affecting millions of Americans. They have remained hidden except to a few VA insiders, who have come to call them "the Mar-a-Lago Crowd."
Perlmutter, Moskowitz and Sherman declined to be interviewed and fielded questions through a crisis-communications consultant. In a statement, they downplayed their influence, insisting that nobody is obligated to act on their counsel. "At all times, we offered our help and advice on a voluntary basis, seeking nothing at all in return," they said. "While we were always willing to share our thoughts, we did not make or implement any type of policy, possess any authority over agency decisions, or direct government officials to take any actions… To the extent anyone thought our role was anything other than that, we don't believe it was the result of anything we said or did."
VA spokesman Curt Cashour did not answer specific questions but said a "broad range of input from individuals both inside and outside VA has helped us immensely over the last year and a half." White House spokeswoman Lindsay Walters also did not answer specific questions and said Perlmutter, Sherman and Moskowitz "have no direct influence over the Department of Veterans Affairs."
But hundreds of documents obtained through the Freedom of Information Act and interviews with former administration officials tell a different story — of a previously unknown triumvirate that hovered over public servants without any transparency, accountability or oversight. The Mar-a-Lago Crowd spoke with VA officials daily, the documents show, reviewing all manner of policy and personnel decisions. They prodded the VA to start new programs, and officials travelled to Mar-a-Lago at taxpayer expense to hear their views. "Everyone has to go down and kiss the ring," a former administration official said.
If the bureaucracy resists the trio's wishes, Perlmutter has a powerful ally: The President of the United States. Trump and Perlmutter regularly talk on the phone and dine together when the president visits Mar-a-Lago. "On any veterans issue, the first person the president calls is Ike," another former official said. Former administration officials say that VA leaders who were at odds with the Mar-A-Lago Crowd were pushed out or passed over. Included, those officials say, were the secretary (whose ethical lapses also played a role), deputy secretary, chief of staff, acting under secretary for health, deputy under secretary for health, chief information officer, and the director of electronic health records modernization.
At times, Perlmutter, Moskowitz and Sherman have created headaches for VA officials because of their failure to follow government rules and processes. In other cases, they used their influence in ways that could benefit their private interests. They say they never sought or received any financial gain for their advice to the VA.
The arrangement is without parallel in modern presidential history. The Federal Advisory Committee Act of 1972 provides a mechanism for agencies to consult panels of outside advisers, but such committees are subject to cost controls, public disclosure and government oversight. Other presidents have relied on unofficial "kitchen cabinets," but never before have outside advisers been so specifically assigned to one agency. During the transition, Trump handed out advisory roles to severalrichassociates, but they've all since faded away. The Mar-a-Lago Crowd, however, has deepened its involvement in the VA.
"On any veterans issue, the first person the president calls is Ike"
—former administration official
Perlmutter, 75, is painstakingly private — he reportedly wore a glasses-and-mustache disguise to the 2008 premiere of "Iron Man." One of the few public photographs of him was snapped on Dec. 28, 2016, through a window at Mar-a-Lago. Trump glares warily at the camera. Behind him, Perlmutter smiles knowingly, wearing sunglasses at night.
When Trump asked him for help putting a government together, Perlmutter offered to be an outside adviser, according to people familiar with the matter. Having fought for his native Israel in the 1967 war before he moved to the U.S. and became a citizen, Perlmutter chose veterans as his focus.
Perlmutter enlisted the assistance of his friends Sherman and Moskowitz. Moskowitz, 70, specializes in knowing the world's top medical expert for any ailment and arranging appointments for clients. He has connections at the country's top medical centers. Sherman, 63, has houses in West Palm Beach and suburban Baltimore and an office in Washington with the consulting firm Alvarez & Marsal. His legal work focuses on financial fraud, white collar investigations and damages disputes. His professional biography lists experience in eight industries, none of them related to health care or veterans.
Moskowitz and Sherman helped Perlmutter convene a council of health care executives on the day of the Trump-Perlmutter photograph, Dec. 28, 2016. Offering more private healthcare to vets was a signature promise of Trump's campaign, but at that point he hadn't decided who should lead an effort that would reverse the VA's longstanding practices.
A new name surfaced in that meeting: David Shulkin, who'd led the VA's health care division since 2015. Perlmutter then recommended Shulkin to Trump, according to a person familiar with his thinking. (Shulkin did not respond to requests for comment.)
Once nominated, Shulkin flew to Mar-a-Lago in early February 2017 to meet with Perlmutter, Sherman and Moskowitz. In a follow-up email a few days later, Moskowitz elaborated on the terms of their relationship. "We do not need to meet in person monthly, but meet face to face only when necessary," he wrote. "We will set up phone conference calls at a convenient time."
