Defense Attorney Lies Under Oath In Sworn Filing to Protect Hospital's Health IT

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At my Aug. 7. 2012 post "Malpractice Attorney Puts ONC-Authorized Testing and Certification Bodies (ATCBs) at Risk of Litigation?" I wrote:

 ... I returned to the U.S. to find that the defense attorney for the hospital where my mother was severely injured, and then died as a result, is once again raising an absurd issue in objections to the medical malpractice Complaint that was refiled within the Statute of Limitations for technical reasons.   The President Judge of the county where the case is filed had dismissed this complaint (among many others) some time ago:

(ii) Plaintiffs Software Design Defect Claims are Preempted by the Federal HITECH Act

... To the extent Plaintiff attempts to bring a common law product liability claim against [name redacted] Hospital for required use of EMR software [see addendum below - ed.], such a claim is barred due to Federal Preemption of this area with the passage of the Health Information Technology for Economic and Clinical Health (HITECH) Act. 42 U.S.C. 201, 300, et seq.

Specifically, the design, manufacture, specification, certification and sale of EMR in the United States is a highly regulated industry under the jurisdiction of the Department of Health and Human Services (HHS). The HHS draws its statutory authority to design and certify EMR as safe and effective under the HITECH act as amended. Id.

The Supremacy Clause of the United States Constitution, article VI, clause 2, preempts any state law that conflicts with the exercise of federal power. Fid. Fed. Say. & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 102 S. Ct. 3014 (1982). “Pre-emption may be either express or implied, and ‘is compelled whether Congress’ command is explicitly stated in the statute’s language or implicitly contained in its structure and purpose.” Matter of Calun Elec. Power Co-op., Inc., 109 F.3d 248, 254 (5th Cir. 1997) citing Jones v. Rath Packing Co., 430 U.s. 519, 525 (1977).

In this case, to impose common law liability upon [name redacted] Hospital for using certified EHR technology, which was in compliance with federal law and regulations for Health Information Technology, would directly conflict with Congress’ statutory scheme for fostering and promoting the implementation and use of EHR 

I really don't think Congress intended HIT to maim and kill patients with impunity.  In any case, this assertion was thrown out in its entirety several months ago, but here it is again in a new set of objections.  I find its reappearance remarkable.  I also wonder if the industry is behind it.

What I didn't post is the reply to this nonsense that was presented to the court by Plaintiff (me), via Plaintiff's counsel after my analysis of this passage, in a Memorandum of Law to the court Dec. 5, 2011:

... HHS does not regulate the design, manufacture, specification, certification, and sale of EMRs or any other clinical information technology. The HITECH Act itself does not establish standards and certification criteria for health information technology, but instead establishes the HIT Standards Committee to implement such specifications and standards for certification. HITECH Act § 3003, 42 U.S.C. § 300jj-13.

The initial set of standards specifications and certification criteria were not published until July 28, 2010, approximately 2 months after Mrs. Silverstein entered [name redacted] Hospital. Health Information Technology: Initial Set of Standards, Implementation Specifications, and Certification Criteria for Electronic Health Record Technology, 75 Fed. Reg. 44589 (July 28, 2010). Therefore, it would have been impossible for [name redacted] Hospital’s EMR system “to be in compliance with federal law and regulations for Health Information Technology” during the time of Mrs. Silverstein’s admission.

These facts were filed with the Court and delivered to the defense on Dec. 5, 2011 regarding health IT certification.  An Affidavit/Certificate of Service to the defendants was also filed with the Response and Memorandum of Law as is customary, and are noted on the Prothontary website.  No "I didn't receive it" excuse is possible...

The facts about health IT "certification" are trivial to verify. 

As the hospital admission where my mother was injured, and the injury itself, were in May 2010, "using certified EHR technology in compliance with federal law and regulations for Health Information Technology" was not possible at that time.  (Not to mention the facilities' EHR's were not actually "certified" until December 2010 via the ONC database of certified systems.)

Thus, the defense attorney by re-issuing this claim in August 2012 (to the new judge overseeing the case re-filing) is now knowingly lying to the Court in sworn filings, in order to harass, cause unnecessary delays in litigation, and needlessly increase the cost of litigation while collecting hourly fees for production of frivolous and untrue assertions.

The attorney is also making a mockery of the court system in the locality where the case is being heard, and also insulting the judges' intelligence.

