Philips Exits a Scandal-Ridden Business

It has taken a long time, but Royal Philips finally did the right thing with regard to its troubled machines for sleep apnea and other respiratory problems: the company has stopped selling the devices in the United States.

The Dutch company took the step as part of a settlement it has been negotiating with the Justice Department and the Food and Drug Administration, which pressed the company to deal more aggressively with a longstanding defect in its continuous positive airway pressure (CPAP) machines. The problem stemmed from an industrial foam used in the devices to reduce noise but which could break apart and cause users to inhale potentially dangerous particles.

This issue has been known for years. In 2021 Philips voluntarily recalled several million devices, but it appears the company was aware of the foam problem long before taking that action. An investigation by ProPublica and the Pittsburgh Post-Gazette found that the company was receiving complaints as early as 2010, yet it failed to make the FDA aware of the magnitude of the problem as the volume of those complaints reached into the thousands: “Again and again, previously undisclosed records and interviews with company insiders show, Philips suppressed mounting evidence that its profitable breathing machines threatened the health of the people relying on them, in some cases to stay alive.”

Philips is likely to end up paying billions of dollars in legal settlements. It has already agreed to a $479 million settlement with plaintiffs claiming economic damages from having to replace defective machines affected by the recall. Tens of thousands of personal injury cases have been filed and will probably get aggregated. The monetary penalties in the settlement with the Justice Department are not yet known.

This scandal is a major blow to the reputation of a company once known for benign products such as electric shavers and video cassette recorders. Yet in recent years the company has had other problems as well. As documented in Violation Tracker, it has paid over $450 million in fines and settlements over the past two decades.  

About half of this total comes from cases involving alleged price-fixing of electronic equipment, and $62 million comes from a Foreign Corrupt Practices Act case stemming from allegations of making improper payments to officials in China to promote sales of medical equipment.

Another $151 million in penalties stems from False Claim Act cases in which the company was accused of defrauding the federal government. Half a dozen of these cases involved the Respironics business Philips acquired in 2008 as its way into the CPAP field. Philips paid over $50 million to settle allegations that it gave illegal kickbacks to medical equipment suppliers to induce them to order its products.

Given this track record, the accusation that Philips tried to cover up the magnitude of the foam problem does not come as a surprise. What is surprising is that it has taken the Justice Department so long to resolve its case against Philips, while it remains unclear whether the company will face criminal charges. Many of its customers would like to see that happen.

Whose Advantage?

Progressive Democrats such as Bernie Sanders have long promoted Medicare for All as the solution to the country’s health insurance problems. Given the popularity of Medicare among the seniors it serves, extending the program to other age groups has a great deal of appeal.

The problem, though, is that Medicare is not a single program. It is an assortment of coverage options that can be bewildering to those turning 65 and to participants during the open enrollment period each year when they must decide whether to stick with their current plan or jump to another. The 2024 open enrollment period began on October 15th and ends December 7th.

Seniors are currently being bombarded with coverage offers, not from the federal government, which oversees Medicare, but from the private insurance companies which have gained a significant foothold in a nominally public program.

That involvement may take the form of supplemental coverage for the 20 percent of medical costs Medicare does not cover. Prescription drugs coverage, which was not part of traditional Medicare, was added in 2006 through a system that requires most participants to purchase plans from private insurers.

Most problematic is the coverage designated as Medicare Part C, which is more commonly known as Medicare Advantage (MA). Whereas traditional Medicare operates much like the fee-for-service health insurance many Americans receive through their employer, MA is more akin to a health maintenance organization or HMO. Instead of paying doctors and others for providing service, MA gives plan providers, which are usually commercial insurers, a lump sum for each beneficiary. They are then responsible for managing patient care. Around half of Medicare participants are in MA plans.

MA providers claim that they can offer improved care, including services such as dental and vision which are not included in traditional Medicare. They also depict themselves as the solution to runaway medical costs. To the extent this is true, the MA providers achieve these results through many of the same ruthless practices that gave HMOs and managed care a bad name starting in the 1990s.

That means erecting roadblocks to care by limiting beneficiaries’ choice of providers, requiring prior authorization for many procedures and refusing authorization at a high rate.

It turns out that MA also fails to deliver on the promise of reducing healthcare costs for the Medicare program. A recent report from Physicians for a National Health Program estimates that the way MA’s capitated system is structured causes taxpayers to overpay the plans at least $88 billion per year and perhaps as much as $140 billion.

