Pharmaceutical companies that get convicted of crimes are still allowed to do business with the U.S. government? How does that work?

Seven years ago, Lee Chartock, a psychiatrist in South Weymouth, Mass., got a visit from a drug saleswoman offering to pay his expenses to an “advisory meeting” in Boca Raton, Fla.

There, hucksters encouraged him and other attendees to prescribe the drug Zonegran, approved by the Food and Drug Administration (FDA) as one of several medications to treat epilepsy seizures in adults. That small market wasn’t growing. But physicians had been paid up to $1,250 to attend Florida sessions where they were encouraged to increase the drugs’ sales by prescribing it “off-label” as a diet pill, to treat mood disorders, and for epilepsy in children.

Back in Massachusetts, the saleswoman offered to pay him to give speeches on behalf of the drug’s maker, an Irish firm with R&D and other operations headquartered in South San Francisco called the Elan Corporation.

Chartock declined. Instead he filed a federal whistle-blower complaint describing an illegal marketing scheme by Elan to market Zonegran for “off-label” uses.

On Dec. 15, the Justice Department announced that Elan would pay criminal and civil penalties totaling more than $200 million. As part of a legal settlement, Elan signed a so-called corporate integrity agreement, designed to ensure it doesn’t repeat this kind of practice. For the next five years, it will employ a “compliance committee” and regularly report back to the government on whether employees are breaking the law.

U.S. Attorney General Eric Holder said in a Dec. 16 speech that the cash settlement and the agreement were examples of how the Obama administration is “fighting back in bold, innovative ways” against health care fraud.

“Ironic” might be a word more apt than innovative. That’s because, when it comes to pharmaceutical companies, the federal government’s antifraud strategy has itself smacked of flimflam.

Elan is one of hundreds of entities under corporate integrity agreements requiring them to audit their own behavior under the supervision of the U.S. Department of Health and Human Services. Such negotiated deals have quietly become America’s preferred method of battling criminal activity in Big Pharma, the largest source of documented fraud against the U.S. government.

But even the feds’ top cop in charge of investigating Medicare fraud points out these agreements can be shams. “Sometimes you can dance around corporate integrity agreements and still be in compliance,” said Timothy Menke, deputy inspector general for investigations with the U.S. Department of Health and Human Services, during congressional testimony in March.

Peter Rost, a former Pfizer marketing vice president who blew the whistle on drug marketing fraud, takes Menke’s criticisms a step further. “In my opinion, this whole thing is a bit of a circus for the consumption of the masses,” he says. “The Department of Justice can say we’ve extracted hundreds of millions of dollars in fines. But it’s a game, and the reason it’s a game is that it really doesn’t change anything.”

As if to confirm Rost’s point, Elan’s official statements seem to suggest the company got caught up in a minor legal quibble and emerged with hardly a scratch. “We are pleased to have reached this agreement, which concludes a longstanding legal matter on a product Elan divested over six years ago,” counsel John Moriarty said. “Elan is committed to adhering to the highest ethical and legal standards.”

Management of health care is one of America’s greatest concerns. In California, new Gov. Jerry Brown’s austere 2011-2012 budget included more than $41 billion to fund Medi-Cal payments for disabled and elderly residents. The federal HHS budget, which includes Medicare and Medicaid health insurance programs for the elderly and poor, is $880 billion.

Medicare fraud, meanwhile, is estimated to take up $60 billion per year of these funds. Much of that problem can be traced to Big Pharma, which can sometimes earn a quarter of its income selling medicine paid for by the government.

Drug company reps can boost sales radically by bribing doctors to prescribe medicines for conditions for which the FDA has not approved them. Laws prohibit off-label marketing to prevent snake-oil salesmen from poisoning the public. For example, the FDA specifically did not approve Zonegran for use in children because of severe potential side effects of heat exhaustion and dehydration. Nonetheless, according to a federal indictment, one sales rep went so far as to instruct physicians to administer the drug to a child by emptying a capsule into applesauce.

According to Chartock’s complaint, between 2001 and 2003 Zonegran’s sales increased 87 percent to more than $80 million “due in large part to” bribes and off-label marketing.

Medicare rules banish companies convicted of felony fraud. But that rarely happens, even in cases of multibillion-dollar fraud.

The reason is simple: Like Bear Stearns and AIG, pharmaceutical giants seem too big to fail. Felony convictions would require banning big drug companies that defraud the government. That would make certain types of medicine unavailable to Medicare patients. And given pharmaceutical companies’ reliance on Medicare sales, banishment would drive companies out of business, eliminating thousands of jobs.

