CareFusion Corp. last year paid $40.1 million to settle allegations that it offered kickbacks to doctors in violation of the False Claims Act. Last week, the Department of Justice announced a settlement with one of the doctors implicated in that case. Dr. Charles Denham agreed to pay the United States $1 million to settle allegations that, under agreements entered into in 2008, Denham received monthly payments from CareFusion while serving as co-chair of the Safe Practices Committee of the National Quality Forum. The government alleged that Denham did not disclose these industry payments and furthermore accepted the money “in exchange for influencing the recommendations of the National Quality Forum” in favor of CareFusion’s product, ChloraPrep.
Dr. Denham was a well-known spokesman in the growing patient safety movement, which focuses on curbing medical errors resulting in preventable patient harm or death. In addition to serving as co-chairman of the National Quality Forum—which sets safety guidelines that are widely accepted through the healthcare community—Denham was also editor-in-chief of the Journal of Patient Safety (JPS). Read an article entitled Conflict of Interest, Dr Charles Denham and the Journal of Patient Safety published in JPS in the wake of the DOJ investigation.
Although he was not mentioned at all by name in the CareFusion complaint or the settlement agreement, DOJ’s press release alleged that CareFusion specifically violated the FCA by paying $11.6 million in kickbacks to Dr. Denham through contracts with Health Care Concepts, Inc. (HCC), a company owned and operated by Denham. Dr. Denham denied these allegations; however, the press release has triggered several investigations into his affiliations and possible inappropriate promotion of ChloraPrep products on CareFusion’s behalf.
For instance, ProPublica has run numerous articles on Dr. Denham, and has dubbed this case “patient safety’s first scandal.” ProPublica reported:
Denham had not disclosed that his for-profit company had been paid by CareFusion while he led the Quality Forum’s Safe Practices committee and advocated for ChloraPrep’s formulation. The Quality Forum ended up endorsing the formulation, excluding other antiseptics, in its guidelines. Other experts on the panel told ProPublica that had not been their intent.
This case offers a number of important takeaways for stakeholders going forward.
For one, Dr. Denham was not a practicing, or prescribing, physician. Normally when you read about kickbacks, the government is alleging that manufacturers are giving money to doctors in exchange for an increase in prescriptions. Here, the allegations are more attenuated from the direct prescription transaction, but far-reaching in their potential consequences given the position of influence Dr. Denham had.
Second, the publicity around this case is focused on hiding necessary disclosures. While it’s unclear whether disclosing his financial relationship with CareFusion would have given Denham a free pass, the fact that he appeared to hide the payments gave the government, and press, plenty of ammunition against him.
Finally, this case was a blackeye for both CareFusion and, potentially more-so, the National Quality Forum. Going forward, both manufacturers and associations will likely require further due diligence into their consultants’ various ties–both disclosed and undisclosed. The National Quality Forum issued a statement on the events:
[The] settlement announced today with Dr. Charles Denham for $1 million brings to a close an unprecedented, unwelcome chapter in the nation’s efforts to advance patient safety.
The DOJ press release acknowledges that former NQF committee co-chair Dr. Charles Denham did not disclose his commercial ties, as required by NQF’s conflict of interest policies.
Upon discovering those ties, NQF took immediate steps to strengthen its processes to ensure the integrity of quality measures and safe practices, and has continued to evolve and strengthen its COI policies. NQF remains committed to endorsing measures and safe practices that are of the highest quality.