An unprecedented Oregon Department of Justice investigation has stepped into an ethical minefield with national implications: When should patients know about a doctor's payments from companies whose products they use, and whose responsibility is it to tell them?
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Biotronik, a heart implant manufacturer, has its North American headquarters in Lake Oswego. Pictured is the firm's latest implantable defibrillator, introduced earlier this year.
Motoya Nakamura/The Oregonian
The state recently concluded a court case against two Salem doctors who put heart implants into patients without telling them that a manufacturer's training program put a sales representative into the operating room. The DOJ accused the doctors in the civil case of having "misrepresented" their services as "for the exclusive benefit of the patient" and "concealing" from patients payments that created a potential "incentive" to use Biotronik implants -- defibrillators and pacemakers. The surgeons received between $400 and $1,250 for implant surgeries when a trainee was present.
Drug and device companies face increasing scrutiny over their payments to doctors, including speaking and consulting fees. But several experts say this is the first time doctors have faced state enforcement action for failing to tell patients about "actual or potential" conflicts that "should have been disclosed." Experts say the Oregon case sends a message -- but local providers are still trying to figure out what that message means.
Under the Aug. 1 settlement with the Justice Department, cardiologists Matthew Fedor and Kyong Turk admitted no wrongdoing but agreed to pay $25,000 each and inform future patients of any payments from a drug or device maker in connection with their services to that patient and when admitting sales representative trainees to the operating room.
Turk, retired in Hawaii, did not respond to requests for comment. Fedor, in a statement, said he didn't think the law called for the disclosures to patients. "I hold the well-being of my patients in the highest regard and believe that my decisions regarding their care were and are appropriate."
At Biotronik's U.S. headquarters in Lake Oswego, president Jake Langer called the state's case unfair and detrimental to good health care.
"We are really clean when it comes to our relationships with physicians," he said. He blamed the first-of-its-kind case on overzealous prosecutors trying "to set up a new law" without going to the Legislature.
Portland cardiologist Sandra Lewis, past president of the American College of Cardiology, Oregon chapter, said her group is aware of this case, and it has "vast implications" for doctors and patient disclosures.
"Where are the lines on this? What is the doctor's responsibility? I think there may be some unintended consequences from this."
Susan Chimonas of Columbia University's Center on Medicine as a Profession said industry pay to doctors increasingly is online, but doctors should also disclose them to patients directly.
"A growing body of scientific evidence shows that even small industry payments can shape physicians' treatment decisions," she said. "If physicians want to maintain patients' trust, then transparency is a minimum ethical requirement."
Ties that bind
Normally court records and proceedings are public, but in this case the judge imposed a protective seal over some records after Biotronik argued many details constituted trade secrets that would help competitors. Many still remain under seal. But the state DOJ released documents with limited information. And a second batch of court records from Marion County Circuit Court late last week adds even more details about the training of Biotronik sales representatives, who during surgeries help physicians program, calibrate and test the new implant. It's standard procedure for representatives of implant-makers to assist in this way.
The public file reveals the findings of the DOJ investigation, based on company documents and sworn depositions:
Fedor earned more than $131,000 between 2007 and 2011 for training Biotronik employees during 257 implant surgeries that trained Biotronik employees; Turk earned more than $97,000 between 2006 and 2009 for 126 surgery trainings.
Biotronik paid from $400 to $1,250 per surgery training; insurance paid $400 to $1,530 for the same surgeries.
To illustrate Fedor's "close financial relationship" with Biotronik, DOJ cited "expensive meals, wine and cocktails for him, his wife, his colleague, and his employees. On one occasion, Biotronik paid ... for a dinner gathering for defendant's ... nurse's day celebration – a celebration attended by defendants, his partners and staff, and Biotronik sales representatives -- and also paid defendant $1,500 to speak at the celebration. On another occasion, Biotronik helped defendant promote his practice by paying the cost of dinner talks with doctors who might refer him (to) patients."
DOJ contended the training program "incentivizes" doctors to select Biotronik "to maximize the number of training opportunities." A Biotronik employee told DOJ that "on at least one occasion, (Turk) pressured him about the absence of a trainee at an implant procedure, asking 'No trainee today?' "
Competitive edge
Sales of heart implants have boomed over the last decade, and Biotronik, based in Germany, has gained ground on its three larger competitors. Several implant-makers have faced scrutiny over relations with physicians who use their products.