Along with these technical reasons is old-fashioned fraud. The Justice Department recently announced that Cigna  would be paying $172 million to settle allegations that it submitted “inaccurate and untruthful” diagnosis codes to the federal government to inflate risk adjustments and thus boost the MA payments it received.

Cigna is not alone. As shown in Violation Tracker, Sutter Health paid $90 million to resolve allegations of submitting inaccurate information about the health status of its MA beneficiaries in order to get its payments increased. It had previously paid $30 million for similar misconduct.

An analysis last year by the New York Times found that all but one of the top ten MA providers had been accused by the federal government of fraud or overbilling.

When we talk of Medicare for All, we need to be clear that means an extension and ideally an enhancement of traditional Medicare–not the false promise of Medicare Advantage.

Non-Profit Hospitals Need to Heal Themselves

Providence, a gigantic non-profit health system with more than 50 hospitals in five Western states, describes itself as “steadfast in serving all, especially those who are poor and vulnerable.” According to a recent New York Times investigation, Providence has also preyed on those populations by using aggressive techniques to get payments from patients who should have been given free care. Those techniques, dubbed Rev-Up, were developed with the help of the consulting firm McKinsey, which the Times said was paid more than $45 million for its advice.

Now Providence is trying to repair the damage to its image. The Times reports that the health system is providing refunds to more than 700 low-income patients who were hounded into making payments for their care. Providence is not disclosing how much its is refunding, but the amount is likely to be a small fraction of what ruthless efforts such as Rev-Up brought in. A lawsuit filed by the Washington State Attorney General accuses Providence of improperly siccing debt collectors on more than 50,000 patients.

Failing to live up to its obligation to provide free care is just one of the ways in which Providence has acted as something less than a model non-profit institution. As documented in Violation Tracker, the health system has paid out more than $380 million in regulatory fines and class action settlements. These include cases involving issues such as wage theft, workplace safety and privacy. It has paid out over $28 million in False Claims Act cases, which involve submitting fraudulent bills to federal programs such as Medicare. Providence’s biggest payouts have involved cases in which it was accused of mismanaging employee retirement plans.

Providence is just one of dozens of large non-profit health systems that show up in Violation Tracker with large penalty totals from multiple cases. The system that tops the list is California-based Sutter Health, which has racked up $749 million in penalties from 46 cases. The largest of these was a $575 million settlement with the California Attorney General and other parties, which accused Sutter of engaging in anti-competitive practices that drove up healthcare costs. Sutter has also paid $170 million in False Claims Act cases.

Apart from Providence and Sutter, about 20 other non-profit health systems have paid out at least $50 million in penalties. These include Trinity Health ($328 million), RWJBarnabas Health ($277 million) and Northwell Health ($208 million). About 120 others have paid at least $1 million.

Many of these penalties result from a preoccupation with the bottom line, which leads the health systems to cut corners on compliance, shortchange their employees and cheat the government. The non-profit hospital systems may not have shareholders, but they seek to generate ever-larger surpluses that can be used for building new facilities and buying up competitors. Expansion seems to be the ultimate goal.

Their behavior makes them increasingly indistinguishable from the giant for-profit health chains HCA and Tenet, each of which has well over $1 billion in penalties. The difference, of course, is that the public is subsidizing the non-profits by relieving them of the obligation to pay taxes. The time has come to force the giant hospital systems such as Providence to focus less on empire-building and more on their social obligations.

Rescuing the Cheaters

The federal government has been sending tens of billions of dollars in aid to the country’s hospitals under the Provider Relief Fund created by the CARES Act. That’s all well and good. Yet there is an awkward aspect to this: quite a few of the recipients have been accused of cheating the federal government in the past.

I’ve been working closely with the relief fund data in recent days, in order to prepare it for uploading to Covid Stimulus Watch. I’ve noticed that numerous recipients are hospital chains that have been involved in cases brought under the False Claims Act (FCA), the law that is widely used by the federal government to go after healthcare providers and contractors for billing irregularities or other improprieties in their dealings with Uncle Sam.

Matching the Provider Relief Fund recipients to the FCA data my colleagues and I have collected for Violation Tracker, I found more than 100 overlaps for the period extending back to 2010. These include both for-profit and non-profit hospital systems.