Shulkin responded diplomatically. "I know how busy all of you are and having you be there in person, and so present, was truly a gift," he wrote. "I found the time we spent, the focus that came out of our discussions, and the time we had with the President very meaningful."
It wasn't long before the Mar-a-Lago Crowd wore out their welcome with Shulkin. They advised him on how to do his job even though they sometimes seemed to lack a basic understanding of it. Just after their first meeting, Moskowitz emailed Shulkin again to say, "Congratulations i[t] was unanimous." Shulkin corrected him: "Bruce- this was not the confirmation vote- it was a committee vote- we still need a floor vote."
Perlmutter, Moskowitz and Sherman acted like board members pounding a CEO to turn around a struggling company, a former administration official said. In email after email, officials sought approval from the trio: for an agenda Shulkin was about to present to Trump for a research effort on suicide prevention and for a plan to recruit experts from academic medical centers. "Everything needs to be run by them," the first former official said, recalling the process. "They view themselves as making the decisions."
The Mar-a-Lago Crowd bombarded VA officials with demands, many of them inapt or unhelpful. On phone calls with VA officials, Perlmutter would bark at them to move faster, having no patience for bureaucratic explanations about why something has to be done a certain way or take a certain amount of time, former officials said. He issued orders in a thick, Israeli-accented English that can be hard to understand.
In one instance, Perlmutter alerted Shulkin to what he called "another real-life example of the issues our great veterans are suffering with when trying to work with the VA." The example came from Karen Donnelly, a real estate agent in Palm Beach who manages the tennis courts in the luxury community where Perlmutter lives. Donnelly's son was having trouble accessing his military medical records. After a month of dead ends, Donnelly said she saw Perlmutter on the tennis court and, knowing his connection to Trump, asked him for help. Perlmutter told her to email him the story because he's "trying to straighten things out" at the VA, she recalled. (Donnelly separately touched off a nasty legal dispute between Perlmutter and a neighbor, Canadian businessman Harold Peerenboom, who objected to her management of the tennis courts. In a lawsuit, Peerenboom accused Perlmutter of mounting a vicious hate mail campaign against him, which Perlmutter's lawyer denied.)
Perlmutter forwarded Donnelly's email to Shulkin, Moskowitz and Sherman. "I know we are making very good progress, but this is an excellent reminder that we are also still very far away from achieving our goals," Perlmutter wrote.
Shulkin had to explain that they were looking in the wrong place: Since the problem was with military service records, it lay with the Defense Department, not the VA.
Perlmutter, Moskowitz and Sherman defended their intervention, saying, "These were the types of stories of agency dysfunction and individual suffering that drove us to offer our volunteer experience in the first place — veterans who had been left behind by their government. These individual cases helped raise broader issues for government officials in a position to make changes, sometimes leading to assistance for one veteran, sometimes to broader reforms within the system."
Right after meeting Shulkin, Moskowitz connected him with his friend Michael Zinner, director of the Miami Cancer Institute and a member of the American College of Surgeons' board of regents. (Zinner declined to comment.) The conversation led to a plan for the American College of Surgeons to evaluate the surgery programs at several VA hospitals. The plan came very close to a formal announcement and contract, internal emails show, but stalled after Shulkin was fired, according to the organization's director, David Hoyt.
Besides advocating for friends' interests, some of the Mar-a-Lago Crowd's interventions served their own purposes. Starting in February 2017, Perlmutter convened a series of conference calls with executives at Johnson & Johnson, leading to the development of a public awareness campaign about veteran suicide. They planned to promote the campaign by ringing the closing bell at the New York Stock Exchange around the time of Veterans Day.
The event also turned into a promotional opportunity for Perlmutter's company. Executives from Marvel and its parent company, Disney, joined Johnson & Johnson as sponsors of the Veterans Day event at the stock exchange. Shulkin rang the closing bell standing near a preening and flexing Captain America, with Spider-Man waving from the trading pit, and Marvel swag distributed to some of the attendees. "Generally the VA secretary or defense secretary don't shill for companies," the leader of a veterans advocacy group said.
The VA was aware of the ethical questions this event raised because of Shulkin's relationship with Perlmutter. An aide to Shulkin sought ethics advice from the agency's lawyers about the appearance. In an email, the aide noted, "the Secretary is friends with the President of Marvel Comics, Mr. Ike Perlmutter, but he will not be in attendance." The VA redacted the lawyer's answer, and the agency's spokesman would not say whether the ethics official approved Shulkin's participation in the event.
Perlmutter did not answer specific questions about this episode. His joint statement with Moskowitz and Sherman said, "None of us has gained any financial benefit from this volunteer effort, nor was that ever a consideration for us."
Perlmutter also facilitated a series of conference calls with senior executives from Apple. VA officials were excited about working with the company, but it wasn't immediately obvious what they had to collaborate on.