So instead of pursuing felony cases, companies get fines and wrist-slaps in the form of corporate integrity agreements. There’s no drug industry equivalent to Martha Stewart, a famous cheating executive who was jailed as a warning to others.

Pfizer, a $146 billion company, entered one integrity agreement, committed more fraud, entered another agreement, committed fraud again, and entered another agreement.

“When deciding whether to exclude or debar any company, we have to ask, ‘What is in the best interest of our program and our beneficiaries?'” Lew Morris, chief counsel to the Health and Human Services Inspector General, was quoted last year as saying. “We have decided that it is better to keep Pfizer in the program providing critical services and drugs.”

In the case of Elan, the penalty included $100 million in criminal fines for promoting Zonegran as an off-label treatment for pain relief, psychiatric disorders, and migraines. The company pleaded guilty to a misdemeanor, rather than a felony, and thus won’t be barred from selling medicine to federal programs. As for other pharmaceutical companies, fraud seems like just another manageable cost of doing business.

Patrick Burns, a spokesman for the Washington group Taxpayers Against Fraud, said the kid-glove policy is changing, if gradually. In November, the Justice Department announced it had indicted a former vice president of the British drug company GlaxoSmithKline on charges of making false statements and obstructing a federal investigation into illegal drug marketing.

More typical, however, are cases such as Elan’s, which announced in November just as settlement negotiations were winding up that CEO Kelly Martin would be leaving — but not until 2012.

“Most of these corporate integrity agreements are not much better than birdcage lining,” Burns says.

Source: Matt Smith, “Government lets fraudulent drug companies deal with Medicare,” San Franscisco Weekly, January 19, 2011.

Official report seeks to shut down psychiatric “house of horrors” in Mumbai

The 110-year-old Masina Hospital – which boasts of one of the city’s foremost psychiatry wards – has been slammed by the Directorate of Health Services (DHS) for rampant violations of the Mental Health Act of 1987.

The hospital has been asked to put its act together or face a shutdown.

A report filed by the five-member committee, appointed by DHS, states that the hospital has been illegally detaining patients in its psychiatry ward and forcefully administering psychotropic drugs to the detainees.

The head of the psychiatry ward, Dr. Yusuf Matcheswala, however is of the opinion that these are only “minor drawbacks,” which do not warrant a shutdown or similar punitive measures.

The matter came to light after Kemp’s Corner resident Pushpa Tolani filed a complaint with the Maharashtra Human Rights Commission (MHRC) claiming that her friend Neela Shete was detained in the hospital illegally.

Tolani in her complaint pointed out that many other patients like Shete were detained without a reception order from the district magistrate – a mandate under the Mental Health Act.

Shete, 55, a resident of Altamount Road was admitted in July. She was discharged two months later. “The doctors’ claim that she had schizophrenia may or may not be true. However, they cannot detain any adult for such a long time without a reception order,” said Tolani, adding that Shete has been untraceable since her discharge. “They have similarly detained many patients without their consent and in all possibility, they are administering drugs which may be worsening their condition,” she alleged.

Dr. Matcheswala however rubbished these claims saying, “Shete was my patient for the last three years. Her admission for two months was also voluntary and we had not detained her illegally.” He added that he has not heard from Shete since September.

Meanwhile, the MHRC refused to take Tolani’s allegations lightly and directed the DHS to file a detailed report after an investigation. “After surveying the hospital and cross checking all the allegations we learnt that about 20 more patients were detained illegally at the hospital.

They were administered treatment which has been banned, and their relatives were overcharged. Often the patients are being drugged even when it was not required,” said Dr. Sanjay Kumavat, who is heading the DHS committee.

The committee including Kumavat, advocate Chaya Haldankar, clinical psychologist Dr. Vinayak Mahajan and psychiatrist Dr. Geeta Joshi personally met these patients.

While Dr. Matcheswala said that he was aware of the enquiry, and vowed to “rectify” the “shortcomings” once the report from DHS was made available to him, Dr. Kumawat and the investigating committee were in no mood to for any leniency.

Psychiatrist Dr Yusuf Matcheswala

“If the hospital fails to straighten up in the stipulated time, their licence will be revoked and the mental health facility will be shut down. The matter is also under the purview of human rights commission. If they are found guilty of violation of the act, as per IPC they can face imprisonment up to five years and cancellation of licence,” said Kumavat.