These are the lengths to which hospitals and defense attorneys seem to be willing to go in defense of health IT.  I find this remarkable (but not surprising).

It will be interesting to see how the judge responds to an attorney knowingly trying to blow smoke up his behind.

-- SS

Addendum:  Also pointed out in earlier filings was the fact that use of EMR's is not "required."   It seems the defense attorney, besides being a liar, has a thick skull.

-- SS

My Presentation to the Health Informatics Society Of Australia: "Critical Thinking on Building Trusted, Transformative Medical Information: Improving Health IT as the First Step"

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In early 2011 I was invited to present at the annual convention of the Health Informatics Society of Australia (HISA) by its CEO, Louise Schaper, PhD.  HISA was aware of my writings and thought a presentation at their conference would be of interest to the Australian informatics and healthcare governance community.

Dr. Schaper wrote:

From: Louise Schaper
Sent: Thursday, March 24, 2011 10:50 AM
To: Scot Silverstein
Subject: HIC invitation to deliver a keynote presentation

Hi Scot,

I trust this email finds you well and I hope spring is bringing you some warmer weather and cheer.

I wanted to let you know that the Health Informatics Conference committee met recently and expressed a high level of interest in having you deliver a keynote address at HIC and also to form part of a panel presentation. 

I know you may not be able to make a commitment to come to Australia in August, but I wanted to let you know what we would love to have you, if circumstances permit you being here.  I’m confident we could have your trip sponsored (providing you don’t mind spending some face-time with the sponsoring organisation) and generate some media coverage around your visit.

The preliminary program will be advertised in the next few weeks and at the moment I’m leaving a ‘spot’ for you in the hope that you may be able to join us.  I know you are in difficult and upsetting circumstances so please know that I’m not intending to add to any pressure – I just wanted to let you know that we would be honoured if you are able to deliver an address at HIC this year and I will keep a speaking spot reserved for you if you think you may be able to accept our invitation.

Thanks for your time Scot.  I look forward to hearing from you.

Kindest regards,

Louise

Sadly, the "difficult and upsetting circumstances" she mentioned were my involvement in caring for my mother, seriously injured in May 2010 in a healthcare information technology-related medical misadventure and, by this time, dying.

I was thus unable to attend.

My mother passed away June 6, 2011 of her injuries.

In January 2012, Dr. Schaper was gracious enough to re-invite me to the annual 2012 conference in Sydney.  I accepted.

I attended HIC 2012, held in the Darling Harbour Convention Centre in Sydney 30 July - 2 August 2012.

I enjoyed taking pictures like this with my trusty (and portable) Canon SX110 IS.  Click to enlarge.  More photos here.

My powerpoint slides for the presentation entitled "Critical Thinking on Building Trusted, Transformative Medical Information:  Improving Health IT as the First Step" are at this link.

Darling Harbour Convention Centre, Sydney, Australia. Click to enlarge.

Australia has embarked on a national Personally Controlled Electronic Health Record (PCEHR) project under the auspices of Nehta, the National E-Health Transition Authority.  I find this an interesting approach to national health IT; unlike the U.S., whose project is top-down (centrally controlled records), Australia seems to have learned from our mistakes and is initiating health IT as a bottom-up (patient-controlled) initiative.

At the conference last week, I delivered a keynote address on the theme of improving health IT as an essential step in leveraging the capabilities of the technology.

Being that I am anti-"bad IT" and pro-"good IT", implicit in my address was the issue of the technology's untrustworthiness in 2012, largely due to the unregulated free-for-all its market represents and the poor engineering that is the result.

I also participated in a Panel Discussion led by Australian investigative journalist and popular political TV program host Tony Jones.  Mr. Jones hosts the Australian Broadcasting Corporation's "Q&A - Adventures in Democracy."

Panel discussion moderated by Australian political commentator Tony Jones, who hosts the show "Q&A" on the Australian Broadcasting Corporation.  Click to enlarge.

I will highlight several key points I made in my keynote and on the panel:

• Critical thinking is essential at all times in healthcare ... or your patient's dead.
• Critical thinking is not mindless criticism; on the contrary, it is reflective, inquisitive, logical thinking that is focused on deciding what to believe or do.
• Health IT must be trusted by users and patients [and be free of major downsides] - as a primary step before HIT can optimally benefit healthcare 
• I pointed out I am not suggesting anything new and that, in fact, I am suggesting something old:  "First, do no harm."
• I pointed out the "revolutions" usually have downsides, and IT always produces winners...and losers (per the empirical research of Social Informatics). 

