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.
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.”
Lown Institute berates greedy pricing, ethical lapses, wallet biopsies, and avoidable shortages.
Greedy corporations, uncaring hospitals, individual miscreants, and a task force led by Jared Kushner were dinged Tuesday in the Lown Institute‘s annual Shkreli awards, a list of the top 10 worst offenders for 2020.
Named after Martin Shkreli, the entrepreneur who unapologetically raised the price of an anti-parasitic drug by a factor of 56 in 2015 (now serving a federal prison term for unrelated crimes), the list of shame calls out what Vikas Saini, the institute’s CEO, called “pandemic profiteers.” (Lown bills itself as “a nonpartisan think tank advocating bold ideas for a just and caring system for health.”)
Topping the listwas the federal government itself and Jared Kushner, President’s Trump’s son-in-law, who led a personal protective equipment (PPE) procurement task force. The effort, called Project Airbridge, was to “airlift PPE from overseas and bring it to the U.S. quickly,” which it did.
“But rather than distribute the PPE to the states, FEMA gave these supplies to six private medical supply companies to sell to the highest bidder, creating a bidding war among the states,” Saini said. Though these supplies were supposed to go to designated pandemic hotspots, “no officials from the 10 hardest hit counties” said they received PPE from Project Airbridge. In fact, federal agencies outbid states or seized supplies that states had purchased, “making it much harder and more expensive” for states to get supplies, he said.
Number twoon the institute’s list: vaccine maker Moderna, which received nearly $1 billion in federal funds to develop its mRNA COVID-19 preventive. It set a price of between $32 and $37 per dose, more than the U.S. agreed to pay for other COVID vaccines. “Although the U.S. has placed an order for $1.5 billion worth of doses at a discount, a price of $15 per dose, given the upfront investment by the U.S. government, we are essentially paying for the vaccine twice,” said Lown Institute Senior Vice President Shannon Brownlee.
Webcast panelist Don Berwick, MD, former acting administrator for the Centers for Medicare & Medicaid Services, noted that a lot of work went into producing the vaccine at an impressive pace, “and if there’s not an immune breakout, we’re going to be very grateful that this happened.” But, he added, “I mean, how much money is enough? Maybe there needs to be some real sense of discipline and public spirit here that goes way beyond what any of these companies are doing.”
In third place: four California hospital systems that refused to take COVID-19 patients or delayed transfers from hospitals that were out of beds.A Wall Street Journal investigation found that these refusals or delays were based on the patients’ ability to pay; many were on Medicaid or were uninsured.
“In the midst of such a pandemic, to continue that sort of behavior is mind boggling,” said Saini. “This is more than the proverbial wallet biopsy.”
The remaining seven offenders:
4. Poor nursing homes decisions, especially one by Soldiers’ Home for Veterans in western Massachusetts, that worsened an already terrible situation. At Soldiers’ Home, management decided to combine the COVID-19 unit with a dementia unit because they were low on staff, said Brownlee. That allowed the virus to spread rapidly, killing 76 residents and staff as of November. Roughly one-third of all COVID-19 deaths in the U.S. have been in long-term care facilities.
5. Pharmaceutical giants AstraZeneca, GlaxoSmithKline, Pfizer, and Johnson & Johnson,which refused to share intellectual property on COVID-19, instead deciding to “compete for their profits instead,” Saini said. The envisioned technology access pool would have made participants’ discoveries openly available “to more easily develop and distribute coronavirus treatments, vaccines, and diagnostics.”
Saini added that he was was most struck by such an attitude of “historical blindness or tone deafness” at a time when the pandemic is roiling every single country.
Berwick asked rhetorically, “What would it be like if we were a world in which a company like Pfizer or Moderna, or the next company that develops a really great breakthrough, says on behalf of the well-being of the human race, we will make this intellectual property available to anyone who wants it?”
6. Elizabeth Nabel, MD, CEO of Brigham and Women’s Hospital in Boston, because she defended high drug prices as a necessity for innovation in an op-ed, without disclosing that she sat on Moderna’s board. In that capacity, she received $487,500 in stock options and other payments in 2019. The value of those options quadrupled on the news of Moderna’s successful vaccine. She sold $8.5 million worth of stock last year, after its value nearly quadrupled. She resigned from Moderna’s board in July and, it was announced Tuesday, is leaving her CEO position to join a biotech company founded by her husband.