Court documents show the state DOJ launched its investigation after The New York Times in 2011 reported Biotronik's marketing practices were under federal investigation. Asked about the federal case, Biotronik said it can't comment on ongoing investigations that are under seal.
In Oregon, DOJ wanted to know if state laws were broken. Based on information from Biotronik, DOJ accused Fedor and Turk of violating the state's Unlawful Trade Practices Act, which "requires open disclosure of information when dealing with consumers."
Biotronik's Langer said the company felt bad the two cardiologists became embroiled in litigation for helping the company, so Biotronik moved to support them by blocking release of the state's initial complaints. He said it was unfair to single them out when pharmaceutical and medical device companies have paid hundreds of other doctors in Oregon.
He said the company was told it was cleared of wrongdoing and the investigation related to Biotronik was closed.
But the DOJ last week repeated that the investigation of Biotronik is open.
As far as whether the doctors should have informed the patients of the training program, Biotronik provided The Oregonian with an affidavit from Jonathan Moreno, a prominent University of Pennsylvania bioethics expert. He said there was no legal nor ethical reason to inform the patients of the payments and no basis for the state's allegations against Turk and Fedor.
"No legislative or regulatory body has proposed, much less implemented, a requirement that doctors make the kinds of disclosures the state of Oregon seeks to impose on Drs. Fedor and Turk," he added.
Dr. Carl Elliott, a professor at the University of Minnesota Center for Bioethics doesn't agree with Moreno's analysis of when payments should be disclosed, saying the payments create a potential conflict of interest. "You don't need to be an ethicist to see that it's wrong to take the money and hide that fact from your patients."
DOJ, for its part, says the case broke new legal ground. “We're proud of it,” spokesman Jeff Manning said. “We think it's good for consumers that this kind of disclosure be made.”
The biggest hospitals in Oregon don't require doctors to tell patients of payments from device or drug makers.
Lewis Low, Legacy Health's Chief Medical Officer, said he hasn't read case documents yet, but he expects the hospital system will get a legal opinion on what it means.
Oregon Health & Science University said it needs more time to look at the case.
A Salem Health spokesperson said doctors generally should be informing patients of outside payments and the health system plans to adopt a policy to make sure that happens. "Our board wants to have a policy to ensure that patients are fully informed of any relationships between physicians and drug and device manufacturers," said Sherryll Hoar.
Biotronik's Langer said he welcomes a federal law called the Sunshine Act that will make such payments public on a government website starting late next year. But he notes that health care is full of hidden incentives such as hospital profit-sharing with doctors: Should all incentives be disclosed to patients? He said Biotronik asked DOJ precisely what needs to be disclosed and the response was, "We don't know exactly where the limits are."
DOJ said it does not recall this conversation.
Sitting at a table at the firm's main building in Lake Oswego, Langer pointed to the next room. "I have 20 people in that room waiting to be trained. Where do I send them? Not to Oregon. Maybe Brazil."
-- Nick Budnick
Full statement from Matthew Fedor
On August 2, 2013, a Stipulated General Judgment was filed with Marion County Circuit Court based on allegations by the Oregon Department of Justice (DOJ) that I violated the Oregon Unfair Trade Practices Act (UTPA) by failing to give certain notifications to patients. The Stipulated General Judgment was not an admission of violation of the UTPA, and I maintain that my conduct was not a violation of law. My reason for settling was a financial decision to avoid the cost of protracted litigation with the State of Oregon.
As part of the terms of the Stipulated General Judgment, I have agreed to make certain notices to patients on a going-forward basis. The requirement to give these notices is a function of the settlement not the UTPA. To my knowledge, this is the first time a consumer protection statute has been applied to require the type of disclosures required of me in this case. Throughout the dealing with the DOJ, I maintained that, to my knowledge, the disclosures sought were not required by law and if the DOJ wanted to effect a change in this area, the proper and most effective way to do such would be through legislation or the rule making process in which the interests of all parties involved, including patients and physicians, could be considered. The DOJ declined such an approach.
The DOJ did not allege that the selection of any device was improper nor that the care provided my patents was substandard in any manner. I hold the well-being of my patients in the highest regard and believe that my decisions regarding their care were and are appropriate.