Me presenting my keynote, driving home the point that IT on its own won't "revolutionize" healthcare; it is a tool to facilitate the true enablers of healthcare - clinicians - a point that should never be forgotten.  Click to enlarge. From the excellent multimedia piece on the conference at this link.

I then posed a series of questions of great relevance to understanding health IT realities.  Click to enlarge:




  

 







I left it to the audience to answer these questions.

I then posed the question "Is health IT being done well?"

I provided links to various evidence that it was not, such as the National Research Council 2009 report on health IT; AMIA's report on its workshop on healthcare IT failure, the 2012 U.S. IOM report on safety, the 2012 U.S. NIST report on usability, work by Australian Professor Jon Patrick of U. Sydney on health IT defects, and other sources as aggregated at this link.

Again, I did not impose views on the audience.  I didn't need to, as that corpus speaks for itself.

I also clarified terminology that reduces essential caution, such as the terms "electronic medical record" (EMR) and "electronic health record" (EHR) - a source of endless, wasted contention on definitions of which is which - being anachronisms from an earlier age of IT.  I pointed out that in 2012 what these innocuous terms somewhat deceptively and disarmingly represent are in reality complex enterprise clinical resource management and clinician workflow control systems – where many, many things can go wrong.

"EHR":  an innocuous "file cabinet" for records, or something else entirely?  Click to enlarge.

I asked if case reports of health IT unintended consequences (UC’s) were “anecdotal” and to be played down, while studies of health IT benefits to date solid science.  I then asked if the reality might be that studies of health IT benefits to date were mostly anecdotal (e.g., in specialized settings; weak observational studies vs. randomized clinical trials) while reports of UC’s are risk management-relevant incident report “red flags” pointing to possible systemic problems.

I pointed out the common seller marketing memes of beneficence and deterministic efficacy, and asked if these were realistic.  I also pointed out the need for transparency about HIT risks, and the impediments to this transparency.

Finally, I indicated what was the likely problem affecting all countries involved in EHR projects: that the rigor, ethics and skepticism of medical science itself not applied in the domain of health IT.

I suggested a simple solution:  a paradigm shift in thinking about health IT as another medical device, that needed to be subject to the same methodologies and ethical considerations applicable for decades (or more) in the healthcare delivery sector such as medical devices, pharmaceuticals, and research (and other risk-prone industries e.g., aviation and automotive).

My goal was to provoke thinking about these issues, to circumvent blank, uncritical acceptance of industry and industry-supporter memes.

I believe I succeeded.  Feedback I received was that the audience, including government officials, found many new things to consider as they embark on their national health IT projects.

I also heard that some HIT seller representatives were squirming a bit.  That was not unexpected.  I was taking "control of their message" away from them.

University of Sydney Professor Jon Patrick presenting on computational linguistics.   Jon is the author of a treatise on health IT defects (at this link), mentioned numerous times on this blog.  Click to enlarge.

Finally, I had a question from the audience, from fellow blogger Matthew Holt of the Health Care Blog.  Matthew asked me a somewhat hostile question that I was well prepared for, expecting a question along these lines from the seller community, actually.  The question was preceded by a bit of a soliloquy of the "You're trying to stop innovation through regulation" type, with a tad of Merck/VIOXX ad hominem thrown in (I ran Merck Research Labs' Biomedical libraries and IT group in 2000-2003).

His question was along the lines of - you were at Merck; VIOXX was bad; health IT allowed discovery of the VIOXX problem by Kaiser several years before anyone else; you're trying to halt IT innovation via demanding regulation of the technology thus harming such capabilities and other innovations.

The audience was visibly unsettled.  Someone even hollered out their disapproval of the question.

My response was along the lines that:

• VIOXX was certainly not Merck at its best, but regulation didn't stop Merck from "revolutionizing" asthma and osteoporosis via Singulair and Fosamax;
• That I'm certainly not against innovation; I'm highly pro-innovation;
• That our definitions of "innovation" in medicine might differ, in that innovation without adherence to medical ethics is not really innovation. 

