CVS Caremark to pay $20 million to three states over fraud allegations

Pharmacy and prescription drug management company CVS Caremark Corp. has agreed to pay nearly $20 million to settle three lawsuits involving allegations that the company defrauded pension systems in three states, including California’s giant pension fund, attorneys said.

The whistleblower lawsuits, filed by two former CVS Caremark pharmacists, accused the company of reselling returned drugs, changing prescription orders to make them more expensive and submitting false reports about how long it took to fill prescriptions.

Under terms of the settlements, CVS Caremark will pay nearly $7 million to the California Public Employees’ Retirement System, $4 million to the state of Illinois and $3 million to the state of Florida. Other money from the settlement went to plaintiff attorneys’ fees and costs, the attorneys said in a news release.

The former employees filed the lawsuits under state laws that encourage employees to expose fraud that victimized government agencies. Typically, whistleblowers receive a portion of any settlements as a reward for exposing the fraud.

“It is a great feeling to finally see this matter brought to a successful resolution,” said Chicago attorney Michael Leonard, one of the plaintiffs’ attorneys. “Even though CVS Caremark of course continues to deny any liability, in my opinion justice has truly been served.”

CVS Caremark did not immediately respond to a request for comment. The company is the product of a 2007 merger between CVS Corp. and Caremark Rx Inc. In addition to operating 7,000 retail stores, the company manages pharmacy benefit services for employers, including prescriptions by mail.

Despite the allegations, CalPERS agreed in June to pay CVS Caremark $575 million per year to provide prescription drug benefits to 346,000 members.

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-- Stuart Pfeifer

Photo: A CVS store in Florida. Credit: Wilfredo Lee / Associated Press

Consumer Confidential: Online deals, safe cars, holiday accidents

Here's your fightin'-words Friday roundup of consumer news from around the Web:

--It's Free Shipping Day! More than 2,500 retailers are participating. And just in time, here are some of the sweeter deals out there to save you even more money. At Coldwater Creek's website, enter the promo code BEST40 to get 40% off your purchase. At J. Crew's site, use the code CHEER to get 30% off. At Land's End, you'll get 40% off, and you don't even need a promo code. At the Levi's site, use the code THIRTY to get 30% off. And for Perry Ellis, enter PESIRE30AF for 30% off. (Time)

--Which cars are safest? Glad you asked. The Insurance Institute of Highway Safety has crunched the numbers and come up with its winners. Companies with the strongest showing included Subaru, which got top ratings for all five models it sells in the U.S. Toyota got the most top picks, with 15 of its Toyota, Lexus and Scion models. Honda gets a nod for most improved. Of the 18 vehicles new to top safety pick status this year, 10 of them were Honda or Acura models. Among high-mileage green cars, the Toyota Prius V qualifies. So do the plug-in Nissan Leaf and Chevy Volt. (MoneyWatch)

--And be safe in the home as well. According to the Consumer Product Safety Commission, more than 13,000 people were treated in emergency departments nationwide last year due to injuries involving holiday decorations. This is an increase from 10,000 in 2007 and 12,000 in 2008 and 2009. Although estimates of deaths and injuries related to Christmas tree and candle fires are down, there are still an alarming number of incidents. Live trees or other evergreen decorations that have dried out burn fast and hot in a matter of seconds if they come in contact with an open flame. The agency recommends extra caution with flames, make sure your tree is watered, and be careful climbing up and down ladders. (Times News)

-- David Lazarus

Photo: It's Free Shipping Day. But don't overlook all the discounts as well. Credit: Lawrence K. Ho / Los Angeles Times

 

Dr. Drew won't talk about 1-800-GET-THIN endorsement

Radio and television celebrity Dr. Drew Pinsky spoke up for the first time Thursday about his endorsement of Lap-Band surgery marketing firm 1-800-GET-THIN.

Well, sort of.

On Thursday, Pinsky issued this statement through his publicist:

“As you may expect, I have a confidentiality clause in my agreement and am unable to comment at this time.”

The longtime host of the syndicated radio talk show “Loveline” and reality TV series “Celebrity Rehab with Dr. Drew” was first asked by The Times to discuss his role with 1-800-GET-THIN on Tuesday.

That was the day the Food and Drug Administration said it had accused 1-800-GET-THIN and several of its affiliated surgery centers with misleading advertising, saying the company failed to adequately disclose the risks of the surgery in its billboard, television and radio ads.

Five patients have died after Lap-Band surgery at clinics affiliated with 1-800-GET-THIN since 2009, according to lawsuits, autopsy reports and other public records. The company's billboards are plastered along freeways throughout Southern California.