Any other questions may be directed to my attorneys, Michael Crew or Brian Parrott at Cooney & Crew, LLP.
View full size
Biotronik, a heart implant manufacturer, has its North American headquarters in Lake Oswego. Pictured is the firm's latest implantable defibrillator, introduced earlier this year.
Motoya Nakamura/The Oregonian
The state recently concluded a court case against two Salem doctors who put heart implants into patients without telling them that a manufacturer's training program put a sales representative into the operating room. The DOJ accused the doctors in the civil case of having "misrepresented" their services as "for the exclusive benefit of the patient" and "concealing" from patients payments that created a potential "incentive" to use Biotronik implants -- defibrillators and pacemakers. The surgeons received between $400 and $1,250 for implant surgeries when a trainee was present.
Drug and device companies face increasing scrutiny over their payments to doctors, including speaking and consulting fees. But several experts say this is the first time doctors have faced state enforcement action for failing to tell patients about "actual or potential" conflicts that "should have been disclosed." Experts say the Oregon case sends a message -- but local providers are still trying to figure out what that message means.
Under the Aug. 1 settlement with the Justice Department, cardiologists Matthew Fedor and Kyong Turk admitted no wrongdoing but agreed to pay $25,000 each and inform future patients of any payments from a drug or device maker in connection with their services to that patient and when admitting sales representative trainees to the operating room.
Turk, retired in Hawaii, did not respond to requests for comment. Fedor, in a statement, said he didn't think the law called for the disclosures to patients. "I hold the well-being of my patients in the highest regard and believe that my decisions regarding their care were and are appropriate."
At Biotronik's U.S. headquarters in Lake Oswego, president Jake Langer called the state's case unfair and detrimental to good health care.
"We are really clean when it comes to our relationships with physicians," he said. He blamed the first-of-its-kind case on overzealous prosecutors trying "to set up a new law" without going to the Legislature.
Portland cardiologist Sandra Lewis, past president of the American College of Cardiology, Oregon chapter, said her group is aware of this case, and it has "vast implications" for doctors and patient disclosures.
"Where are the lines on this? What is the doctor's responsibility? I think there may be some unintended consequences from this."
Susan Chimonas of Columbia University's Center on Medicine as a Profession said industry pay to doctors increasingly is online, but doctors should also disclose them to patients directly.
"A growing body of scientific evidence shows that even small industry payments can shape physicians' treatment decisions," she said. "If physicians want to maintain patients' trust, then transparency is a minimum ethical requirement."
Ties that bind
Normally court records and proceedings are public, but in this case the judge imposed a protective seal over some records after Biotronik argued many details constituted trade secrets that would help competitors. Many still remain under seal. But the state DOJ released documents with limited information. And a second batch of court records from Marion County Circuit Court late last week adds even more details about the training of Biotronik sales representatives, who during surgeries help physicians program, calibrate and test the new implant. It's standard procedure for representatives of implant-makers to assist in this way.
The public file reveals the findings of the DOJ investigation, based on company documents and sworn depositions:
Fedor earned more than $131,000 between 2007 and 2011 for training Biotronik employees during 257 implant surgeries that trained Biotronik employees; Turk earned more than $97,000 between 2006 and 2009 for 126 surgery trainings.
Biotronik paid from $400 to $1,250 per surgery training; insurance paid $400 to $1,530 for the same surgeries.
To illustrate Fedor's "close financial relationship" with Biotronik, DOJ cited "expensive meals, wine and cocktails for him, his wife, his colleague, and his employees. On one occasion, Biotronik paid ... for a dinner gathering for defendant's ... nurse's day celebration – a celebration attended by defendants, his partners and staff, and Biotronik sales representatives -- and also paid defendant $1,500 to speak at the celebration. On another occasion, Biotronik helped defendant promote his practice by paying the cost of dinner talks with doctors who might refer him (to) patients."
DOJ contended the training program "incentivizes" doctors to select Biotronik "to maximize the number of training opportunities." A Biotronik employee told DOJ that "on at least one occasion, (Turk) pressured him about the absence of a trainee at an implant procedure, asking 'No trainee today?' "
Competitive edge
Sales of heart implants have boomed over the last decade, and Biotronik, based in Germany, has gained ground on its three larger competitors. Several implant-makers have faced scrutiny over relations with physicians who use their products.