“Ours is the only psychiatric ward in the city. We cannot close down because of such minor drawbacks,” said a belligerent Dr. Matcheswala.

What’s ailing Masina hospital

♦ Detaining patients without consent: “Ideally a patient can come voluntarily or following a court order. However, patients here were brought in a van at relatives’ request. There are cases of relatives sending patients away due to vested interest,” said Kumavat, and consent taken later.

♦ Unqualified staff, inadequate facilities: The report says the hospital has few psychiatric nurses and other professionals. Despite a 40-bed licence, some 100 patients are kept without permission.

♦ Forcing unnecessary therapies, including shock therapy: Patients are administered treatment banned long ago.  Shock treatment is often used despite use of tranquillisers. One patient is given 35 sessions of Transcranial Magnetic Stimulation, which is unnecessary.  “As patients are unaware, the hospital administers almost all non required treatment and makes money for itself and pharma firms, by extending their stay,” said Dr Vinayak Mahajan, committee member. “We have prescriptions of unwanted medicines,” he said.

♦ Patients seldom rehabilitated: Hardly any patients are being rehabilitated. The hospital only concentrates on active psychiatric cases. They are not maintaining patient records and case papers.

Source: Sobiya Moghul and Jyoti Shelar, “City’s foremost mental hospital uses banned therapies, detains patients illegally,” Ahmedabad Mirror, January 4, 2011.

Three psychiatrists among those arrested by feds in “largest criminal case of its kind”

Federal agents Tuesday arrested 16 doctors, administrators and others who are accused of participating in a $200 million mental healthcare racket, the largest criminal case of its kind in the country.

Among the 20 defendants charged with conspiring to defraud Medicare are three former medical directors for Miami-based American Therapeutic Corp., which had been indicted along with the clinic chain’s owners last fall.

The defendants – including physicians Mark Willner, Alan Gumer and Alberta Ayala — were expected to have their first appearances on Tuesday afternoon in Miami federal court.

“As today’s charges reflect, defrauding the Medicare system was not an aberration at ATC, but instead part and parcel of its business operations,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s criminal division. “By exploiting positions of trust, these defendants masked their fraudulent operation as a legitimate mental health business.”

In October, the federal grand jury indicted American Therapeutic and four senior executives, accusing them of scheming to loot $200 million from the taxpayer-funded Medicare program by billing the program for purported counseling sessions that were either not necessary or provided. Three of the executives were also charged with paying kickbacks to patient recruiters. The case is headed for trial in August.

American Therapeutic’s one-time owner, Lawrence Duran, 48, and former chief executive, Marianella Valera, 39, are being detained at the Miami Federal Detention Center, as the FBI and IRS try to account for much of the $83 million that the notoriously lax Medicare program paid to their seven-clinic company since 2003.

The couple’s detention came after details surfaced on how they and other employees allegedly changed the diagnoses and medications of patients. They would make the changes at “charting parties” to dupe Medicare into believing that the psychotherapy was necessary when, in fact, it wasn’t, Justice Department lawyers say.

The case is being handled by the U.S. Attorney’s Office in Miami, the FBI and the Department of Health and Human Services’ Office of Inspector General.

Source: Jay Weaver, “Feds make more arrests in major Medicare fraud case,” Miami Herald, February 15, 2011.

Arizona counselor William L. Riedel convicted of drugging and sexually molesting 11-year-old girl

A judge on sentenced a Mesa man to 20 years in prison for sexual exploitation of a minor and 15 years in prison for child molestation, attempted child molestation, attempted sexual exploitation of a minor and unlawful administration of drugs.

In addition to that prison time – the sentences will run back to back – William Lewis Riedel also got lifetime probation on two other charges.

Riedel, a former family counselor, was arrested in January 2008.

According to investigators, Riedel, who was 43 at the time, convinced his then girlfriend to give her 11-year-daughter sleeping pills – they told the child they were allergy pills – and then the couple took pictures as they molested her. This happened in 2006 and went on for three months.

It all came to light nearly two years later when the daughter of Riedel’s new fiance found the pictures on Riedel’s computer. She told her mother and the mother contacted the police.

Investigators confiscated the computer and found a variety of disturbing images or Riedel with the victim. They said the victim appeared to be drugged or unconscious in all of the pictures. Police said they also found other images depicting child pornography.

Riedel allegedly told investigators he “groomed” the victim’s mother, teaching her and encouraging her to take part in the molestation.