Pinsky recently became the voice of 1-800-GET-THIN, advocating Lap-Band surgery on radio ads and in a recording played for those who called 1-800-GET-THIN. On Thursday, a call to the number was answered directly by an operator, not a recording of Pinsky pitching the Lap-Band.

Kathryn Trepinski, a lawyer who represents relatives of one of the deceased patients, said she was disappointed that Pinsky has elected to remain silent.

“This has been an enormously powerful billboard and radio advertising campaign, the likes of which we’ve really never seen before," Trepinski said. "People have gone forward with these surgeries not fully recognizing the risks. Dr. Drew’s endorsement certainly didn’t clarify the risk of the surgery.

“Because he is a media personality, it may have given patients a false sense of security. The public is entitled to have a discussion with him about why he did it.”

RELATED:

Another patient dies after Lap-Band surgery

Lap-Band death blamed on anesthesiologist

FDA accuses 1-800-GET-THIN of misleading Lap-Band ads

-- Stuart Pfeifer and Michael Hiltzik

Photo: Dr. Drew Pinsky. Credit: VH1

Lap-Band maker issues own advertising guidelines

Lap-Band maker Allergan Inc. is distancing itself from surgical centers at the center of a new controversy over misleading advertising of the weigh-loss device.

A spokeswoman for the Irvine company said it issued its own voluntary advertising guidelines earlier this year that call for doctors who use the Lap-Band device to present “balanced information” about the procedure and to base claims of success on scientific evidence.

The Lap-Band is a silicon ring surgically fitted over part of the stomach to discourage overeating.

“Advertising about medical procedures, including surgery involving the Lap-Band system, should convey the benefits and risks of the treatment and be truthful and not misleading,” the one-page set of guidelines says.

The guidance stands in contrast to allegations by the U.S. Food and Drug Administration that eight California surgical centers and the marketing firm 1-800-GET-THIN have misled consumers by failing to provide required information in their advertising materials about the risks and side effects of the procedure.

Allergan has sought repeatedly to set itself apart from marketers and doctors who use its device. Earlier this year, Chief Executive David E.I. Pyott criticized an independently run Southern California billboard marketing campaign that promotes the surgery with slogans like “Diets fail! The Lap-Band works!”

In a February interview with The Times, Pyott said: “That isn’t the wording I would use. We put patients’ welfare and safety at the top, so I wouldn’t support it.”

The company’s advertising guidelines are only recommendations. Doctors who use the surgical device are not required to follow them. The guidelines call for doctors to do the following:

 * Be truthful and not misleading … reveal all information about the procedure that is important for patients to know and consider prior to the procedure.

 * Provide balanced information about benefits and risks related to the procedure.

 * Ensure that all claims of success, including comparative claims, have sufficient support, including appropriate scientific evidence when necessary.

 * Use language that is easy to understand and appropriate for patients who may be interested in treatment.

 * Present important risk information, including potential adverse events associated with the procedure, in a way that is clear and does not minimize the potential risks.

 * Showcase only endorsements and testimonials from patients that are truthful and reflect a typical patient experience

 * Encourage patients to seek information from other sources, such as patient support groups, to gain more information on their condition and potential treatment options

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-- Duke Helfand

Photo: A 1-800-GET-THIN billboard beside a Southland freeway. Lap-Band maker Allergan Inc. says it's not responsible for the ads. Credit: Mariah Tauger / Los Angeles Times

 

FDA's 1-800-GET-THIN warning follows L.A. County official's complaint

The Food and Drug Administration has ordered 1-800-GET-THIN, the company behind the ubiquitous advertising campaign for Lap-Band weight-loss surgery, to take better steps to warn consumers about risks associated with such procedures.

The move, in an FDA letter to eight California surgical centers and the marketing firm 1-800-GET-THIN, comes one year after Los Angeles County's public health chief, Dr. Jonathan Fielding, asked the FDA to take action.

In a December 2010 letter, Fielding said "advertising of this medical device by 1-800-GET-THIN ... inadequately informs consumers of potential risks."

Since 2009, five patients have died following surgeries at centers affiliated with the ad campaign. A series of lawsuits blamed the deaths on mistakes by the surgery centers and doctors who performed the surgeries.

An attorney for 1-800-GET-THIN filed a complaint against Fielding with the county, contending that the county official had a conflict of interest because he's a former executive and a shareholder of Johnson & Johnson, which competes with Lap-Band manufacturer Allergan Inc. in the gastric-band market.