The company that has received the most from the basic Provider Relief Fund (there is a separate set of awards to hospitals that have treated large numbers of covid patients) is also the hospital chain that has paid the most in FCA penalties over the past decade: Tenet Healthcare.

In 2016 Tenet and two of its subsidiaries had to pay over $513 million to resolve criminal charges and civil claims relating to a scheme to defraud the United States and to pay kickbacks in exchange for patient referrals. The subsidiaries pled guilty to conspiracy charges.

Community Health Systems, another big for-profit hospital chain participating in the relief fund, has been involved in ten different FCA controversies over the past decade. In 2018 one of its subsidiaries had to pay $260 million to resolve criminal charges and civil claims that it knowingly billed government health care programs for inpatient services that should have been billed as outpatient or observation services; paid remuneration to physicians in return for patient referrals; and submitted inflated claims for emergency department facility fees.

Among the non-profit relief fund recipients with FCA problems is Michigan-based Beaumont Health, one of whose hospitals had to pay $84 million in 2018 to resolve allegations that it made payments to referring physicians that violated the Anti-Kickback Act as well as the FCA.

CommonSpirit Health, the large Catholic health system, has numerous affiliates receiving relief funds that have faced FCA allegations. For example, in 2014 Dignity Health had to pay $37 million to resolve allegations that 13 of its hospitals in California, Nevada and Arizona knowingly submitted false claims to Medicare and TRICARE by admitting patients who could have been treated on a less costly, outpatient basis.

Altogether, at least 103 health systems whose facilities are participating in the relief fund have paid more than $4 billion in False Claims Act settlements and fines over the past decade.

Given the magnitude of the covid crisis, it would be difficult to argue that these providers should be denied assistance. Yet there should at least be additional safeguards put in place to make sure that they do not engage in similar transgressions when it comes to CARES Act funds.

Note: A list of companies receiving $500,000 or more from the Provider Relief Fund can be found here. A list of recipients of the high-impact awards can be found here.

Corporate-Owned Nursing Homes and Covid-19

It was only a few days ago that the Centers for Medicare and Medicaid Services announced that nursing homes will be required to notify residents and their families when coronavirus cases have been discovered in a facility. This comes many weeks after the Life Care Center in Kirkland, Washington became an early Covid-19 hotspot and deaths started mounting at other nursing homes across the country.

Even before the pandemic began, conditions in the nation’s roughly 15,000 nursing homes, which house some 1.5 million residents, were far from ideal. As a Washington Post investigation recently found, about 40 percent of nursing homes with publicly reported cases of coronavirus — the list of which is far from complete, given varying transparency practices among the states — had been previously cited by government inspectors for violating regulations meant to control the spread of infections. This made them all the more susceptible to coronavirus.

The blame for that poor track record rests to a significant degree with the large corporations, including private equity firms, that control a substantial portion of the country’s nursing homes. While the Washington Post story did not identify the parent companies of the facilities with reported Covid-19 cases, the data in Violation Tracker shows the compliance problems at those corporations.

The nursing home chain with the largest amount of total penalties is Kindred Healthcare, which has had to pay out more than $350 million in fines and settlements.  The bulk of that amount has come from cases in which Kindred and its subsidiaries were accused of violating the False Claims Act by submitting inaccurate or improper bills to Medicare and Medicaid. Another $40 million has come from wage and hour fines and settlements.

Kindred has also been fined more than $4 million for deficiencies in its operations. This includes more than $3 million it paid to settle a case brought by the Kentucky Attorney General over issues such as “untreated or delayed treatment of infections leading to sepsis.”

Golden Living Centers, a large chain owned by the private equity firm Fillmore Capital Partners, accounts for more than $200 million in fines and settlements. Golden Living is the current incarnation of Beverly Enterprises, which in the 1990s was the poster child of nursing home misconduct. In 2000 it paid $170 million to settle allegations that it defrauded Medicare by fabricating records to make it appear that staff members were devoting much more time to residents than they actually were.

Golden Living and Beverly have also paid more than $6 million in fines arising out of inspections of their facilities, including $1.5 million paid to the Arkansas Attorney General to resolve allegations of patient neglect.

Another chain with a problematic track record is Life Care Centers of America, operator of the ill-fated facility in Kirkland. The company has paid more than $147 million in fines and settlements, most of which came from a False Claims Act case in which it was accused of improperly billing Medicare for rehabilitation services.

