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Category Archives: Conflicts of Interest
SEC may take ‘fresh look’ at auditor conflicts of interest: Gensler
Dive Brief:
- Securities and Exchange Commission (SEC) Chair Gary Gensler has asked the Public Company Accounting Oversight Board (PCAOB) Chair Erica Williams to consider adding auditor independence standards to its agenda and the SEC itself may need to take a “fresh look” at its own rules on the independence issue, Gensler said during a webinar Wednesday.
- SEC staff has seen “situations of decreased vigilance” when it comes to auditor independence and Gensler expressed concern that conflicts of interest stemming from auditors and affiliated firms serving the same client persist 20 years after the Sarbanes Oxley Act directed the SEC to take steps to create stronger barriers between auditors and other parts of their firms, he said.
- “A number of firms spun out their consulting businesses in the days shortly before and after Sarbanes-Oxley. Over the past 20 years, however, many of these firms went on to rebuild them again. PCAOB inspections continue to identify independence — and lack of professional skepticism — as perennial problem areas,” Gensler said.
Dive Insight:
Gensler spoke during a webinar hosted by the Center for Audit Quality commemorating the 20th anniversary Sarbanes-Oxley Act, which established the PCAOB in the wake of the Enron and WorldCom accounting scandals to oversee accounting firms that audit public companies.
The SEC chair has been shaking up the oversight of auditors for some time, ousting William Duhnke as PCAOB chair last year. Last fall SEC Acting Chief Accountant Paul Munter underscored the importance of independent audits as an investor safeguard, saying that an auditor that provides extensive non-audit services to an entity that has an active mergers and acquisitions business model must continually monitor the impacts of all such transitions on its audit engagement to ensure that the auditor remains independent of all of its audit clients.
During the talk Gensler was also critical of the sluggish pace at which PCAOB has undertaken the responsibility that it was given to update interim standards that it inherited from the American Institute of Certified Public Accountants.
“Historically … the PCAOB has been too slow to update auditing standards. Twenty years later, most of those interim standards remain,” Gensler said. But he expressed confidence that Williams, who took over as chair of the U.S. audit watchdog in January, and the board would “live up to Congress’s original vision with respect to standard-setting. I hope we can make some progress before Sarbanes-Oxley can legally drink.”
In May the PCAOB announced plans to update almost all of the remaining interim standards.
Hospitals performed 100,000 unnecessary surgeries in the first year of COVID-19, Lown Institute says
U.S. hospitals performed more than 100,000 surgeries on older patients during the first year of the pandemic, according to a new Lown Institute analysis.
The healthcare think tank relied on Medicare claims data and analyzed eight common low-value procedures. It called the 100,000 procedures unnecessary and potentially harmful in a press release. It found that between March and December 2020, among the most-performed surgeries were coronary stents and back surgeries.
The procedures either offered little to no clinical benefit, according to the institute, or were more likely to harm patients than help them.
“You couldn’t go into your local coffee shop, but hospitals brought people in for all kinds of unnecessary procedures,” Vikas Saini, M.D., president of the Lown Institute, said in a statement. “The fact that a pandemic barely slowed things down shows just how deeply entrenched overuse is in American healthcare.”
Here is the volume of each procedure analyzed, for a total of 106,474 procedures identified:
1. Stents for stable coronary disease: 45,176
2. Vertebroplasty for osteoporosis: 16,553
3. Hysterectomy for benign disease: 14,455
4. Spinal fusion for back pain: 13,541
5. Inferior vena cava filter: 9,595
6. Carotid endarterectomy: 3,667
7. Renal stent: 1,891
8. Knee arthroscopy: 1,596
Among the “U.S. News & World Report” 20 top-ranked hospitals, all had rates of coronary stent procedures above the national average in what the Lown Institute called “overuse.” Four had at least double the national average, including the Cleveland Clinic, Houston Methodist Hospital, Mt. Sinai and Barnes Jewish Hospital. The procedures and overuse criteria were based on previous Lown research.
“We’ve known for over a decade that we shouldn’t be putting so many stents into patients with stable coronary disease, but we do it anyway,” Saini said. “As a cardiologist, it’s frustrating to see this behavior continue at such high levels, especially during the pandemic.”
In response to the Lown analysis, the American Hospital Association said in a statement Tuesday that delays or cancelations in non-emergency care may have negative outcomes on patients. “Lown may define these services as ‘low value,‘ but they can be of tremendous value to the patients who receive them,” the statement read.
It also pointed to its response to last year’s Lown analysis, which it criticized as being based “on data that are not only incomplete, but also not current.” The organization argued the services surveyed only represent a portion of the care hospitals provide. It added that procedures are determined by physicians based on an evaluation of the patient’s medical needs.
Houston ER physicians say they were urged to avoid COVID tests, work sick
A group of emergency room physicians filed a lawsuit in March alleging representatives for their employer, American Physician Partners, discouraged them from testing for COVID-19 and pressured them to work while ill, according to the Houston Chronicle.