Riedel eventually pleaded guilty to the counts for which Maricopa County Superior Court Judge Paul McMurdie sentenced him.

Source: Catherine Holland, “Mesa man gets 35 years in child molestation case,” http://www.azfamily.com, February 11, 2011.

Kansas City mental health counselor accused of being pot dealer

On December 17, 2010, Kansas City (Kansas) licensed professional counselor Thomas Whiteford Scott was charged with three counts of possession with intent to distribute marijuana and possession of felony drug paraphernalia, among other charges.

Source: “Psychotherapist accused of being marijuana dealer,” Kansas City Star,” December 17, 2010.

Prosecutors bring additional charges against therapist Thomas P. Jewell; already facing child porn charges

In December 2010, Contra Costa (California) County prosecutors amended the charges against marriage and family therapist Thomas P. Jewell.

Jewell had initially been arrested on child pornography charges last November, after police found a large amount of such material in his home.

Jewell had been employed for several years by the mental health division at Contra Costa County Health Services, assigned to Juvenile Hall.

Investigators found 13,000 images of child pornography on computers seized from Jewell’s home in November.

The complaint against Jewell was amended when one of the victims was identified in the images.

Jewell was additionally charged with 46 counts of child molestation, one count of posing a child for the purpose of pornography, one county of showing pornographic material to a child and one count of possession of child pornography.

His bail was increased from $1 million to $5.8 million in light of the molestation charges.

Source: Robert Salonga, “Contra Costa Juvenile Hall counselor arrested in child pornography case,” Contra Costa Times, 18 November 2010 and ”Youth counselor charged with porn, molestation,” Associated Press, December 6, 2010.

Mental health counselor Joshua Johnmeyer charged with Medicaid fraud

On December 7, 2010, the Missouri Attorney General announce that licensed professional counselor Joshua Johnmeyer was charged with four felony counts of Medicaid fraud, one count of obstruction and one count of stealing by deceit.

Johnmeyer is charged with submitting false claims for payment to Medicaid for mental health counseling services he did not perform and for supplying the Attorney General’s Medicaid Fraud Control Unit with false patient records with the intention to defraud the state.

He is further charged with billing the state for more than $3,600 in false claims from January to September 2009.

Source: Emily Rittman, “Missouri Attorney General: Springfield counselor faces six felony counts in Medicaid fraud case,” KSPR-33 (ABC-TV affiliate), December 7, 2010.

Georgia psychiatrist, a “leading scientist,” arrested on a substance-related charge…again

An Georgia psychiatrist was arrested on drug charges Monday after police went to his home to investigate an assault.

After arriving at the home of Jeffrey Lynn Rausch, 58, investigators discovered drug paraphernalia and a small amount of Ecstacy, a schedule I narcotic, said Columbia County sheriff’s Capt. Steve Morris.

Information on what Rausch is charged with was not immediately available.

In January 2009, Rausch was charged with possession of a Schedule II drug and traffic violations after police pulled him over for making an illegal U-turn. They found marijuana residue and blue powder in his car. Three other people were found in his home with drugs.

In March, Rausch was arrested again and charged with possession of a controlled substance and traffic charges, including driving on a suspended license.

Morris said police are still investigating the assault.

In 2005, Rausch was detained at the Aiken County Sheriff’s Office and missed his April 23 wedding in Augusta, according to The Augusta Chronicle archives.

The groom-to-be first caught Richmond County deputies’ attention when he crashed into a cruiser in front of Sacred Heart Cultural Center, the location of his soon-to-be wedding. He was found with an open bottle of gin in his car. However, because he registered below the legal limit, he was charged with open container and let go.

Several hours later in North Augusta, Rausch ran off the road, jumped a curb, hit a light pole and two trees on Georgia Avenue. He was arrested and charged with DUI and transporting legal liquor unlawfully, police said.

Several bags of tropical fish were also located in his vehicle, along with open bottles of gin and tequila.

Rausch is a former professor and Case Distinguished Chair in Psychiatry at the former Medical College of Georgia, now known as Georgia Health Sciences University. He was inducted into the American College of Neuropsychopharmacology in 2007, according to a news release issued at the time by MCG.

The organization, limited to about 700 leading scientists, aims to better understand brain disorders and behavior and advance the prevention and treatment of those disorders. Membership is limited to those making major research contributions toward that goal. Rausch was the first member of the organization from MCG.