The company has also paid more than $2 million in fines stemming from inspections, including $467,985 for nursing homes in Washington State. Life Care facilities appear numerous times on the Washington Post list of facilities with reported coronavirus cases.

Other chains with substantial penalty totals include Genesis HealthCare ($57 million), Ensign Group ($48 million) and National Healthcare Corp. ($28 million).

Among the many problems that have been brought into sharp relief by Covid-19 — and that will have to be addressed once we have gotten through the pandemic – is the sorry state of our nursing homes, too many of which seem to put profit ahead of safety for one of the most vulnerable parts of our population.

The Rap Sheets of the Big Ventilator Producers

Earlier this year, the U.S. Attorney’s Office in South Carolina announced that a company called ResMed had agreed to pay more than $37 million to settle allegations under the False Claims Act that it illegally paid kickbacks to promote sales of equipment used to treat sleep apnea.

The case did not receive much attention at the time, but ResMed, which also produces ventilators, is now one of the companies involved in the controversy over the distribution of equipment that hospitals desperately need to save lives during the coronavirus pandemic.

New York Gov. Andrew Cuomo and other state chief executives have been complaining about price-gouging and shipments that fail to materialize, as health systems across the country compete for a woefully inadequate supply of ventilators, some of which have reportedly been exported.

This apparent profiteering should come as no surprise, given the track record of the ventilator industry, in which ResMed is not the only producer with a history of alleged misconduct. In fact, all the big publicly traded companies in the industry have paid millions of dollars in penalties in False Claims Act, kickback and bribery cases.  Along with ResMed, they are Philips, General Electric, Hill-Rom, and Medtronic.

In 2016 a Philips subsidiary called Respironics agreed to pay $34.8 million to settle allegations similar to those faced by ResMed involving the payment of kickbacks to suppliers for the purchase of sleep apnea equipment. In 2013 the Securities and Exchange Commission ordered Philips to pay $4.5 million for violations of the Foreign Corrupt Practices Act stemming from improper payments to healthcare officials in Poland.  

In 2011 GE Healthcare agreed to pay $30 million to settle False Claims Act allegations that a subsidiary caused Medicare to overpay for a radiopharmaceutical used in certain cardiac diagnostic imaging procedures by giving the federal government false or misleading information about doses.

Also in 2011 Hill-Rom agreed to pay $41.8 million to settle allegations that for years it knowingly submitted numerous and repeated false claims to the Medicare program for certain specialized medical equipment – bed support surfaces for treatment of pressure ulcers or bed sores – for patients for whom the equipment was not medically necessary.

Since 2006 Medtronic and its subsidiaries have paid more than $160 million in penalties in eight False Claims Act cases. The largest of these was a $75 million settlement agreed to by Medtronic Spine to resolve allegations that its marketing activities caused hospitals to submit false claims for kyphoplasty procedures, minimally-invasive surgeries used to treat compression fractures of the spine caused by osteoporosis, cancer or benign lesions.

Along with the False Claims Act cases, which are civil matters, a Medtronic subsidiary agreed to plead guilty and pay more than $17 million in 2018 to resolve a criminal charge that it promoted a neurovascular device for uses that were not approved by the FDA and were potentially dangerous.

It is true that none of these cases involved mechanical ventilators, but they do suggest something about ethical practices at the five companies. These are corporations accused of putting their own financial interests ahead of those of the federal government and thus the taxpayers. One of them has a subsidiary that is literally a corporate criminal.  

The coronavirus crisis is exposing many vulnerabilities of U.S. society. Among them is that the survival of many thousands of people now depends in large part on the behavior of a group of companies that have been something less than model corporate citizens.

This makes it all the more scandalous that the Trump Administration refuses to make full use of the Defense Production Act to end profiteering in the ventilator industry and force it to serve the needs of the country during this national emergency.

Back Pedaling on Kickbacks?

It’s hard not to be suspicious when the Secretary of Health and Human Services promotes a supposed reform by stating that “President Trump has promised American patients a healthcare system with affordable, personalized care, a system that puts you in control, provides peace of mind, and treats you like a human being, not a number. But too often, government regulations have stood in the way of delivering that kind of care.”

Secretary Alex Azar used those dubious statements in a press release about his department’s plan to “modernize and clarify” the regulations that interpret the Physician Self-Referral Law (known as the Stark Law) and the Federal Anti-Kickback Statute.

Azar claims that the rule changes would promote new methods of delivering healthcare based on greater coordination among providers, including those with financial relationships with one another.