7. Hospitals that punished clinicians for “scaring the public,” suspending or firing them, because they “insisted on wearing N95 masks and other protective equipment in the hospital,” said Saini. Hospitals also fired or threatened to fire clinicians for speaking out on COVID-19 safety issues, such as the lack of PPE and long test turnaround times.
Webcast panelist Mona Hanna-Attisha, MD, the Flint, Michigan, pediatrician who exposed the city’s water contamination, said that healthcare workers “have really been abandoned in this administration” and that the federal Occupational Safety and Health Administration “has pretty much fallen asleep at the wheel.” She added that workers in many industries such as meatpacking and poultry processing “have suffered tremendously from not having the protections or regulations in place to protect [them].”
8. Connecticut internist Steven Murphy, MD, who ran COVID-19 testing sites for several towns, but conducted allegedly unnecessary add-ons such as screening for 20 other respiratory pathogens. He also charged insurers $480 to provide results over the phone, leading to total bills of up to $2,000 per person.
“As far as I know, having an MD is not a license to steal, and this guy seemed to think that it was,” said Brownlee.
“Colloidal silver has no known health benefits and can cause seizures and organ damage. Oleandrin is a biological extract from the oleander plant and known for its toxicity and ingesting it can be deadly,” said Saini.
Others named by the Lown Institute include Jennings Ryan Staley, MD — now under indictment — who ran the “Skinny Beach Med Spa” in San Diego which sold so-called COVID treatment packs containing hydroxychloroquine, antibiotics, Xanax, and Viagra, all for $4,000.
Berwick commented that such schemes indicate a crisis of confidence in science, adding that without facts and science to guide care, “patients get hurt, costs rise without any benefit, and confusion reigns, and COVID has made that worse right now.”
Brownlee mentioned the “huge play” that hydroxychloroquine received and the FDA’s recent record as examples of why confidence in science has eroded.
10. Two private equity-owned companies that provide physician staffing for hospitals, Team Health and Envision, that cut doctors’ pay during the first COVID-19 wave while simultaneously spending millions on political ads to protect surprise billing practices. And the same companies also received millions in COVID relief funds under the CARES Act.
Berwick said surprise billing by itself should receive a deputy Shkreli award, “as out-of-pocket costs to patients have risen dramatically and even worse during the COVID pandemic… and Congress has failed to act. It’s time to fix this one.”
Freshman Sarah Anne Cook carries her belongings as she packs to leave the University of North Carolina at Chapel Hill, on August 18, because of a COVID-19 outbreak. All in-person undergraduate learning was canceled.
On August 10, students at the University of North Carolina at Chapel Hill (UNC) began the fall semester in person. Freshman Jasmine Baker was cautiously optimistic — as an incoming student in the Hussman School of Journalism, she was excited to experience college and get to know her suitemates. But she also worried that the university’s health and safety protocols would not prevent the spread of the coronavirus on campus.
Baker, an out-of-state student, learned about the change in learning plans while attending an in-person class. “The email was very vague about housing,” she told Slate. “There were no specifics. Everyone kind of started freaking out. . . . We learned about it at the same time the professors did.” To top it off, she and a roommate soon tested positive for COVID-19. “We were all in such close quarters,” Baker said. “I know people that barely left their dorms, and they still ended up catching it.”
Experts like Julia Marcus, PhD, MPH, an epidemiologist at Harvard Medical School, and Jessica Gold, MD, MS, a psychiatrist at Washington University, saw this coming from a mile away. “Students will get infected, and universities will rebuke them for it; campuses will close, and students will be blamed for it,” they warned in the Atlantic over the summer.“Relying on the self-control of young adults, rather than deploying the public-health infrastructure needed to control a disease that spreads easily among people who live, eat, study, and socialize together, is not a safe reopening strategy.”
If you put 10,000 [students] in a small space, eating, sleeping, and socializing together, there’ll be an explosion of cases. . . . I don’t know what colleges were expecting.
—UNC epidemiologist Whitney Robinson
As the Editorial Board of the Daily Tar Heel, UNC’s student newspaper, wrote one week into the semester, “Reports of parties throughout the weekend come as no surprise. Though these students are not faultless, it was the University’s responsibility to disincentivize such gatherings by reconsidering its plans to operate in person earlier on.” The local health department recommended that UNC implement remote learning for the first five weeks of the fall term, but administrators ignored that advice.
“I don’t think there are two universities that have the same protocol,” Irwin Redlener, director of the Pandemic Resource and Response Initiative at Columbia University, told Politico. “It’s national chaos.”