A widely recognized expert on depressive, bipolar, anxiety and Asperger’s disorders, Rausch published a study in a Neuropsychopharmacology that identified a mechanism of serotonin receptor adaptation that explains differences in response to antidepressants.

Source: “Evans psychiatrist arrested on drug charge,” Augusta Chronicle, February 7, 2011.

Psychologist charged with sexual misconduct with patient; he admit he fondled her

A psychologist at a southwest suburban mental health center was ordered was formally charged Friday with sexual misconduct with a disabled patient.

Dr. Robert Eizenga, 66, of Tinley Park, was charged Jan. 19 with one count each of sexual misconduct with a disabled person and official misconduct, according to Chicago Police.

On Jan. 20, he was ordered held on $150,000 bond, according to the Cook County State’s Attorney’s office. Add on Friday, Eizenga was indicted on the charges, according to state’s attorney’s office spokeswoman Tandra Simonton.

Eizenga, a forensic psychologist, has been employed by the state Dept. of Human Services for more than 20 years, according to the state’s attorney’s office.

At the time of the alleged incidents, he was working at the Tinley Park Mental Health Center at 7400 W. 183rd St. as court liaison to the state’s attorney’s office and the Guardianship and Advocacy Commission.

Court records show that on April 25, 2010, a 45-year-old woman was admitted as an inpatient suffering from depression. A few days after she was admitted, Eizinga took her into a conference room and said he would try to help her.

A couple of days later, he told the victim he had a “sex addiction,” was going to get divorced and was going make the victim “feel better.” He allegedly pulled his chair closer to hers, rubbed her leg and said he could get her a job, prosecutors said.

He then fondled her, exposed himself and told the victim to perform a sex act on him, threatening that he could keep her in the facility or send her to the Read Mental Health Center if she did not comply, prosecutors allege.

She performed oral sex because she believed he would force her to remain at the center, though she was there voluntarily. prosecutors said.

After a second similar encounter, the victim told her sister, who made numerous calls to the center trying to have her sister discharged. On the day the victim was discharged, Eizenga went to her room and gave her $20 and his business card, prosecutors said.

Eizenga later called the woman and bought her a cell phone using the name “Sam Doe.’’ He later gave her $100 to “keep her mouth shut,’’ court records show. On May 12, 2010, the victim called the facility to make a complaint and Eizinga was placed on administrative leave.

On Oct. 13, an Illinois State Police Special Agent placed Eizenga under arrest and he gave a handwritten statement admitting he told the victim he had a sex addiction and was getting divorced, but he claimed the victim wanted to have sex with him.

He admitted he fondled her and gave her $20, but said the woman asked for $500 and a bus ticket to Atlanta, according to the state’s attorney’s office. He said he then stopped communicating with her.

Source: “Psychologist indicted for sexual misconduct with patient,” Chicago Sun-Times, February 4, 2011.

Maryland psychiatrist loses license in Pennsylvania following loss of Maryland license for long-term sex affair with patient

On November 23, 2010, the Pennsylvania Department of State Medical Board accepted the permanent voluntary surrender of psychiatrist Myron David Brenner’s license because his license was disciplined by the proper licensing authority of another state and he failed to report this action within 60 days after its occurrence.

This action makes reference action taken against Brenner in the state of Maryland.  Specifically, on October 22, 2008, the Maryland Board of Physicians accepted the surrender of Brenner’s license “to avoid disciplinary charges and the prosecution of the charges based on his unprofessional and sexual relationship with a female patient while under his care as her treating psychiatrist.”

“…during my treatment of this patient, I maintained a personal diary concerning our interactions during treatment sessions and our sexual relationship.”

A letter of surrender from Dr. Brenner to the Board states that he carried on the sexual relationship “for about four years” with the patient; that he engaged in self-disclosure with the patient (informing her about issues in his personal life); received monetary gifts and loans from the patient and also gave the patient gifts.

Lastly, he stated that, “…during my treatment of this patient, I maintained a personal diary concerning our interactions during treatment sessions and our sexual relationship.”

He may not apply for nor seek reinstatement of his medical license for five years.

Source: January 2011 Disciplinary Actions report, Pennsylvania Department of State and Letter from Myron D. Brenner, M.D. to Robert G. Hennessy, M.D., M.B.A., Chairman of the Maryland Board of Physicians, Re: Surrender of License to Practice Medicine, as posted on the website of the Maryland Board of Physicians.

This story used with permission of Citizens Commission on Human Rights International.