Fielding said he wasn't aware when he wrote to the FDA that Johnson & Johnson, where he worked in the 1980s, makes gastric bands. Regardless, he said, he would delegate any issues related to weight-loss devices to members of his staff.

RELATED:

Lap-Band clinic sued over death

Another patient dies after Lap-Band surgery

FDA accuses 1-800-GET-THIN centers of deceptive advertising

-- Stuart Pfeifer and W.J. Hennigan
Twitter.com/spfeifer22 and Twitter.com/wjhenn

Photo: Paula Rojeski died Sept. 8 after having Lap-Band weight-loss surgery at an outpatient clinic in West Hills, officials said. She was the fifth person to die in the last two years after having surgeries at clinics that, according to wrongful-death lawsuits, are affiliated with the 1-800-GET-THIN ad campaign. Credit: Marni Rader

FDA accuses 1-800-GET-THIN centers of deceptive advertising

Weight loss surgical centers affiliated with the 1-800-GET-THIN marketing campaign have been accused by the U.S. Food and Drug Administration of misleading consumers about the risks of the Lap-Band device used to treat obesity.

On Tuesday, the FDA announced that it has taken action against eight California centers by issuing warning letters because Lap-Band is a restricted medical device that is being misbranded because of allegedly deceptive advertising by the centers.

In a news release, the FDA announced that it warned that the organization’s billboards and advertising inserts used by recipients of the warning letters “to promote the Lap-Band procedure fail to provide required risk information, including warnings, precautions," and possible side effects.

Steve Silverman, director of the Office of Compliance in the FDA’s Center for Devices and Radiological Health, said in a statement: “The FDA takes seriously its responsibility to protect consumers from products promoted without adequate warnings. It's particularly troublesome when advertisements don’t communicate the serious risks associated with medical devices."

Five people have died since 2009 after Lap-Band surgeries at clinics affiliated with the 1-800-GET-THIN campaign, according to lawsuits, autopsy reports and interviews.

In all, the FDA sent letters to Bakersfield Surgery Institute Inc., Beverly Hills Surgery Center, Palmdale Ambulatory Center, Valley Surgical Center, Top Surgeons LLC, Valencia Ambulatory Center LLC, Cosmopolitan Plastic & Reconstructive Surgery, San Diego Ambulatory Center LLC and 1-800-GET-THIN LLC.

[Updated at 11:53 a.m.: 1-800-GET-THIN, the ubiquitous marketing campaign on billboards, television and the Internet, has led to a surge of Lap-Band weight-loss surgeries in Southern California. More than 100,000 people called 1-800-GET-THIN in its first 15 months of business, leading to more than 10,000 scheduled surgeries, the marketing company said in a trademark lawsuit.

The Lap-Band, manufactured by Irvine-based Allergan Inc., is a silicone ring that is surgically implanted around the stomach to discourage overeating. The surgeries vary in cost — ranging from $12,000 to about $20,000 by some accounts — and often are covered by insurance.

The patients' deaths and injuries have led to a series of wrongful-death and personal injury lawsuits against 1-800-GET-THIN, its affiliated surgery centers and doctors who performed the procedures. Allergan is not affiliated with 1-800-GET-THIN.

Another lawsuit, seeking class-action status, accuses 1-800-GET-THIN of false advertising, saying the ads failed to provide adequate warnings about the risks of the surgery. Wrongful death lawsuits allege that two brothers, Julian and Michael Omidi, were part of a "joint venture" that included the surgery centers and the 1-800-GET-THIN marketing firm.

Both Omidis have been disciplined by the state medical board over issues unrelated to 1-800-GET-THIN, according to state records.

Michael Omidi did not return a telephone call seeking comment. His attorney, Robert Silverman, also did not immediately comment.

1-800-GET-THIN and the Omidi brothers have filed a series of lawsuits against The Times, its journalists and website commenters over past coverage of the surgery deaths. Judges have dismissed three of the lawsuits and ordered the plaintiffs to pay The Times' legal expenses and fees in two of the cases.]

RELATED:

Lap-Band clinic sued over death

Another patient dies after Lap-Band surgery

Tighter scrutiny for outpatient surgery centers

-- W.J. Hennigan and Stuart Pfeifer

twitter.com/wjhenn and twitter.com/spfeifer22

Photo: The 1-800-GET-THIN marketing firm promotes Lap-Band surgeries on Southern California billboards as well as on TV, radio and the Internet. Above, a pair of billboards in 2010. Credit: Glenn Koenig / Los Angeles Times

Blue Shield and UCLA fight over contract rates

A contract dispute between one of California’s largest health insurers and UCLA could force thousands of patients at the university’s medical centers to seek treatment elsewhere if the disagreement is not resolved by the end of December.

