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Full Measure After Hours
After Hours: Did VA Doctors Take Bribes to Buy and Use Unnecessary Medical Devices on Vets? (From the Archives)
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- [00:00]
Cheryl Akison
Searching for a romantic summer getaway escape with Rich Girl Summer, the new Audible original from Lily Chiu, the exquisitely talented Philippa Hsu. Returning to narrate her fifth Lily Chu title. This time Philippa is joined by her real life husband, Steven pasquale. Set in Toronto's wealthy cottage country, a.k.a. the Hamptons of Canada, Rich Girl Summer follows the story of Valerie, a down on her luck event planner posing as a socialite's long lost daughter while piecing together the secrets surrounding a mysterious family and falling deeper and deeper in love with the impossibly hard to read and infuriatingly handsome family assistant, Nico. Caught between pretending to belong and unexpectedly finding where she truly fits in, Valerie learns her summer is about to get far more complicated than she ever planned. She's in over her head and head over heels. Listen to Rich Girl Summer now on audible. Go to audible.com richgirlsomer hi everybody. Cheryl Achison here. I hope you enjoy this special from the Archives edition of Full Measure After Hours. Hi everybody. Cheryl Akison here. Welcome to another edition of Full Measure After Hours. Today, a medical sales rep blows the whistle on an alleged kickback scheme where he says a company bribes staff at a VA hospital to buy unnecessary medical devices at taxpayer expense and use them in medically unnecessary procedures on Vets. On Sunday, April 21st on full measure, a fascinating story that you should care about on many levels, but not the least of which is that it involves alleged misspending of your tax money. A whistleblower claims that a company, Medtronic, bribed doctors at a VA hospital to get them to buy a ridiculous amount of Medtronic products unnecessarily and to use them unnecessarily on veterans at taxpayer expense. We're talking millions of dollars in official court filings. It's an alleged kickback scheme. Now I want to let you know before you hear the interviewer with the whistleblower and his allegations that all of this is the subject of legal action and investigations. Medtronic, the accused company, has said the allegations in this case are false and that Medtronic will continue to defend the litigation as it moves ahead. Medtronic has also said that it has a strong compliance and reporting program, including robust auditing and other internal controls. Now here's the whistleblower, Tom Schrader.
- [02:45]
Tom Schrader
If I summarize it, I would say it's a story of a typical scenario, whether it's healthcare or any other industry where there's always opportunity to take advantage of weaknesses and systems or opportunistic scenarios. And I think this is one that was a similar situation that started small in my estimation, and snowballed into something pretty unbelievable to the average person, including myself, when it was all said and done.
- [03:18]
Cheryl Akison
Can you tell me what kind of. Again, these. Just sort of asking for brief overviews. What kind of company is Medtronic?
- [03:25]
Tom Schrader
Oh, Medtronic is the largest medical device healthcare company in the world. I think they do somewhere in the 30 to 35 billion dollars in annual revenue.
- [03:36]
Cheryl Akison
And then for the purposes of our discussion, we're talking about things involving pad. Instead of saying PAD or pad, let's say what that is in the interview, which is peripheral artery disease.
- [03:48]
Tom Schrader
Peripheral arterial disease.
- [03:49]
Cheryl Akison
Arterial disease. Can you explain. So we're talking about a group of treatments or devices they made. You can go ahead and explain that. Do what?
- [03:58]
Tom Schrader
Yeah. So pad, which is the acronym we all use in the industry, it's very simple. Simple or very similar to coronary artery disease, which people usually have a better understanding of. It's simply your arteries in your body that get clogged over years with plaque and debris from obesity, smoking, diet. And eventually that stricture or lesion, that plaque buildup, gets to be the point where, just like your home plumbing, it clogs off the pipe and restricts the blood flow to whatever part of the body it was needing to keep blood flow to. So for peripheral, it's everything except the coronary. So the main arteries are. And if you've got coronary artery disease and you're getting a heart stent, it usually means the pipes are clogged in multiple parts of the body. And that most significantly comes up in the legs, which is where the peripheral component comes in. So the arteries that we treat for clogs are usually from the waist down.
- [05:00]
Cheryl Akison
How big of a problem and how big of a business is this massive?
- [05:05]
Tom Schrader
I mean, look at the health of the world today. Everybody's battling high cholesterol, smoking, any number of different comorbidities. All of that relates directly to arterial disease. And so just like with heart stents, which we've got much more advanced ways and a history of treating effectively, the peripheral arteries were kind of that second frontier. And so we're still trying to figure out how best to treat those arteries.