The changes are technical in nature, but I cannot help but worry that the scheme would serve to legitimize dubious dealings and enable providers to avoid prosecution under laws that have been in place for several decades.

I have become more familiar with these laws in the course of collecting data for Violation Tracker. The database currently contains more than 360 cases in which kickbacks and bribery are involved as the primary or secondary offense. These cases have resulted in more than $14 billion in fines and settlements involving many of the largest names in pharmaceuticals (Merck, Amgen, Bristol-Myers Squibb, Pfizer, et al.), hospitals (Tenet, HCA, among others) and pharmacies (such as CVS).

The biggest penalty is a $2.2 billion agreement signed by Johnson & Johnson in 2013 to resolve civil and criminal charges of paying kickbacks to physicians to encourage them to prescribe several of its drugs for uses not approved by the Food and Drug Administration.

One of those drugs was the anti-psychotic medication Risperdal, which was only approved for schizophrenia but which J&J was allegedly promoting for other less serious conditions among elderly patients through financial inducements to providers.

In an interesting coincidence, the announcement of the new HHS proposal came at almost exactly the same time that a jury in Philadelphia hit J&J with an $8 billion verdict over its marketing of Risperdal for use by children.

It will be interesting to see whether the new HHS rules on kickbacks, if they go through, manage to distinguish between more innocent financial dealings among providers and the corrupt practices that have been so common among the larger players. Given this administration’s track record on healthcare and so many other issues, we cannot give it the benefit of the doubt.

Have Voters Killed the Crappy Coverage Comeback?

Democrats seized the House while Republicans increased their majority in the Senate, but the unambiguous and across-the-board winner in the election was regulation – specifically, regulation of the health insurance industry.

Rarely has the public sent such a clear message that it wanted government to rein in corporations and market forces in favor of consumer and public interest protections. The desire to retain provisions of the Affordable Care Act protecting those with pre-existing conditions was key to Democratic gains. Republicans responded by pretending they agreed with that principle, but few were fooled by this deception.

At the same time, voters in three deep red states – Idaho, Nebraska and Utah – approved ballot initiatives in favor of ACA Medicaid expansion. This amounted to an embrace not just of regulation but of out-and-out government-controlled health coverage.

All these results should put an end to the longstanding Republican crusade to repeal the ACA, but it remains to be seen whether there is also a termination of the Trump Administration’s effort to undermine the law through steps such as allowing wider sale of substandard policies.

One encouraging sign came even before the votes were counted. On November 2 a federal judge in Miami, acting at the request of the Federal Trade Commission, issued an order temporarily shutting down a Florida company called Simple Health Plans LLC, which along with related firms was selling policies the FTC called “predatory” and “worthless.”

The FTC complaint against the companies spells out a variety of deceptive practices meant to make customers think they were buying real coverage when in fact they were getting medical discount memberships of limited value.

It’s telling that one of the websites used by the firms is called Trumpcarequotes.com. Trumpcare is actually an appropriate term for the crappy coverage—both because Trump has been touting such plans and because the Trump name has been involved in previous scams such as Trump University. Let’s not forget that after his election Trump had to pay $25 million to settle litigation related to that venture, a step that the New York State Attorney General called “a major victory for the over 6,000 victims of his fraudulent university.”

The ACA’s provisions relating to protection for pre-existing conditions are inseparable from those setting minimum standards for coverage. Ensuring the right of patients to buy insurance is meaningless if they end up with plans that pay for next to nothing.

The proliferation of junk insurance through the efforts of companies such as Aetna was one of the dismal realities of the U.S. health insurance market that gave rise to the ACA. Republicans have been promoting similar low-cost plans as their solution to the supposed crisis of Obamacare. This is a cynical ploy to use a perverse form of consumerism to restore the old days of limited regulation. Let’s hope the election results have taught them a lesson about the consequences of messing with healthcare.

Capital Punishment or Capital Reward?

When Betsy DeVos  was nominated to head the Department of Education, the main concern was what harm a “choice” crusader would bring to K-12 public schools. Recently we’ve seen that she can also cause damage with regard to post-secondary education.

DeVos announced plans to delay the implementation of rules on for-profit colleges that the Obama Administration fought long and hard to bring into being. Calling the plan unfair, DeVos said she wants to redo the rulemaking process from scratch – a clear sign that she wants to weaken or eliminate the restrictions.  That’s the premise of a lawsuit just filed against DeVos by the attorneys general of 18 states and the District of Columbia.

