UC Regents Settles $10 Million Whistleblower Case Stemming From Industry-Physician Relationships

The University of California Board of Regents agreed on a $10 million settlement with a UCLA physician who alleged that the school allowed doctors to take industry payments. The Los Angeles Times reports that Robert Pedowitz, originally recruited to UCLA in 2009 to run the orthopedic surgery department, sued UCLA, the UC Regents, fellow surgeons, and senior university officials because they failed to act on his complaints about conflicts of interest. Pedowitz alleged that they later retaliated against him for speaking out.

According to the LA Times story, Pedowitz stated he became “concerned about colleagues who had financial ties to medical-device makers or other companies that could unduly influence their care of patients or taint important medical research.” Pedowitz raised concerns about the financial dealings of several doctors, including an orthopedic surgeon that testified at trial about receiving $250,000 in consulting fees in 2008 from device maker Medtronic. Pedowitz also took issue with physicians who included UCLA logos on personal websites without getting official permission (Patch.com).

After raising his concerns, however, Pedowitz said he was pressured to step down as department chairman in 2010. He accused the university of retaliation, stating he was denied patient referrals and prevented from participating in grants and other activities, LA Times reports. In 2012, Pedowitz sued the regents and several UCLA doctors in Los Angeles Superior Court for whistleblower retaliation as a result of coming forward.

However, UCLA maintains that they followed up on Pedowitz’s complaints. Indeed, UCLA conducted “[m]ultiple investigations by university officials and independent investigators [who] concluded that conduct by faculty members was lawful,” according to their public statement. “UCLA adheres to stringent ethical and procedural guidelines and will continue efforts to do so,” they stated. “Enhancements to UCLA’s compliance policies and procedures have been under way for several years and have included the hiring of a nationally recognized chief compliance officer who remains on staff and has expanded the compliance review team.”

In settling the case, UCLA settled the case “to end a prolonged conflict and permit UCLA Health Sciences to refocus on its primary missions of teaching, research, patient care and community engagement.”

Potential conflicts at a time when there is growing government scrutiny of industry payments to doctors.

Starting this fall, the federal Physician Payments Sunshine Act, part of President Obama’s healthcare law, requires public disclosure of financial relationships between healthcare companies and physicians.

Many doctors and universities defend long-standing industry arrangements as essential for carrying out cutting-edge research and top-flight medical education.

“These are serious issues that patients should be worried about,” Pedowitz said in an interview with the newspaper. “These problems exist in the broader medical system and they are not restricted to UCLA.”

What next?

It’s a common tenent of employment law that you can’t retaliate against an employee for raising compliance concerns. Thus, while UCLA’s $10 million settlement suggests that at least some of Pedowitz’ allegations about retaliation are true, the case gets to the tougher subject of what exactly Pedowitz raised his initial concerns about. The answer, it seems, is perhaps perfectly legal industry-physician relationships. Complex compliance programs already provide an enormous firewall for improper industry-physician relationships. Additional—unnecessary—red tape could lead to an unbelievable chill on these important collaborations.

Mark Quigley, Pedowitz’s attorney, said the case could have been avoided if California’s system enforced the policies it already had in place.

But is that true?

UCLA stated that they conducted “[m]ultiple investigations by university officials and independent investigators [who] concluded that conduct by faculty members was lawful.” That is a lot of financial resources to expend attempting to weed out conflicts of interests. And the school still had to pay a multi-million dollar settlement. It’s likely this case will result in many expensive wild goose chases for alleged conflicts. Plus, schools will spend more money recording and documenting their investigative efforts going forward. It will be interesting to follow other medical schools around the country to see if similar cases start cropping up.