- [05:33]
Cheryl Akison
And it's my understanding there's a lot of different treatments or devices. Can you give an example of a common device that may be used to treat pad?
- [05:41]
Tom Schrader
Sure. Angioplasty balloons are usually the ones that most can recognize or remember. And that's simply just a Balloon that's threaded through your artery to the blockage and then inflated. And then that just smashes the artery and all the plaque back open. And so that's kind of the most basic rudimentary treatment. And it's not ideal because you tear the artery wall and embolize, you know, some of that plaque downstream. But it's effective at getting the artery open immediately. And then the next levels are usually some kind of self expanding stent, which is just a bare cage that you would in insert inside the artery, which takes that open artery that your angioplasty balloon opened up for you. And then that cage just keeps the structure open, kind of tacks it all up against the wall like scaffolding. And now the newest age products are drug coated balloons. So they've taken that concept of the angioplastic balloon, coated it with a drug that helps prevent the scarring and all the issues. And so that's kind of a new exciting technology lately.
- [06:46]
Cheryl Akison
And can you explain the relationship of Medtronic to doctors, hospitals and patients? So how does the device, let's say I have a problem, I may go into a hospital for a treatment or to a doctor. How does that work and how do you and Medtronic fit in?
- [07:01]
Tom Schrader
So the part of the process where the device manufacturers come into it, not just in the development of the product, which is the more commonly understood course, somebody needs to produce the products. Our role comes in as consultants or sales specialists in helping the physicians understand how to use the product. They're ultimately the physician, they choose the product. They are the ones that are responsible for actually deploying or manipulating the product. But at the end of the day, there's so many different tools and so many, especially in such a rapidly evolving type of industry like peripheral arterial disease, that these devices aren't necessarily something that they've been using for a long period of time. And so somebody like myself or a Medtronic rep is gonna come in and help them understand the nuances of that device and how to safely and appropriately apply it to the application that the doctor needs for that patient.
- [07:56]
Cheryl Akison
Does a hospital bring you in as a device representative and put you with a doctor? Does the doctor call you on the phone and say, help me learn how to use this product?
- [08:07]
Tom Schrader
All the above. Usually it's the doctor or the staff and. But I would say predominantly it's the. And we want to be there to introduce the product to a physician who's not familiar with it, because just like everybody, they get busy and need help keeping up on the latest types of technologies and what there is as far as advancement. So our job is kind of mutual. The sales component would be us introducing the product, telling them the differences, the benefits, and. And then the other side of it is they'll call us and say, hey, I want to use that, because it sounds like something my patient could benefit from.
- [08:41]
Cheryl Akison
And if you had to, you describe a lot of and have a lot of detail as to what was going on that you thought was wrong. But do you remember the first moment when you saw something that seemed very strange or suspicious or out of line to you that made you think this is not just an accident or a small problem? Could you describe that in the year that it happened?
- [09:03]
Tom Schrader
Oh, yeah, I'll never forget it. There was two of them, technically. The first one was in November of 2016. And for years I'd heard, because I'd never managed Wichita, but I'd always heard it's a tight community inside the industry. And I'd always heard about the situation about these reps and managers and the va. And what did you heard? Wild stories about how much product they used on these veterans and how awful it was and how much they were buying. So much more than was even necessary. I mean, it's for anybody in the inside, you can take one look, if you actually get inside, you can take one look at a situation like this as an expert, as somebody who lives this, and know instantly something's not right here. So that had always been there. The incidence was my new sales rep that I had hired in Wichita when I took over in 2015, he had finally gotten into the VA and he called me and he's like, tom, it's all true. You got to see this. There's hundreds and hundreds of these drug coated balloons and atherectomy products on the shelf. And I didn't believe him because he was telling me how many there were. And I was, even though I heard it, it's still something. That's unbelievable. So I drove down the next day and we walked in there and sure enough, I took pictures. I'm like, this is insane. And then. So that was the first one and it just so happened. Coincidentally, two months later, I was in a park parking lot at a Home Depot picking something up. And I had gotten an email from one of my national account managers at CR Bard where I was at. He said, hey, did you hear or see this bid come through for the VA in Wichita? You cover that, right? And I'm like, yeah. And so he sent this to me and he called me, he said, yeah, they're buying 500,000 or 500 drug coated balloons. Half a million dollars worth of drug coated balloons. I said, well, now you got to be mistaken because I just, I was just there taking pictures and it was already so gross amount of product. And it was one of those moments where it was over at that point for me. I was like, this is a massive issue.