(I forgot to mention that I gave an invited presentation to Merck's Drug Surveillance department in 2006, PPT here, long after I was their employee, on the potential use of EHR data to detect drug adverse events sooner than traditional phase IV studies or ad-hoc reporting allowed.)

When I spoke of medical innovation requiring ethics, nearly the full audience at my keynote address - hundreds of people - broke out in applause.

•I knew at that point that my talk was a success.

This author with HISA CEO Louise Schaper , PhD. Click to enlarge.

More photos of my trip are here.

-- SS

Addendum:  Another added pleasure in my visit Down Under. As Australia and the U.S. respect each other's amateur radio licenses, I was able to operate my handheld radio as "KU3E portable Victor-Kilo." VK is the international radio prefix for Oz.  Contacting Australia from the U.S. is considered a "holy grail" of ham radio.  It was interesting to hear amateur radio "from the other end."

Yaesu VX-3 Multiband Transceiver

-- SS

Aug. 11, 2012 Addendum:

An excellent multimedia video of HIC 2012 produced as the conference proceeded has been posted on YouTube at http://www.youtube.com/watch?v=DZg_46wY0E0.  It was finished and shown immediately after the conference's conclusion.

-- SS

A Bonus for Bankruptcy? - KV Pharmaceutical Reveals CEO's Bonus, then Declares Bankruptcy

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The latest example of the disconnect between compensation for leaders of health care organizations and their and their organizations' performance comes from a report in the St Louis Business Journal. 

Executive Compensation and KV Pharmaceutical

Its essence was:

KV Pharmaceutical Co. President and CEO Gregory Divis Jr. earned $976,270 in the fiscal year ended March 31, more than double the $385,102 he was paid in fiscal 2011, according to a proxy statement the company filed Thursday with the Securities and Exchange Commission.

His 2012 earnings were comprised of a $638,750 salary, a $130,000 bonus, $204,189 in option awards and $3,331 in other compensation, which includes a $2,909 car allowance, a 401(k) match and group term life insurance.

The total pay for other top executives was as follows:

Treasurer and Chief Financial Officer Thomas McHugh earned $506,615 in fiscal 2012, including a $65,000 bonus. Hit total comp in fiscal 2011 was $320,950.
Vice President, General Counsel and Secretary Patrick Christmas earned $530,604 in fiscal 2012. He joined the company in June 2011.

Admittedly, compensation of just under $1 million a year does not seem that high for the CEO of a pharmaceutical company in this day and age. Furthermore, as noted in Forbes, Mr Divis' compensation is less than that of his predecessor:

who was interim ceo and president, received $1.25 million before Divis succeeded him, and so the ceo is now being compensated at a lower amount.

The Troubled History of the Company

However, first consider that the company was not exactly in the best financial health at the time Mr Divis was getting his pay, as per the St Louis Business Journal:

KV Pharmaceutical Co. officials said July 20 that the company has been notified by the New York Stock Exchange that it is below listing standard criteria due to the company’s average market capitalization being less than $50 million over a 30-day trading period and its stockholder’s equity being less than $50 million.

After years of missteps, mismanagement and mounting losses, KV Pharmaceutical’s ability to survive is in question. The company itself raised doubts as to its ability to continue as a going concern in its quarterly filing Feb. 9 with the Securities and Exchange Commission. [Note that this filing occurred during the same fiscal year in which the CEO received the compensation noted above - Ed.]

In fact, as we discussed here in 2010, a former KV Pharmaceutical CEO and Chairman is one of the very few for-profit health care corporate leaders who actually received personal punishment due to a US government prosecution. Former CEO and Chairman Marc Harmelin was banned from doing business with the US government for 20 years after a fraud prosecution that lead to "a KV subsidiary's conviction on criminal charges earlier this year for shipping oversize morphine tablets" per the St Louis Post-Dispatch.

