New Focus of Inquiry Into Bribes: Doctors .... NY Times March 22, 2008

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NY Times March 22, 2008 New Focus of Inquiry Into Bribes:

Doctors By BARNABY J. FEDER A

long-running federal investigation into the orthopedic device industry’s

suspected kickback payments to hip and knee surgeons now has the doctors in the

spotlight. Having reached settlements

with the five leading makers of artificial joints last year over the payments,

the government has been focusing on the many doctors who receive money as the

companies’ paid consultants. “We are going to

be looking at those soliciting kickbacks,” , the chief

counsel in the federal office that pursues civil complaints of Medicare fraud,

told an audience of hundreds of doctors, company representatives and investors

this month in San Francisco at the annual meeting of the American Academy of

Orthopedic Surgeons. The same message has

gone out to health care lawyers attending legal education seminars in recent

months and, directly from J. Christie

Jr., the United States attorney in Newark ,

who is overseeing the investigation. Executives say Mr. Christie has addressed

sales meetings of the five companies, which reached a settlement last fall to

avoid prosecution on charges they had routinely paid illegal kickbacks to

surgeons. Mr. Christie said

“ ‘I’ve dealt with the supply issue, now I need to deal with

the demand issue,’ ” recalled B. Lipes, the executive vice

president in charge of surgeon relationships at the device maker Stryker Corporation,

the first of the companies to cooperate in the investigation, which began in

2005. Although industry

executives say they have heard that some doctors have received subpoenas, none

have been publicly identified. “Our investigation is continuing into the

conduct of individual surgeons,” Drewniak, the spokesman for the

United States attorney’s office in

Newark , said Friday. Mr. Drewniak declined

to say whether any of the doctors had become targets of the investigation. The government has not

argued that any of the kickbacks led to unnecessary knee or hip surgery or

maltreatment of any patients. Nor has it established a direct link to higher

Medicare costs. Switching a patient from one company’s device to another

would not change the amount Medicare pays hospitals for an

implant. But kickbacks might

raise the overall cost of health care. Doctors can be convicted of violating

Medicare’s antifraud statutes simply for submitting a bill for a

procedure linked to a kickback, whether or not the procedure was necessary. Besides Stryker, the original targets of the investigation were Biomet; DePuy Orthopaedics, a

unit of the &

Company; & Nephew; and Zimmer Holdings. Those four

agreed to pay $310 million in fines to settle civil charges. In December, two

smaller competitors, the Medical Group and Exactech, received subpoenas, indicating that the government

is intent on making sure that the entire major joint business — the $6

billion core of the orthopedics industry — is playing on the same field. From the

government’s perspective, the investigation has already been successful.

Even before the settlements with the device makers, those companies and others

had sharply curbed entertainment, travel payments and other practices the

government regarded as possibly influencing doctor’s medical decisions.

And with the settlements, still tighter restrictions were forced on the

companies. To avoid prosecutions

that could have threatened the companies’ Medicare business — a

crushing blow in a segment of the health care industry where the average

patient is 68 years old — the device makers not only agreed to pay the

fines but to operate for 18 months under stricter federal scrutiny than

military contractors do. Mr. Christie’s

appointed monitors, overseers whom the companies pay monthly retainers plus up

to $895 an hour, screen every payment the companies make to doctors who help

with training or with developing new products. Each company is

required to develop and gain government approval of a “needs

assessment” detailing every task for which it will engage doctors this

year. The settlements also set a $500-an-hour ceiling for most consulting

agreements. In addition, all five

were required to disclose on their Web sites cash payments last year to each

doctor or medical group they dealt with, as well as compensation paid each of

them in the form of plane tickets, lodging, food and gifts. The companies halted

nearly all types of payments to doctors and many education programs while

completing the needs assessment, including previously pledged support for

groups like the American Academy of Orthopedic Surgeons. Stryker and

& Nephew say they have received final approval for their 2008 assessments.