As it turned out, Moskowitz wanted Apple and the VA to develop an app for veterans to find nearby medical services. Who did he bring in to advise them on the project? His son, Aaron, who had built a similar app. The proposal made Apple and VA officials uncomfortable, according to two people familiar with the matter, but Moskowitz's clout kept it alive for months. The VA finally killed the project because Moskowitz was the only one who supported it.
Moskowitz, in the joint statement, defended his son's involvement, calling him a "technical expert" who participated in a single phone call alongside others. "Any development efforts, had they occurred, would not have involved Aaron or any of us. There was no product of Dr. Moskowitz's or Aaron's that was promoted or recommended in any way during the call," the trio said. "Again, none of us, including Aaron, stood to receive any financial benefit from the matters discussed during the conversation — and any claims to the contrary are factually incorrect."
Moskowitz had more success pushing a different pet cause. He has spent years trying to start a national registry for medical devices, allowing patients to be notified of product recalls. Moskowitz set up the Biomedical Research and Education Foundation to encourage medical institutions to keep track of devices for their patients to address what he views as a dangerous hole in oversight across the medical profession. At one point, the foundation built a registry to collect data from doctors and patients. Moskowitz chaired the board, and Perlmutter's wife was also a member. Moskowitz's son earned $60,000 a year as the executive director, according to tax disclosures.
Moskowitz pushed the VA to pick up where he left off. He joined officials on weekly 7:30 a.m. conference calls in which officals discussed organizing a summit of experts on device registries and making a public commitment to creating one at the VA. In an email to Shulkin, the VA official in charge of the project referred to it as the "Bruce Moskowitz efforts."
When the summit arrived, on June 4, Moskowitz and his son did not attend. It's not clear what role they will have in setting up the VA's registry going forward — their foundation has shut down, according to its website, and Moskowitz's son said he's no longer involved. But in his opening remarks at the summit, Peter O'Rourke, then the acting secretary, offered a special thanks to "Dr. Bruce Moskowitz and Aaron Moskowitz of the Biomedical Research and Education Foundation" as "driving forces" behind it.
Over the course of 2017, there was growing tension within the Trump administration about how much the VA should rely on private medical care. During the campaign, Trump championed letting veterans see any doctor they choose, inside or outside the VA system. But Shulkin warned that such an approach was likely to result in poorer care at a higher cost. His preferred solution was integrating government-run VA care with a network of private providers.
In September 2017, the Mar-a-Lago Crowd weighed in on the side of expanding the use of the private sector. "We think that some of the VA hospitals are delivering some specialty healthcare when they shouldn't and when referrals to private facilities or other VA centers would be a better option," Perlmutter wrote in an email to Shulkin and other officials. "Our solution is to make use of academic medical centers and medical trade groups, both of whom have offered to send review teams to the VA hospitals to help this effort."
In other words, they proposed inviting private health care executives to tell the VA which services they should outsource to private providers like themselves. It was precisely the kind of fox-in-the-henhouse scenario that the VA's defenders had warned against for years. Shulkin delicately tried to hold off Perlmutter's proposal, saying the VA was already developing an in-house method of comparing its services to the private sector.
Shulkin also clashed with the Mar-a-Lago Crowd over how to improve the VA's electronic record-keeping software (the one episode involving the trio that has previously surfaced, in a report by Politico). The contract, with a company called Cerner, would cost more than $10 billion and take a decade to implement. But Moskowitz had used a different Cerner product and didn't like it. He complained that the software didn't offer voice recognition, even though newer versions of Cerner's product do. For months, the Mar-a-Lago Crowd pressured Shulkin to put the contract through additional vetting.
On Feb. 27, 2018, Shulkin flew to Mar-a-Lago — not to see Trump, who was back in Washington, but to meet with Perlmutter, Moskowitz and Sherman. The trip was supposed to close the deal on the Cerner contract, according to two people familiar with the meeting. By then, Shulkin's stature had been badly diminished by an ethics scandal, and he expected he didn't have much longer in the job, but he wanted to finish the Cerner deal first.
Shulkin brought O'Rourke, an ex-Trump campaign aide who stepped in as chief of staff after the ethics scandal led to the departure of Shulkin's top aide. O'Rourke took the opportunity to ally himself with the Mar-a-Lago Crowd. "It was an honor to meet you all yesterday," he wrote in a follow-up email. "I want to ensure that you have my VA and personal contact information." He then provided his personal cell phone number and email address. (Using personal email to conduct government business can flout federal records laws, as President Trump and his allies relentlessly noted in their attacks on Hillary Clinton during the 2016 campaign.) "Thank you for your support of the President, the VA, and me," O'Rourke wrote. (O'Rourke didn't answer requests for comment.)