The Failed Strategy to Get a License for a Previously Generic Drug, and Increase its Price by Ten Thousand Percent (10,000%)

Then consider the direction company leadership took after that setback.  As described in an August, 2012, St Louis Post-Dispatch article, the company's main strategy was based on a license to sell Makena, an injectable form of hydroxyprogesterone. Hydroxyprogesterone had first been approved in the 1950s. In 2003, a National Institute of Health funded study showed that injecting it reduced the risk of premature birth [Meis PJ, Klebanoff M, Thom E et al. Prevention of recurrent preterm delivery by 17 alpha-hydroxyprogesterone caproate. N Engl J Med 2003; 348: 2379. Link here.]. Somehow, with funding from KV Pharmaceutical, "the FDA granted the approval to Hologic, which presented the application and argued for the drug based on medical research sponsored by the National Institutes of Health." After that, while "KV neither invented nor patented Makena, but agreed to pay Hologic nearly $200 million for 'orphan drug' status – and seven years of market exclusivity – for the rights to sell the branded drug." I cannot figure out why either company should have been granted an exclusive right to sell this drug under these circumstances. Nonetheless, once KV Pharmaceutical obtained the rights,

Makena sparked a national controversy over its sky-high price – a 100-fold increase over the average cost – about $15 – for an already widely available non-branded version of the drug produced by compounding pharmacies.

Leading national medical organizations and advocacy groups, including the March of Dimes and two U.S. senators, publicly blasted the pricing.

On March 30, 2011, the FDA announced that it would not enforce KV’s market exclusivity because of concerns that the drug would be unaffordable to many women. Hours later, the federal Centers for Medicare and Medicaid Services indicated that states could purchase the compounded version, called 17P, from specialty pharmacies.

The resistance prompted KV executives to dramatically lower Makena’s cost, but the move failed to forestall the backlash. As a result, KV’s ambitious sales projections for its latest drug failed to materialize.

Bankruptcy

That sealed the company's fate, and the same article reported,

KV Pharmaceutical Co., once among the St. Louis region’s strongest public companies, now faces yet another survival struggle after filing for bankruptcy.

Summary: A Bonus for Bankruptcy

So a company that suffered a criminal conviction for selling morphine tables whose dose was twice what was on their label, whose former CEO was banned from the pharmaceutical industry, which based its survival on a scheme to game the regulations to allow it to sell a previous $15 drug for $1500, then paid its CEO nearly $1 million, including over $330,000 in cash bonus and stock options just before it filed for bankruptcy.  Note that the CEO "earned" that compensation over a time period during which the company revealed doubts that it could survive as a "going concern."

This is a simple, relatively small, but especially graphic example of how leaders of health care organizations are not simply overpaid, but seem to personally profit from their organizations' mismanagement, poor financial results, and last but not least, exploitation of patients. Describing these incentives as perverse seems euphemistic.

Economists seem to like to justify outsized executive compensation by citing shareholder value they create, realistically defined as short-term stock price (look here).  One could argue that companies that sell health care products or provide health care directly should measure performance in terms of effects on patients' and the public's health.  Putting this aside, however, in this case, the executives seemed to be receiving bonuses not based on shareholder value, or stock price, but for continuing a course that resulted in the complete destruction of shareholder value.  (Stock shares lose essentially all their value when a company goes bankrupt.) 

In this case, and in others we have discussed, executive compensation seems to be based on the ability of executives to control their own pay, which seems more like what economists like to call "rent-seeking," as defined by Wikipedia, gaining from "manipulating the social or political environment in which economic activities occur, rather than by creating new wealth." 

Clearly, as long as health care leaders can personally profit however bad their performance is, or even due to their poor performance, we can expect nothing other than worsening performance.  Health care will become continually more dysfunctional until true reform makes health care leaders accountable for their actions, and all their effects, on stockholders, but also on patients' and the public's health.

Old Mystery Solved? Former FDA Reviewer Speaks Out About Intimidation, Retaliation and Marginalizing of Safety

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At my Dec. 2005 post "Report: Life Science Manufacturers Adapt to Industry Transition" I wrote:

... The recognition of a gap in formally-trained medical informatics-trained personnel in the pharmaceutical industry [by Gartner Group] is welcome. For example, from my own experience:

I recall an interview I had last year with the head of the Drug Surveillance & Adverse Events department at Merck Research Labs in a rehire situation [after a 2003 layoff]. I came highly recommended by an Executive Director in the department, to whom I had shown my prior work. This included well-accepted, novel human-computer interaction designs I'd developed for use by busy biomedical researchers for a large clinical study in the Middle East, as well as my work modeling invasive cardiology and leading the development and implementation of a comprehensive information system to detect new device and treatment modality risks in a regional center performing more than 6,000 procedures/year. In addition, I'd worked with the wife of the Executive Director in years prior, when she ran the E.R. of the hospital where I was director of occupational medicine.