The Obama campaign against predatory colleges was one of the most consequential initiatives of the administration on corporate misconduct. In addition to the rules – one of which is designed to bar federal loans at schools whose graduates don’t earn enough to pay off their debt and another that would make it easier to erase debt incurred at bogus institutions – the Obama Education Department and the Consumer Financial Protection Bureau brought enforcement actions that helped bring about the demise of flagrant abusers such as Corinthian Colleges and ITT Educational Services.

And this came after the Obama Administration pushed Congress to get commercial banks out of the student loan business.

Taken together, the Obama era measures against predatory for-profit education represent one of the rare instances in which government action targeted not just an illegitimate practice or a miscreant company but an entire industry. The message was not simply that for-profit colleges needed to be reformed but rather that they should not continue to exist. It was capital punishment for capital.

It comes as no surprise that the billionaire DeVos, who has had personal involvement with dubious business ventures, is seeking to undo the crackdown on for-profit colleges. And it is yet another example of how the Trump Administration is working against the interests of those lower-income voters who put him in office.

The same dynamic can be seen in the healthcare arena. The Republican “solution” to the problems of the Affordable Care Act is to make it easier for insurance companies to offer bare-bones junk insurance while dismantling Medicaid, both in its traditional form and its expansion under the ACA. The latest version of the Senate bill is willing to retain the hated taxes on high-income earners as long as the assault on the socialistic Medicaid program moves forward.

It appears that the right’s desire to protect the interests of corporations – including the most predatory – is even greater than its wish to redistribute income upward. Thus the one thing that Republicans have made sure to do with their stranglehold on the federal government has been to roll back as many business regulations as possible.

It remains to be seen how long Trump and Congressional Republicans can get away with telling their working class supporters that predatory corporations are the ones that deserve relief.

 

 

The Insurance Industry’s No-Lose Situation

Many voices are speaking out about the Republican effort to undo the Affordable Care Act, but one party diligently refrains from public comment: the insurance industry. While the industry is undoubtedly exerting its influence in the closed-door negotiations to restructure the wildly unpopular GOP bill, it is not airing those views more widely.

It doesn’t have to, because the healthcare debate between the two major parties is largely a disagreement on how best to serve the needs of Aetna, Anthem and the other big players.

The ACA, of course, was built on the premise that government should expand coverage largely by providing subsidies to help the uninsured purchase plans from private companies. When those companies became dissatisfied with the composition of their new client base and starting jacking up premiums in response, ACA supporters were put in the position of advocating for new insurer financial incentives.

Meanwhile, the Republicans are seeking to help the industry by rolling back Medicaid expansion and allowing it to return to the pre-Obamacare practice of selling bare-bones junk insurance, which would be the only kind that many people could afford after subsidies are decimated.

This is probably a no-lose situation for the insurers: either they get paid more to provide decent coverage or they are freed to sell highly profitable lousy plans.

All those legislators catering to insurers one way or the other are forgetting that healthcare reform was made necessary by the ruthless behavior of that same industry. If those companies had not been denying coverage whenever possible, it would not have been necessary for the ACA to set minimum standards. And if those firms had not been raising premiums relentlessly, it would not have been necessary for the ACA to take steps — which turned out to be inadequate — to try to restrain costs.

The industry’s unethical practices are not limited to the individual marketplace. The big insurers have also exploited the decision by policymakers to give them a foothold in the big federally funded programs: Medicaid and Medicare.

As Senate Republicans were cooking up their repeal and replace bill, the U.S. Attorney’s Office in Los Angeles joined two cases against one of the industry’s giants, UnitedHealth Group. The whistleblower suits accuse the company of systematically overcharging the federal government for services provided under the Medicare Advantage Program.

The complaints in the cases allege that UnitedHealth routinely scoured millions of medical records, searching for data it could use to make patients seem sicker than they actually were and thus justify bigger payments for the company, which was also accused of failing to correct invalid diagnoses made by providers. Either way, the complaints argue, UnitedHealth was bilking Medicare Advantage, which was created on the assumption that bringing the private sector into a government program would cut costs.

Such assumptions continue to afflict federal health policy as a whole. Too many members of Congress continue to worship the market in the face of all the evidence that the private insurance industry cannot be the foundation of a humane healthcare system.