Court documents show the state DOJ launched its investigation after The New York Times in 2011 reported Biotronik's marketing practices were under federal investigation. Asked about the federal case, Biotronik said it can't comment on ongoing investigations that are under seal.
In Oregon, DOJ wanted to know if state laws were broken. Based on information from Biotronik, DOJ accused Fedor and Turk of violating the state's Unlawful Trade Practices Act, which "requires open disclosure of information when dealing with consumers."
Biotronik's Langer said the company felt bad the two cardiologists became embroiled in litigation for helping the company, so Biotronik moved to support them by blocking release of the state's initial complaints. He said it was unfair to single them out when pharmaceutical and medical device companies have paid hundreds of other doctors in Oregon.
He said the company was told it was cleared of wrongdoing and the investigation related to Biotronik was closed.
But the DOJ last week repeated that the investigation of Biotronik is open.
As far as whether the doctors should have informed the patients of the training program, Biotronik provided The Oregonian with an affidavit from Jonathan Moreno, a prominent University of Pennsylvania bioethics expert. He said there was no legal nor ethical reason to inform the patients of the payments and no basis for the state's allegations against Turk and Fedor.
"No legislative or regulatory body has proposed, much less implemented, a requirement that doctors make the kinds of disclosures the state of Oregon seeks to impose on Drs. Fedor and Turk," he added.
Dr. Carl Elliott, a professor at the University of Minnesota Center for Bioethics doesn't agree with Moreno's analysis of when payments should be disclosed, saying the payments create a potential conflict of interest. "You don't need to be an ethicist to see that it's wrong to take the money and hide that fact from your patients."
DOJ, for its part, says the case broke new legal ground. “We're proud of it,” spokesman Jeff Manning said. “We think it's good for consumers that this kind of disclosure be made.”
The biggest hospitals in Oregon don't require doctors to tell patients of payments from device or drug makers.
Lewis Low, Legacy Health's Chief Medical Officer, said he hasn't read case documents yet, but he expects the hospital system will get a legal opinion on what it means.
Oregon Health & Science University said it needs more time to look at the case.
A Salem Health spokesperson said doctors generally should be informing patients of outside payments and the health system plans to adopt a policy to make sure that happens. "Our board wants to have a policy to ensure that patients are fully informed of any relationships between physicians and drug and device manufacturers," said Sherryll Hoar.
Biotronik's Langer said he welcomes a federal law called the Sunshine Act that will make such payments public on a government website starting late next year. But he notes that health care is full of hidden incentives such as hospital profit-sharing with doctors: Should all incentives be disclosed to patients? He said Biotronik asked DOJ precisely what needs to be disclosed and the response was, "We don't know exactly where the limits are."
DOJ said it does not recall this conversation.
Sitting at a table at the firm's main building in Lake Oswego, Langer pointed to the next room. "I have 20 people in that room waiting to be trained. Where do I send them? Not to Oregon. Maybe Brazil."
-- Nick Budnick
Full statement from Matthew Fedor
On August 2, 2013, a Stipulated General Judgment was filed with Marion County Circuit Court based on allegations by the Oregon Department of Justice (DOJ) that I violated the Oregon Unfair Trade Practices Act (UTPA) by failing to give certain notifications to patients. The Stipulated General Judgment was not an admission of violation of the UTPA, and I maintain that my conduct was not a violation of law. My reason for settling was a financial decision to avoid the cost of protracted litigation with the State of Oregon.
As part of the terms of the Stipulated General Judgment, I have agreed to make certain notices to patients on a going-forward basis. The requirement to give these notices is a function of the settlement not the UTPA. To my knowledge, this is the first time a consumer protection statute has been applied to require the type of disclosures required of me in this case. Throughout the dealing with the DOJ, I maintained that, to my knowledge, the disclosures sought were not required by law and if the DOJ wanted to effect a change in this area, the proper and most effective way to do such would be through legislation or the rule making process in which the interests of all parties involved, including patients and physicians, could be considered. The DOJ declined such an approach.
The DOJ did not allege that the selection of any device was improper nor that the care provided my patents was substandard in any manner. I hold the well-being of my patients in the highest regard and believe that my decisions regarding their care were and are appropriate.
Any other questions may be directed to my attorneys, Michael Crew or Brian Parrott at Cooney & Crew, LLP.