Despite all this in my favor, the Executive Director's boss, himself a former FDA adverse events official [a former deputy director of CDER’s office of drug safety, who'd recently moved to the pharma industry he once regulated - ed.], dismissed me in five minutes as I was showing him the cardiology project, saying flatly "we don't need a medical informatics person here." I had driven 80 miles to Rahway for this interview to save the executive a trip to Pennsylvania, where I was originally scheduled to come for the interview, since the executive's father was ill in the hospital. In an instance of profound social ineptness, my effort was not even acknowledged. Perhaps he was in a bad frame of mind, but the dismissal under the circumstances was all the more disappointing.

I recall this was one of the most puzzling hiring debacles I'd ever experienced, as all the senior people in his dept. had recommended he hire me - I was really only there for his approval and signoff - and the work I'd shown him had improved care, saved lives, and saved money.

I may not need to be puzzled any longer.  This story just appeared:

Former FDA Reviewer Speaks Out About Intimidation, Retaliation and Marginalizing of Safety
By Martha Rosenberg, Truthout
July 29, 2012

The Food and Drug Administration (FDA) is often accused of serving industry at the expense of consumers. But even FDA defenders are shocked by reports this week of an institutionalized FDA spying program on its own scientists, lawmakers, reporters and academics that included an enemies list of "actors" and collaborators

... Ronald Kavanagh [FDA drug reviewer from 1998 to 2008]:  ... In the Center for Drugs [Center for Drug Evaluation and Research or CDER], as in the Center for Devices, the honest employee fears the dishonest employee. There is also irrefutable evidence that managers at CDER have placed the nation at risk by corrupting the evaluation of drugs and by interfering with our ability to ensure the safety and efficacy of drug ... While I was at FDA, drug reviewers were clearly told not to question drug companies and that our job was to approve drugs.

Read the entire story at the link.  I won't cover it more here, except to say it's certainly possible to believe certain FDA officials don't want serious people around -- who in addition to being MD's can write serious software to detect drug and device problems -- whose work can get in the way of drug approvals.

-- SS

When Does Lavish Executive Compensation Become "Embezzlement?"

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A single article in the Miami Herald raises the question of when is excessive executive compensation in health care too excessive.  To set up the question, I will be quoting from the story in an order quite differently from how the story was presented.

Background

The story is about the executives of the Miami Beach Community Health Center, described thus:

Headquartered on Biscayne Boulevard in North Miami, the Miami Beach Community Health Center is one of the oldest and most well-respected public health clinics in Florida. It opened more than three decades ago, and now includes four locations, three on the Beach, including two sites that care for people with mental illness. The center employs more than 280 people, with a monthly payroll of around $1.2 million.

The health center’s annual budget is about $36 million — about one-third of which comes from private insurance, Medicaid, the state and federal health insurance for needy people, Medicare, the federal insurer for elders, and private payments.

The CEO's Compensation

Previous stories, and public records suggested that the Center's CEO, Kathryn Abbate, was very well compensated. First,

an October 2010 Miami Herald business story ..., relying on federal tax documents, reported Abbate’s compensation package as $824,000 in 2008. In the article, Abbate said the compensation package was inflated by cashed-out sick time, vacation time and a retirement account.

She did even better in subsequent years,

The Miami Beach Community Health Center’s federal tax report for 2010 indicates Abbate’s base salary was $261,165 — but includes an additional $956,584 in 'bonus and incentive' dollars that pushed her total compensation to more than $1.2 million. The center’s IRS disclosure for the prior year reported Abbate’s base salary as $970,532, and total compensation of $987,902. In 2008, Abbate’s total reported compensation was $824,686, records show.

The CEO got very generous compensation given the size of her organization.  This compensation was documented on forms the organization submitted to the IRS that were in the public domain.

However, as we have discussed many times before (look here), many leaders of health care organizations, including non-profit organizations, have been collecting very generous compensation.

The Role of the Board of Trustees

As we have discussed before, e.g., here, exceptional compensation for top hired managers is often justified by the governing boards, that is, boards of trustees or directors, to whom the hired managers nominally report.  These governing board members often seem to be working off a common set of "talking points." 

In this case, there was a difference. The Herald reported that the Centers board of trustees "never agreed to pay Abbate more than $300,000, [Center Chief Medical Officer Dr Mark] Rabinowitz said."