Brentwood, Tenn.-based American Physician Partners staffs and manages ER physicians at more than 15 Houston Methodist facilities, including hospitals and emergency care centers. The lawsuit, which does not involve Houston Methodist employees, centers on a dispute between eight physicians and APP.
The physicians allege APP is underpaying them and engaging in “unethical practices,” such as urging physicians with COVID-19 to work, as a way to boost revenue.
APP’s protocol, “discourages testing and disregards physician, staff, and patient safety when a doctor does test positive for COVID-19,” the lawsuit alleges. The physicians claim APP is putting “profit over patient.”
APP denied its involvement in the alleged financial damages in a response to the physicians’ complaint filed April 25. The company told the Houston Chronicle that it has been in discussions with the physicians since they raised concerns four months ago.
“We advised them at that time that their concerns do not reflect the facts known to APP and otherwise appear to be based on misinformation,” APP said in a statement to the Chronicle. “Thus we are disappointed these physicians — who represent a very small minority of the physicians APP partners with in the Houston area — have decided to move forward with this litigation. We remain open to continuing our dialogue with these physicians outside of the litigation, which, again, APP believes is without merit.”
Houston Methodist, which isn’t involved in or named in the lawsuit, said it cannot comment on the specific allegations, according to the Chronicle. “We are unaware of any ER doctor who came to work after testing positive for COVID-19,” a hospital spokesperson told Becker’s.
Read the full Houston Chronicle article here.
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Investor sues UHS execs, alleging ‘unfair’ stock gains amid pandemic
A Universal Health Services investor is suing several executives of the King of Prussia, Pa.-based system, alleging they unjustly enriched themselves through stock options amid the pandemic, according to Law360.
The lawsuit, filed in the Delaware Chancery Court and made public July 9, accuses UHS executives and directors of taking advantage of a pandemic-related temporary hit in the company’s stock price and argues taking the stock options was “grossly unfair to the company and its stockholders.”
“The controllers and other company insiders took advantage of the temporary drop in the company’s stock price to grant and receive options to buy the company’s stock at rock bottom prices, thereby showering themselves in excessive compensation,” the lawsuit claims.
In particular, the lawsuit claims that in just 12 days after the stock options were granted, defendants made over $30 million in gains.
Several top execs were named as defendants, including Alan Miller, UHS founder and chair and Marc Miller, CEO and president of UHS. Three other UHS execs were named, as well as Warren Nimetz, an administrative partner of law firm Norton Rose Fulbright’s New York office.
“UHS’s directors and officers deny any liability associated with the company’s routine and publicly disclosed options grant in March 2020,” attorney Matthew Madden of Robbins Russell Englert Orseck & Untereiner, representing UHS, its executives and Mr. Nimetz, told Law360. “The options grant was in line with the company’s compensation practices in prior years and took place at a board meeting scheduled months in advance.”
Mr. Madden added that UHS’ executives and officials “acted properly” and that the plaintiff’s claims are “baseless.”
“UHS is proud of its service to patients, and stewardship of investor capital, during these unprecedented times in the healthcare industry,” Mr. Madden told Law360.
The lawsuit was filed by Robin Knight.
Cartoon – Today’s Ethics Committee
Washington health system rebuked for offering COVID-19 vaccines to ‘major donors’
Overlake Medical Center & Clinics invited about 110 donors who gave more than $10,000 to the Bellevue, Wash.-based health system to receive COVID-19 vaccines, drawing criticism from the state’s governor, according to The Seattle Times.
Molly Stearns, the chief development officer at Overlake, emailed the “major donors,” as they were addressed in correspondence, about 500 open appointments in its COVID-19 clinic that were set to open Jan. 23. According to The Seattle Times, donors who received the email got an access code to register for appointments.
The vaccination appointments weren’t exclusive to donors, but were open to some 4,000 people who were board members, some patients, volunteers, employees and retired health providers, Overlake told the newspaper. All registrants were supposed to meet state-specific eligibility requirements for the vaccine, according to The Seattle Times.
Tom DeBord, Overlake’s COO, told the newspaper that the invitation was sent after the hospital’s scheduling system stopped working properly. To speed up distribution, the system began contacting people whose emails they had access to, which included donors, retirees, some patients and board members.
“We’re under pressure to vaccinate people who are eligible and increase capacity. In hindsight, we could certainly look back and say this wasn’t the best way to do it,” Mr. DeBord told The Seattle Times.
Once Gov. Jay Inslee’s office found out about the “invite-only” appointments, the office asked Overlake to shut down the sign-ups, which the system did.
In a Jan. 27 statement posted to the health system’s website, Overlake said all communications with people invited to sign up for the vaccine “made clear that people must show proof of eligibility under current Washington State requirements to ultimately be vaccinated, no matter who they are or how they are affiliated with us. We recognize we made a mistake by including a subset of our donors and by not adopting a broader outreach strategy to fill these appointments, and we apologize. Our intent and commitment has always been to administer every vaccine made available to us safely, appropriately, and efficiently.”
Read the full report here.
HENRY KOTULA 