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For users of Philips Respironics respirators, the past few years have been a nightmare in many ways. First came complaints of illness or injury caused by the equipment. Then the death was reported. Then came a massive recall, which had its own problems.
Now, ProPublica has learned of another episode. As Philips struggles to implement a recall in 2022, it has turned to its largest distributor, Lincare, to ensure replacement devices reach patients who need them most. But instead of sending those machines to vulnerable long-time users, as Philips had expected, Lincare diverted thousands of machines to new customers, resulting in increased profits. Some patients were unable to receive replacement ventilators for two years. Meanwhile, complaints to the FDA reporting deaths (561) and illnesses, injuries, and malfunctions (116,000) related to recalled devices continued to rise.
The issues with Philips first became public in June 2021, when the company announced that the sound-deadening foam lining its devices, primarily CPAP machines, had decomposed, releasing potentially toxic particles and smoke into users. It warned that it could be sent into the throat and lungs of people. (Millions of people use such “continuous positive airway pressure” devices to treat sleep apnea, a condition in which breathing stops and starts repeatedly during the night.)
Philips has issued a recall. The company has halted sales to new customers and vowed to focus its manufacturing capacity on replacing recalled devices with safer, redesigned CPAP devices “as quickly as possible.” (Phillips’ recall and the complicated history leading up to it were the subject of a series of investigations by ProPublica and the Pittsburgh Post-Gazette.)
However, this recall was marred by problems, with many patients not receiving replacement devices by spring 2022. Some were told by Phillips that they might have to wait another year. This means the company will not be able to meet its plan to replace all recalled equipment by the end of 2022. As a result, even patients who received double lung transplants had to wait. It lasted for months.
Under pressure from the Food and Drug Administration, which regulates the safety of medical devices, Philips has announced a “priority approach” to provide new devices first to the “most vulnerable” patients, those who are most respirator-dependent. agreed to pursue. According to the FDA notification order dated March 10, 2022, Philips is committed to delivering all safe devices it manufactures to the most critically ill patients as quickly as possible.
Lincare is the largest respiratory sales company in the United States. The company buys tens of thousands of CPAP machines from manufacturers like Philips each year and collects rental fees for up to 13 months to provide them to patients, with insurance companies like Medicare picking up most of the money. I am receiving it. Lincare also sells advantageous replacement supplies such as masks, filters, and hoses. A recent investigation by ProPublica found that the company has a long history of fraud, including repeated overcharging of Medicare and elderly patients, and that Lincare has been placed on the equivalent of Medicare probation four times in the past quarter century. I am receiving it.
Lincare and most other distributors have refused to actively cooperate with Philips’ recall, according to four people familiar with the recall. They complained that Philips was not providing enough funding to carry out the work to pick up and replace old equipment. Meanwhile, Philips’ CPAP problems weighed on Lincare’s profits, as it lacked new machines to make money while the recall was ongoing.
But Lyncare executives found a way to use the recall to the company’s benefit. In late March 2022, Lyncare Chief Operating Officer Greg McCarthy announced plans to mitigate the financial blow, according to Sam Markovich, one of the company’s four regional vice presidents at the time. Announced to the president and others. McCarthy said on Friday’s regular conference call that Philips had arranged for Lincare to provide 20,000 CPAP machines free of charge.
Philips has promised to direct the FDA to prioritize customers who need it most and send all new machines to replace recalled devices. But that’s not what Lincare had planned for supply. Instead, Mr. Markovich said, Mr. McCarthy told the agent that Lincare would provide the devices to new customers. That way the company will make more money. Even if existing customers continue to pay for consumables in the recalled machines, Lincare could add more patients. At the end of the conference call, McCarthy said Markovich frequently advised him, “If you’re not growing, you’re dying!”
Spence Hodges, who was then the head of sales for Philips’ Lincare division and was given a copy of the recording, said McCarthy later told the story of how he acquired the machine in a private conversation recorded on tape. . In that conversation, Mr. McCarthy led Philips to believe that Lincare would use the device to replace recalled devices that it owned and needed for existing patients in long-term care facilities, such as nursing homes and assisted living facilities. said.
This article is based on testimony from Mr. Markovich, other former Lyncare employees, and Mr. Hodges. Lincare has a history of litigation with former executives, firing Markovich in 2022 and suing him for more than $100,000 in restitution for alleged unreasonable expenses. Earlier this year, a judge granted summary judgment in Lyncare’s favor. Markovic disputes the allegations.