The board seemed totally unaware of what their organization was paying its CEO.

Rabinowitz and a health center spokeswoman, Alia Faraj-Johnson, said that board members they spoke to had not seen the [2010] newspaper story [about the CEO's 2008 compensation]until just recently, and acknowledged its content would have raised significant red flags.

'That would have tripped everybody’s light,' Rabinowitz said.

Why the board had never thought to look at the organization's own reports (990 forms) to the US Internal Revenue Service which detailed the executives' compensation, reports that were in the public domain, and are easily available online (look here), is unknown.

The article implied that the board was somehow not up to this task even though it has fiduciary responsibilities to oversee the top hired managers, oversee the overall budget, and try to maintain both the organization's mission and fiscal stability did not seem up to the task. The article noted,

board members remained unaware until last spring. Under federal law, at least half of the board members of federally subsidized health centers such as Miami Beach’s must be consumers of the clinic, and some of the clinic’s board members were simply ill-equipped to detect what the center calls a sophisticated financial crime.

The board members seemed to think that it was the job of the CEO's subordinates to keep tabs on her compensation,

'One of the sad things about this, regrettably, is that if the gatekeeper in this case, the chief financial officer, had done his job, a large portion of this would have been discovered a long time ago,' said Bill Dillon, a Tallahassee-based healthcare lawyer who is advising the center.

The Chief Financial Officer contended that he would not have been able to successfully blow the whistle:

[CFO Stanley] DeHart, who lives in Coral Springs, said he was aware of many of Abbate’s activities, but declined to alert the board of directors. 'The board of directors was very close to her, and I really thought they would not believe me,' DeHart said. 'They held her in very high esteem.'

DeHart and members of his staff 'discussed whistle-blowing,' he said, but they all agreed taking such an action was more likely to result in their firing than Abbate’s. 'I felt at the time, and I still feel, that I had no proof that the board of directors would accept.'

And, DeHart added, blame for the scandal should include outside auditors, who failed to raise any objections when Abbate wrote dozens of checks to herself for 'community development' — a department that regularly generated an enormous amount of 'abnormal activity.' DeHart said he told auditors he suspected something was amiss in the community development department.

'The external auditors had to have known about this,' DeHart said, 'because I laid it out to them in plain view. I did not hide anything.'

In fact, the CEO's total compensation, plus a variety of other payments she seemed to direct to herself, were not made clear until

May, after a routine audit required by federal funders turned up irregularities, said Mark Rabinowitz, an obstetrician and gynecologist who is the center’s chief medical officer. Abbate had written a check for $5,000 to herself, and cashed it, labeling the expenditure a 'community development' expense....

Only after that,

Calling the actions of their former administrator an 'outrageous betrayal of trust,' authorities with the Miami Beach Community Health Center are investigating what they call the theft of almost $7 million in taxpayer money by the center’s longtime chief executive.

Members of the health center’s board of directors fired Chief Executive Officer Kathryn Abbate, saying she diverted the nearly $7 million in money intended to provide healthcare for the needy to her personal use beginning in 2008.

Summary

So let me backtrack a bit. The board of a moderately big, non-profit community health center seemed to make no attempt to monitor the organization's finances, did not even review the organization's own filings with the US government, and therefore had no idea what they were paying their CEO. Nonetheless, they seemed to assume that the organization's finances would be kept in order by an executive who reported to that same CEO. When an audit ordered externally ordered revealed that the CEO was being paid much more than the board had assumed, they charged "embezzlement," again even though a good chunk of such payments were in the form of compensation reported to the US government.

The real distinction between this case and many other cases of huge executive compensation we have discussed is that in this one the board seemed to be trying to maintain "plausible deniability" of any knowledge of the CEO's compensation, even though supervising that compensation was its direct responsibility. In other cases, board seem fully aware of enormous compensation, but blithely dismissive of any concerns about it. 

So does this case could represent "embezzlement, " why were all the other cases of hired managers lavishly compensated not so regarded, even when their compensation was completely out of proportion to their known accomplishments, their organizations' financial performance, much less their organizations' fulfillment of their missions and positive impact on patients' and the public's health?  In many of those cases, the money paid out in executive compensation was also partially derived from taxpayers, and also was partially meant to "provide healthcare for the needy."

As I have said many times before,...  Health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research.


If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.