Universities have a strong financial incentive to reopen in person. Many are hoping to recover revenue from housing fees and out-of-state tuition payments that were lost when the pandemic forced them to suspend in-person classes in March. But as many universities have learned in recent weeks, reopening in person comes at a cost to the health of students, faculty members, and the surrounding community.
While California is not represented on USA Today’s list of big outbreaks, it is dealing with surges on some campuses. According to the New York Times campus tracker, there are nearly 2,600 coronavirus cases at 57 schools in California. (Because there is no national tracking system for coronavirus cases on college campuses, the New York Times is believed to have the most comprehensive count available.)
I expect this will blow up outbreaks in places that never had outbreaks, or in places that had outbreaks under control.
—Boston University epidemiologist Eleanor Murray
With 444 confirmed cases, San Diego State University tops the list among California schools, followed by the University of Southern California with 358 cases and UC San Diego with 237. By comparison, North Carolina has nearly 5,200 coronavirus cases at 42 schools, including 1,150 cases at UNC.
California’s relative success at mitigating the spread of COVID-19 on campus can be attributed in part to the conservative reopening plans of many schools. The California State University (CSU) system, California Community Colleges, and University of California (UC) schools moved nearly all fall classes online. UC Berkeley is fully remote for the fall semester. Stanford University planned to have half of its undergraduate students on campus during different quarters, but it switched to mostly remote learning as coronavirus cases continued to rise in the Bay Area over the summer.
Even a hybrid learning model, however, has failed to stave off new coronavirus cases on campuses. Chico State University and San Diego State University, both part of the CSU system, became the first and second California campuses to pause in-person classes after COVID-19 cases spiked, Ashley Smith reported for EdSource.
Resources are a factor in prevention efforts. Chico State’s health center doesn’t have coronavirus tests for students. San Diego State, which has more resources, has two coronavirus testing sites on campus. Across the CSU system, only 2 out of 23 campuses (CSU Maritime Academy and Humboldt State University) have tested all students living in dorms, according to CalMatters. The UC system, which has a budget roughly four times that of the CSU system, is testing all students living in dorms across all 10 campuses. (The UC system has restricted on-campus housing to students who have no alternative housing options.)
An Avoidable Situation
With the academic year off to a rocky start and students being sent home amid coronavirus outbreaks on campuses, experts across the country are nervously tracking the spread of the virus. “I expect this will blow up outbreaks in places that never had outbreaks, or in places that had outbreaks under control,” Eleanor Murray, ScD, MPH, an epidemiologist at Boston University, told Ed Yong in the Atlantic.
COVID-19 surges on college campuses were preventable. “If you put 10,000 [students] in a small space, eating, sleeping, and socializing together, there’ll be an explosion of cases,” Whitney Robinson, PhD, an epidemiologist at UNC, told Yong. “I don’t know what colleges were expecting.”
This week Politico broke the news of a scathing Congressional investigation into the lavish spending of Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma, centered around boosting her own “brand image” and position among inside-the-beltway Washington power brokers.
According to the report, Verma sidestepped the use of CMS’ internal public relations team, and instead engaged a handpicked group of consultants, who charged the government over $6M in less than two years for their work in polishing her public profile and personal brand, arranging meetings with media, and traveling with her to events around the country.
The spending line items included tens of thousands of dollars focused on “getting Seema on lists”, including Politico’s “50 Most Powerful People in DC” and Washingtonian’s “Most Powerful Women in Washington”. Consultants were paid to arrange op-eds and interviews for Ms. Verma, with outlets such as AARP, Christian Broadcasting Network, and Fox News, and $450 was spent on a makeup artist to ensure Ms. Verma was perfectly camera-ready for a two-minute video shoot. The outside advisers even charged nearly $3,000 to arrange a private “Girls’ Night” event held last November at the home of a USA Today bureau chief, to network Verma with other DC insiders.
This isn’t the first time that Verma’s spending has come under scrutiny. In July the Office of the Inspector General found that Verma’s publicity spending violated federal contracting rules, and she was widely criticized for filing a $47,000 expense request for personal items stolen on an official trip, including a $325 jar of moisturizer and a $5,900 Ivanka Trump-brand necklace.
Public relations expenses to educate the public and promote official initiatives are standard fare, but Verma’s lavish spending, often focused on boosting her personal image, shows a stunning lack of judgement, if not an overt misuse of taxpayer dollars. We’d rather see those dollars put to more worthwhile uses, like educating people on how to best shop for insurance, or how to access testing and other needed care services during the largest healthcare crisis of our lifetimes.