Healthcare Business News

NQF panel member admits he got $11M from CareFusion, but calls kickback allegations surprising

By Joe Carlson
Posted: January 21, 2014 - 7:15 pm ET

Renowned quality expert Dr. Charles Denham confirms that CareFusion paid his company more than $11 million, but Denham says he was surprised to see the U.S. Justice Department describe the money as kickbacks intended to influence national quality-of-care guidelines published by the National Quality Forum.

The government alleges in court records that CareFusion struck agreements with Denham's company, Health Care Concepts Corp., in 2008 to pay him $11.6 million to promote the company's products while he served as co-chair of an NQF committee that published evidence-based industry guidance on patient-safety topics. The committee initially recommended surgeons use a specific CareFusion product, but that line was removed before publication.

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The Justice Department named Denham in a settlement agreement with CareFusion involving off-label marketing and in a recent news release about the case. His attorney emphasized Tuesday that the whistle-blower lawsuit does not include any allegations against Denham, and he described the contracts at issue as coming well before the NQF took interest in the benefits of alcohol-based skin preparations such as CareFusion's ChloraPrep.

The settlement between CareFusion and the Justice Department lays out the allegations this way: “The United States contends that CareFusion's payments to HCC were made for the purpose of influencing Dr. Denham's work as co-chair of the Safe Practices Committee and for the purpose of inducing Dr. Denham to recommend, promote and/or arrange for the purchase of CareFusion's product, ChloraPrep, in violation of the federal anti-kickback statute.”

On Jan. 9, CareFusion announced the payment of $40 million to settle allegations that it had marketed ChloraPrep for uses not approved by the Food and Drug Administration between 2009 and 2011. The company signed a nonprosecution agreement as part of the deal and did not admit wrongdoing.

It was the Justice Department, not whistle-blower Dr. Cynthia Kirk, a former CareFusion vice president, who accused Denham of receiving kickbacks, court records show.

Denham's lawyer, Larry Gondelman of Powers Pyles Sutter & Verville in Washington, acknowledged that CareFusion did pay Denham's company under two contracts.

But he said the two contracts in question were signed in 2008, which was before the New England Journal of Medicine published a study extolling the virtues of alcohol-based skin preparation products. Gondelman said the NQF committee considered the NEJM study when it drafted the recommendations in 2010.

“That study provided the impetus for the NQF to examine what kind of recommendation, if any, they might come up with,” Gondelman said.

Gondelman said the $11.6 million paid to Denham's company covered “an array of services” and that he could not elaborate.

The Justice Department, though, says the contracts were written to look as though CareFusion was buying consulting, software development and strategic marketing services, as well as the completion of three unnamed projects. The value of the deals, the government alleges, far exceeded the fair-market costs of those services, and that one of the actual purposes of the deals was to conceal kickbacks to Denham while he served on the National Quality Forum.

The NQF is a standards-setting organization for the healthcare provider industry. It holds the exclusive contract to provide Medicare and Medicaid with recommendations on a national quality-of-care strategy and the measures used to gauge improvements.

The NQF has acknowledged that the committee Denham co-chaired initially recommended using ChloraPrep products prior to surgeries. But the reference to the specific product was removed “after an NQF ad hoc review did not find sufficient evidence to support one skin preparation over another,” a Jan. 16 statement said.

“The ad hoc review effectively served its role of rapidly responding when a potential issue is identified,” the NQF statement says. “This structure is an important safeguard that allows information from the field to surface in order to facilitate expert review and an NQF response as appropriate.”

Follow Joe Carlson on Twitter: @MHJCarlson

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