Executives from Blue Shield of California and the University of California’s health system are quarreling over reimbursement rates for medical treatment at Ronald Reagan UCLA Medical Center in Westwood and nearby Santa Monica-UCLA Medical Center and Orthopaedic Hospital.

Blue Shield says the rates for care at the hospitals have nearly doubled in the last five years, and that the costs for inpatient treatments are already 41% higher than what it pays on average for similar care in Southern California hospitals.

“Every dollar they asked for comes from our customers, and they certainly aren’t in any mood to be paying large increases,” said Paul Markovich, Blue Shield’s chief operating officer.

UC officials say they have negotiated in good faith and hope to still reach an agreement before the contract expires Dec. 31. The negotiations affect the hospitals as well as two doctor’s groups.

“What the health system is offering at UCLA is incredibly fair,” said Santiago Muñoz, chief strategy officer for UC Health, the system that oversees UCLA’s hospitals and four other UC medical centers around the state.

At stake is care for more than 200,000 of Blue Shield’s customers who live within 15 miles of UCLA. Of that group, about 8,000 policyholders got inpatient or outpatient care last year at the two hospitals. This group is covered through Blue Shield’s preferred provider organization policies.

If the contract is allowed to expire, these people would have to pay higher out-of-pocket costs to get medical care at UCLA or seek cheaper treatment through doctors and hospitals still in the Blue Shield network. Customers with HMO coverage will largely be unaffected because their doctors do not typically refer patients to UCLA hospitals.

This dispute is not new: Blue Shield let contracts with UCLA expire in 2006 for two months and in 2008 for four months after it could not reach agreements on new reimbursement rates.

Blue Shield’s Markovich said the company negotiated with UCLA in the past. This time, he said, the insurer is having to talk instead with UC’s statewide health system, which is overseeing insurer contracts for each of its five medical centers.

Markovich said the system-wide negotiating strategy has given UC officials leverage to secure higher reimbursement rates. That, he said, is putting more pressure on Blue Shield, which earlier this year pledged to return money to policyholders when its net income exceeds 2% of revenue. This year, it is returning $450 million.

Muñoz said the centralized negotiating strategy saves administrative expenses and that reimbursement rates reflect prices in each local healthcare market.

Officials at the UCLA Health System said they want an agreement that “adequately reimburses” its doctors and hospitals for the complex medical care they provide. “It remains our goal to put patient care first and to avoid any disruption to our patients,” a spokeswoman said in a statement.

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California spends less on healthcare than most states

Use of retail medical clinics is rising, study says

More U.S. firms using high-deductible insurance plans

-- Duke Helfand

Photo: Front entrance of Ronald Reagan UCLA Medical Center in Westwood.

Credit: Stefano Paltera  

 

California spends less on healthcare than most states

 

California spends less on healthcare for each of its residents compared to per-capita spending in most other states, and the situation has persisted for more than a decade, new federal data show.

The statistics from the Centers for Medicare and Medicaid Services reveal that all medical spending in the state amounted to $6,238 per resident in 2009, well below the national average and putting California in a bottom rung with Arkansas, Georgia, Texas, Utah, Nevada, Arizona, Colorado and Idaho.

Experts say the low spending level is partly the result of the state’s big uninsured population –- nearly one in four Californians has no health benefits -– and the low rates the state pays doctors and hospitals for treating the poor.

California spent a smaller amount on low-income care -- $4,569 per person -– than any other state in 2009, even though per-capita spending grew faster than that for the nation as a whole from 2004-09, according to the federal data.

“Spending may be lower in California just because people are not getting access to the healthcare system,” said Larry Levitt, a healthcare and insurance analyst with the nonprofit Kaiser Family Foundation.

California does have signs of strength: It has a relatively young population that uses fewer healthcare services, the report shows. And it is home to a robust system of HMOs -- including the largest, Kaiser Permanente -- which have demonstrated an ability to control healthcare spending, analysts say.

To see the report, go to Cms.gov/MMRR/Downloads/MMRR2011_001_04_A03.pdf

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-- Duke Helfand

Photo: Mel Melcon / Los Angeles Times

 

 

Molina Healthcare buys Long Beach offices for $81 million

One of Long Beach’s premier office complexes has been sold for $81 million to Molina Healthcare Inc., the property’s largest tenant.