Perlmutter welcomed the overture. "I feel confident that you will be a terrific asset moving forward to get things accomplished," he replied.
The Mar-a-Lago Crowd grew frustrated with Shulkin, feeling like he wasn't listening to them, and Perlmutter came to regret recommending Shulkin to Trump in the first place, according to people familiar with his thinking. That aligned them with political appointees in the VA and the White House who started to view Shulkin as out of step with the president's agenda.
One of these officials, senior adviser Camilo Sandoval, presented himself as Perlmutter's eyes and ears within the agency, two former officials said. For instance, in an email obtained by ProPublica, Sandoval kept tabs on the Apple project and reported back to Moskowitz and Sherman. "I will update the tracker, and please do let me know if this helps answers [sic] questions around Apple's efforts or if additional clarification is required," he wrote. Sandoval, who didn't answer requests for comment, knew Perlmutter because he worked on the campaign with Trump's son-in-law, Jared Kushner, who is also close with Perlmutter.
In December, White House adviser Jake Leinenkugel sent Sandoval a memo outlining a plan to upend the department's leadership. Leinenkugel would not say who asked him to write the memo. But it was clearly not intended for Sandoval alone, since it refers to him in the third person. Three people familiar with the situation said the memo was sent to Sandoval as a channel to Perlmutter. The spokeswoman for Perlmutter, Sherman and Moskowitz said they didn't know about the memo.
The memo recommended easing Shulkin out and relying on Perlmutter for help replacing him. "Put [Shulkin] on notice to exit after major legislation and key POTUS VA initiatives in place," the memo said. "Utilize outside team (Ike)." Although several factors contributed to Shulkin's downfall, including the ethics scandal and differences with the White House over legislation on buying private health care, three former officials said it was his friction with the Mar-a-Lago Crowd over the Cerner contract that ultimately did him in.
Perlmutter, Moskowitz and Sherman dispute that contention. "Any decisions of the agency or the president," they noted in their statement, "as well as the timing of any agency decisions, were independent of our contacts with the VA."
But it wasn't just Shulkin — all the officials that the Leinenkugel memo singled out for removal are now gone, replaced with allies of Perlmutter, Sherman and Moskowitz. The memo suggested that Sandoval take charge of the Office of Information and Technology, overseeing the implementation of the Cerner contract; he got the job in April. The memo proposed removing Deputy Secretary Tom Bowman; he left in June, and the post hasn't been filled. The memo floated Richard Stone for under secretary for health; he got the job on an acting basis in July. Leinenkugel himself took charge of a commission on mental health (the same topic Moskowitz had emailed O'Rourke about). O'Rourke, having hit it off with the Mar-a-Lago Crowd, became acting secretary in May.
Wilkie, who was sworn in on July 30, now faces a choice between asserting his own authority over the VA or taking cues from the Mar-a-Lago Crowd.
Trump initially nominated White House doctor Ronny Jackson to replace Shulkin, with Pentagon official Robert Wilkie filling in on a temporary basis. On Wilkie's first day at the VA, Sherman was waiting for him in his office, according to a calendar record.
Within a few weeks, Wilkie made a pilgrimage to Mar-a-Lago. He tacked it onto a trip to his native North Carolina, and O'Rourke caught up with him in Palm Beach. They visited a VA hospital and rehab facility, then headed to Mar-a-Lago to meet with Perlmutter, Moskowitz and Sherman, according to agency records.
The Mar-a-Lago Crowd gave Wilkie and O'Rourke rave reviews. "I am sure that I speak for the group, that both you and Peter astounded all of us on how quickly and accurately you assessed the key problems and more importantly the solutions that will be needed to finally move the VA in the right direction," Moskowitz told Wilkie in a follow-up email.
Perlmutter was similarly thrilled with the new regime. "For the first time in 1½ years we feel everyone is on the same page. Everybody 'gets it,'" he said in an email. "Again, please know we are available and want to help any possible way 24/7."
Wilkie replied that the honor was his. "Thank you again for taking time to see me," he wrote.
Soon after, Jackson's nomination imploded over allegations of misconduct as White House physician. (Jackson denied the allegations, and they're still being investigated.) At that point, Perlmutter's endorsement cleared the way for Trump to nominate Wilkie.
Wilkie, who was sworn in on July 30, now faces a choice between asserting his own authority over the VA or taking cues from the Mar-a-Lago Crowd. Wilkie reportedly wants to sideline O'Rourke and Sandoval and restock the agency leadership with his own people. But people familiar with the situation said the Mar-a-Lago Crowd's allies are pushing back on Wilkie's efforts to rein them in. As his predecessor learned the hard way, anyone who crosses the Mar-a-Lago Crowd does so at his own risk.