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Dr. Charles Denham
Photo credit: SafetyLeaders/Flickr

Denham leaves volunteer post at Leapfrog in wake of CareFusion kickback allegations

By Joe Carlson
Posted: January 29, 2014 - 7:45 pm ET

The Leapfrog Group, a national patient-safety organization, has launched an aggressive internal probe into the actions of Dr. Charles Denham, who on Wednesday resigned his longtime role with the group. The U.S. Justice Department recently accused Denham of taking $11.6 million in kickbacks for his influence in setting care guidelines.

Several hours after Modern Healthcare inquired about Denham's status with Leapfrog, a representative for Denham released a one-sentence statement saying he had resigned his volunteer role with Leapfrog “in order to minimize distractions.”

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Leapfrog President and CEO Leah Binder said the board of directors will likely welcome the announcement when it meets Friday, but it doesn't resolve the “full range of issues” that have been raised regarding how it should address Denham's apparent lack of transparency in his financial dealings with industry. Leapfrog is also implementing stronger conflict disclosure rules.

“We take this as a very serious situation,” Binder said. “Our mission is transparency, and we have the highest standards for scientific integrity. And both of those appear to have been compromised in this situation.”

Leapfrog's concerns about Denham were raised by the revelation earlier this month that Denham received $11.6 million in contracts from healthcare supplier CareFusion in 2008. In 2009 Denham co-chaired a National Quality Forum committee that recommended U.S. hospitals use infection-prevention treatments contained in CareFusion products rather than products by other companies, including 3M.

A spokesman for Denham said in an e-mail Wednesday that "Dr. Denham denies that his work on patient safety issues was impacted in any way by financial contributions from anyone.”

In 2009, Denham's Austin, Texas-based not-for-profit research organization, the Texas Medical Institute of Technology, was actively researching safe practices and providing staff support for the NQF committee. Two members of the committee told Modern Healthcare in interviews last week that they were uncomfortable with how much work the outside organization seemed to be doing on behalf of the rushed committee, especially given scant scientific support for two wording changes that benefited CareFusion.

“I had no inkling of the connection with CareFusion,” said University of California at Davis professor Dr. Patrick Romano, who served on the NQF committee and expressed reservations about the rapid pace of the committee's work.

Now they know Denham's private company, Health Care Concepts, was being paid millions of dollars directly by CareFusion in what the Justice Department describes as overpriced contracts that weren't enforced to their own terms, leading the government to conclude that the money was intended in part as a kickback.

HCC is described online as working as a “business-development accelerator” on more than 400 product teams for devices, pharmaceuticals, capital equipment and health-information technology.

Meanwhile, Denham maintained similar relationships with Leapfrog that he had with NQF.

TMIT has a long history of also providing volunteer services to the Leapfrog Group—work that cost TMIT more than $50,000 to perform in 2011 alone, according to TMIT's public tax forms. Binder said the work included the development of a tool used to grade hospitals on how well their computer systems detect potential drug conflicts and other complications in patient records.

Denham had a long-standing role as chairman of the safe practices program at Leapfrog, which represents the interests of about 200 Fortune 500 companies. His unpaid work at Leapfrog involves the establishment of a national pay-for-performance program that measures how well hospitals adopt the NQF-endorsed practices developed by the committee he chaired there.

Denham did not disclose the payments from CareFusion to the NQF, and Binder said he hasn't told Leapfrog about that money or any other potential conflicts involving payments from industry to his private company. While that hasn't triggered actions involving his work at Leapfrog yet, that may still happen, she said.

“We don't think there was adequate transparency on the part of Dr. Denham,” Binder said. “Whatever the merits of the allegations and arguments back and forth, or rumors or anything else, fundamentally there is a very significant lack of transparency about a significant matter and that is deeply troubling to us.”

CareFusion paid $40 million earlier this month to resolve the Justice Department's allegations that the company mislabeled a product and paid kickbacks to Denham in an attempt to influence his work at the NQF.

Although the Justice Department settlement directly accused Denham of violating the federal anti-kickback law, Denham has not been charged criminally or sued over the alleged conduct.

His attorney, Larry Gondelman, has said Denham has been wrongly accused in media reports of being sued for receiving kickbacks. Gondelman acknowledged that payments totaling $11.6 million passed from CareFusion to HCC in 2008.

“Dr. Denham has cooperated in the past with the government's investigation of CareFusion and will continue to do so in the future,” Gondelman wrote in a Jan. 20 e-mail to Modern Healthcare.

Follow Joe Carlson on Twitter: @MHJCarlson

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