Molina Healthcare bought two connected 14-story buildings at 200 and 300 Oceangate in the city’s central business district. It was largest office sale in Long Beach since the real estate peak of 2007, said real estate broker Kevin Shannon of CBRE Group Inc.

The brokerage represented the seller, the Swig Co. San Francisco-based Swig had owned the property, formerly known as Arco Center, since 1986.

Molina Healthcare's headquarters occupies about one-third of the 461,263-square-feet complex that lies between Ocean Boulevard and Shoreline Drive, across the street from the Long Beach World Trade Center, Shannon said.

It is more than 90% occupied by such tenants as the California State Lands Commission and California Marine And Intermodal Transportation System Advisory Council, according to real estate data provider CoStar.

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Long Beach World Trade Center sale stalled

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— Roger Vincent

Photo: Office buildings at 200 and 300 Oceangate in Long Beach.  Credit: Charlie Lenoir

Use of retail medical clinics is rising, study says

Americans are increasingly turning to retail medical clinics in pharmacies, grocery stores and other shopping outlets to treat the flu, ear infections, bronchitis and other ailments, a new study shows.

Use of clinics is growing particularly among young, healthy, and higher-income patients who live close to the facilities, according to the analysis from the Rand Corp.

Researchers examined the medical choices of 13.3 million commercially insured patients from 2007 to 2009. During that time, the rate at which patients visited retail clinics on a monthly basis rose  nearly 10-fold -- from 0.3 visits per 1,000 people to 2.7 visits per 1,000.

The reliance on the retail clinics could grow even more as national healthcare reforms unfold. That’s because millions of Americans are expected to gain health insurance in 2014 under President Obama’s healthcare plan, which will provide government subsidies to people who otherwise could not afford coverage.

Already, retail giant Wal-Mart Stores Inc. said it is exploring ways to expand the kinds of healthcare services it offers at dozens of its stores across the country.

The Arkansas company, the nation’s largest retailer, is looking to partner with outside healthcare companies to treat and manage serious medical conditions such as HIV, diabetes, arthritis and clinical depression.

The Rand researchers said that medical care delivered at retail clinics is 30% to 40% less expensive than care provided in a doctor’s office, and 80% cheaper than services delivered in emergency rooms.

Still, the researchers said they could not determine whether the expanded use of retail clinics will raise or lower healthcare costs.

“If the growth in retail clinic visits that we noted represents substitution for other sources of care, then the increase … could lead to lower costs,” said J. Scott Ashwood, a Rand researcher and the study’s lead author.

“However, if these visits represent new utilization or induced demand -- in other words, patients are seeking care when they would have otherwise stayed home -- then costs could increase,” Ashwood added. “Answering these questions requires additional study.”

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More U.S. firms using high-deductible insurance plans

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-- Duke Helfand

Photo: Medical assistant Miriam Olivares walks past an exam room at a medical clinic inside a pharmacy in Oakland. Credit: Robert Durell / Los Angeles Times

More U.S. firms using high-deductible insurance plans

 

U.S. employers, struggling to contain rising healthcare costs, are expanding their use of high-deductible insurance plans, which help reduce monthly insurance premiums by shifting a greater share of medical expenses to workers, a new survey shows.

In 2011, 32% of companies with 500 or more employees offered high-deductible plans. That was up from 23% in 2010, according to the survey of 2,844 private and public employers by the benefits consulting firm Mercer.

In all, 13% of insured employees in the survey were enrolled in such a plan this year, up from just 3% five years ago.

Under high-deductible plans, employees pay for more of their initial medical expenses with money deposited by them and their employers into health savings accounts. Money in the accounts can be rolled over from year to year, allowing workers to build up large sums for future medical expenses.

“One feature of the [high-deductible] plans that employers like is the flexibility in funding employees’ spending accounts,” said Laura Baker, a principal in Mercer’s Los Angeles office. “A growing number of employers are making their account contributions contingent on the employees’ willingness to take steps to improve their own health.”

Companies say the approach is a benefit to them and their workers because it helps keep a lid on monthly insurance expenses. The Mercer survey showed that the average cost of employee coverage under high-deductible plans was nearly 20% lower than traditional insurance plans -- $7,787 compared to $9,385.

The shift to the high-deductible plans may be one reason behind slower growth of health insurance costs reported by employers.

The average per-employee cost of health benefits grew by 6.9% last year. The average costs have grown by 6.1% this year, and are expected to rise by 5.7% in 2012, the survey found.

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Proposed health insurance rate regulation initiative submitted

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-- Duke Helfand 

Photo credit: Andre Panneton / iStockphoto.com