Other companies are at various stages of getting their assessments approved. For all the

disclosures and scrutiny though, the details of the misconduct that attracted

the Justice Department’s attention remain murky. The companies were

allowed to deny any wrongdoing in the criminal and civil settlements they

negotiated. The four that signed so-called delayed prosecution agreements

— Biomet, DePuy, & Nephew and Zimmer — have been promised

that the criminal cases filed against them in September will be dropped a year

from now if they live up to compliance procedures in their agreements. No charges were filed

against Stryker, the fifth company, because it was the first to cooperate in

the investigation. But Stryker accepted the same restrictions on its conduct

and was also assigned an independent monitor for 18 months. Stryker’s

potential civil liabilities were left unresolved. The five

companies’ payment disclosure lists say nothing about what the doctors on

them did to receive their money. As a result, there is no apparent way to

distinguish potentially questionable kickback deals amid a sea of service

contracts, licensing agreements and research grants that the government agrees

are legitimate. The American

Academy of

Orthopedic Surgeons has said that the

listings raise unfair suspicions and that the companies should provide more

detailed breakdowns of the payments. “A lot of this

has been irresponsible,” Dr. M. Coon, a surgeon in Red Bluff,

Calif. , said of the government’s investigation

during a break at the recent meeting in San

Francisco . Dr. Coon said the broad

reach of the government’s action had “thrown up in the air”

hundreds of company-surgeon relationships. “Who knows how it will come

out?” said Dr. Coon, a pioneer in minimally invasive knee surgery, who

has consulted principally for Zimmer, the largest hip and knee company. Dr. Coon declined to

say how much he was owed after Zimmer halted payments in October.

Zimmer’s disclosure said it paid him $158,420 last year — in

addition to $1,944 for air travel, $2,498 for lodging, $1,034 for meals, $440

for ground transportation and $10 for a gift. Identifying any rogue

surgeons could be politically sensitive for Mr. Christie, who has been reported

to have aspirations to run for governor of

New Jersey . He stirred controversy in

Congress for appointing his previous boss, the former

United States attorney general, Ashcroft, to the lucrative

job of monitoring the activities of Zimmer, the largest implant company. “They will

probably find somebody to indict, but people are viewing the attorney

general’s office with a lot of distrust,” said Dr. H.

Schmidt, an orthopedist in Fort Worth . As indicated by Dr.

Coon’s work with Zimmer, financial relationships between orthopedics

companies and their customers are among the most complicated in health care. In

contrast to drugs, which are typically developed in company laboratories, many

orthopedic devices and related tools originate from inventions by doctors, who

often retain a financial stake in their market success. Once companies begin

to develop the devices, leading doctors are hired as consultants to help modify

the implants and related hardware. When the products are finally brought to

market, companies also hire many of the same opinion leaders to train other

doctors and sales representatives how to use them. As a result, Mr.

Christie has had no problem finding large sums of money — in some cases,

more than $1 million annually — flowing from companies to doctors who use

their devices. But doctors say it is far too simplistic to conclude, as Mr.

Christie claimed last fall, that “many orthopedic surgeons in this

country made decisions predicated on how much money they could make —

choosing which device to implant by going to the highest bidder.” For the most part, the

hip and knee joints sold by the major companies are similar in performance, but

getting surgeons to switch is a lot more difficult than persuading an internist

to prescribe a prescription drug rather than aspirin. Familiarity with a

joint and the tools to put it in place may be the single biggest factor in a

surgeon’s success with a patient, according to Dr. P. Grelsamer, a

Brooklyn orthopedist and author of books on

hip and knee reconstruction. “Surgeons are by

and large reluctant to jump from one horse to another,” Dr. Grelsamer

said. As a result, surgeons

would be looking to whatever cases might be brought against their peers to clarify

the lines the government wants drawn between unacceptable and acceptable

relationships with the device industry. Mr. Christie and Mr.

, the top lawyer in the Office of the Inspector General in the Department

of Health and Human Services, will in turn face tough choices on how many

cases to pursue. Complaints against individual doctors rarely have the impact

on overall medical practice that cases against large companies or groups of

companies do, nor do they produce large financial compensation for the

government.

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