Philips declined to comment on Lincare’s role in the recall. However, Philips acknowledged in a written statement that the new CPAP machines it provided were to be used as replacements for the recalled machines: All decisions made by Philips Respironics to allocate patients’ needs are based solely on the patient’s priorities. Our position has been, and continues to be, that all devices manufactured in response to recalls in the United States are intended only for affected patients. ”
An FDA spokesperson declined to interview officials or comment on Lincare’s actions, but said, “We are working through this recall to protect affected patients and ensure they receive relief.” It was a top priority for FDA.”
Lincare also declined to make executives available for comment. In response to a summary of this article’s findings provided separately to the spokesperson and COO McCarthy, the spokesperson emailed the following two-sentence response: We take this issue seriously and are looking into it. ” McCarthy has not commented.
Lincare has approximately 700 locations in the United States, including one in Libby, Montana. Credit: Rebecca Stumpf, Special to ProPublica
In early April 2022, shortly after meeting with Mr. McCarthy, Lincare’s vice presidents and others across the country were scheduled to receive a shipment of missing Philips CPAP machines to pass on the COO’s order to use them on new patients. We started contacting regional center administrators. Markovich said he personally notified five managers in four states.
Some people were surprised to learn that Lincare makes devices available for new customers (or “set-ups” in industry parlance). The new machines helped one regional center exceed its monthly quota for new CPAP sales despite the recall, according to a former manager who requested anonymity. “I founded over 100 companies during that time,” the former manager told ProPublica. “I always remember that I had two more palettes left before I knew I had to cancel the setup. [arriving]. It was just perfect timing. ”
Hodges, Philips account executive for Lincare, learned of Lincare’s plans by June 2022. Hodges told ProPublica that he immediately reported what he heard to Phillips management. A few weeks later, he said he received a recording of McCarthy discussing how he had misled Phillips and gave it to his boss. “All I know is that the information was brought back to me and went through the proper channels at Phillips,” he said. I turned everything upside down and let them decide what to do with it. ”It is unclear what action, if any, Phillips took in response to that information.
Hodges, who will leave Phillips in 2023 after 15 years, said he was upset at the time. “People had to wait,” he says. “In my opinion, these devices are intended to be used by patients who need a device replaced, and I felt strongly that that is what they should be used for. I did my best.”
It’s unclear exactly how long some patients had to wait for new equipment due to Lincare’s repurposing. It wasn’t until October 2023 that Philips announced that it had met “more than 99%” of the requests of patients registered for the recall. (These patients received new devices or, in some cases, were paid for.) That means some users may have waited as long as two years for a replacement device.
As ProPublica previously reported, Philips waited years to address health complaints and internal concerns before announcing a recall in June 2021 that included both CPAP machines and ventilators. Since then, the company has faced an ongoing federal criminal investigation and more than 700 lawsuits. . Starting in December 2023, Philips will admit no fault, receive a $1.7 billion settlement, be indefinitely banned from selling new respirators in the U.S., and provide health monitoring and payments to affected customers. agreed to a federal consent decree to do so.
Philips has had a long-standing and successful relationship with Lincare. Philips’ efforts to increase sales to Lincare and other distributors have led to three federal civil lawsuits alleging that Philips gave kickbacks to distributors. In 2016, Philips agreed to pay $34.8 million to resolve allegations that the company illegally provided free call center services in exchange for purchasing Philips CPAP masks. In 2022, the company allegedly paid $24 million to resolve allegations that it provided physician prescription data to Lincare and other companies in exchange for device orders, as well as arranging interest-free loans to purchase the devices. The company agreed to pay $1.3 million for the issue. (Phillips denied wrongdoing in each case.)
Philips agrees to pay $1 billion to patients who claim they were injured by respiratory equipment
Recently, Lyncare and Philips have been facing each other in court, with Lyncare being the plaintiff. The company sued Philips in February in state court in Pennsylvania, where Philips makes devices. Lincare is seeking “millions of dollars” in costs and losses caused by the recall, citing indemnity provisions in its contract with Philips. Phillips has not filed a response to the lawsuit. However, in a public filing with the Securities and Exchange Commission, Phillips said it is “discussing the level of compensation to which some of our business partners may be claimed to be entitled” as a result of the recall.
Tom Wilson, administrator of the 7,700-member CPAP recall support group on Facebook, said Lincare’s actions in the recall were “appalling.” Even in mid-2022, many patients are still waiting for new, safer machines, he said. People with severe apnea were not able to easily stop using the recalled devices and were particularly frightened and desperate to obtain replacements. “I have something touching my face for eight hours every night, and I don’t know how safe or dangerous this device is.”
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