- [11:02]
Cheryl Akison
I read in your complaint a lot of detail about how it works, how they may get products on consignment, they may be switched out before they expire or maybe when they expire and rotate it. But can you explain in very simple terms why they shouldn't probably have hundreds of product on the shelf and how it's supposed to work?
- [11:22]
Tom Schrader
Sure. So any company like Medtronic or any of the companies that I've worked for, we've got, especially in today's globalized supply chain, we can deliver something to your doorstep within a day. And so you don't need the excessive amount of inventory on the shelves outside of product lines that have maybe multiple sizes. And then you would just need that amount of sizes that would cover the number of cases that you're generally gonna see. And those are pretty easy to. For any good lab manager or hospital administrator. You generally know, hey, this is the number we're gonna need. And then our role also as a sales rep is for that city should you run out for some crazy reason. We carry trunk stock. So you can call me and I'll be there and deliver product to you to help that patient out. So that's why you don't keep extra inventory. Because if you purchase it from me, then you're responsible for it. And if it goes bad and expires, then you lose the money. And then you'd reference consignment. That's a simple way of thinking. Instead of the hospital purchasing millions of dollars of inventory of all these different products, if a company wants you to use their product, then there's, it's pretty common practice that we'll place and agree to place that number of devices, an appropriate number of devices at our expense on your shelf. And then you use them when you feel the need, and then you pay us when you use them, and then we restock it. But that inventory is our inventory and we're responsible for it. And then ultimately we get it back when you're deciding you don't want to use it anymore.
- [12:57]
Cheryl Akison
So it was Wichita VA Hospital that initially you first saw there was something out of line who would have been benefiting from keeping too much product on the shelf at the VA hospital?
- [13:08]
Tom Schrader
Well, clearly the rep and the manager and Medtronic as an organization, this was from what I've alleged and what I've seen in discovery, by far one of their largest accounts in the country for certain amount of product, certain amounts of these products.
- [13:25]
Cheryl Akison
Can you explain how that would be working? Who. Who was reaping the benefit of the money? What as you described in the complaint.
- [13:32]
Tom Schrader
So if I can sign the product to you, it sits on your shelf. I'm not making any money until you use it as a rep or as the organization. But if you buy it from me, let's say $500,000 of it, it's an instant transaction, then I'm going to get a percentage of that sale. And obviously the company has just sold you a half million dollars worth of product. So it's very beneficial for the company and the rep. And what's the incentive.
- [13:58]
Cheryl Akison
For the hospital to order too much product?
- [13:59]
Tom Schrader
Well, that's. That was where I was getting ready to say there is none. In fact, that's the first sign that something's way off. Because no hospital in their right mind would be buying product that they know couldn't be used in five years, three years. As lack of common sense as it sounds to you and your views right now, that's how little sense it makes. There shouldn't be any.
- [14:21]
Cheryl Akison
It means that I assume a lot of product was being thrown away as expiring before it was used.
- [14:29]
Tom Schrader
Well, in this case, what was interesting is there was so much product, we're talking such an exponential amount of product, that of course, some of it I allege, was getting thrown away. It had to be. And then we had heard that it was. And then on top of that, we came to understand. I came to understand through all of my work looking into it that a lot of that product was getting walked out the door that I alleged. We then walked out the door by the Medtronic sales employees and taken to other facilities where I was also getting bids for projects or product and had come to find out that those bids were being supplemented with a lot of free devices that I couldn't compete with.
- [15:11]
Cheryl Akison
Okay, so break that down. If the hospital's not getting any benefit from storing too much, too many materials, who was it who was convinced to order all those devices and materials?
- [15:22]
Tom Schrader
So here's the real fascinating component of this, and that's where it turns to an issue of the va. And it's sad, but at any other private for profit hospital, there's a hierarchy of staff and administrators that are highly in tune to the health of the organization, financially and otherwise. So any of those outliers would immediately get picked up in a private institution, not a va va. There are some phenomenal people within the va. But if. And that's where I go back to my original answer earlier. As far as the opportunistic portion, when you, as a person can identify a weakness in a va, it becomes a different game because there is no oversight. It's not your money. It's not the person's money that's buying the product. It's my money, it's your money, it's everybody's money who's watching this. That's the money that's being spent and their job. If nobody's overseeing it, nobody really cares. It's just another expenditure on the government budget line. So that employee that was purchasing those, as I alleged, was getting benefits. As far as financial benefits, kickbacks, bribes, and any number of different inducements to make those purchases.
- [16:34]
Cheryl Akison
And then if extra materials and devices were being walked out the door and given for free to other doctors so that they would order more, I guess, is what you're saying. Or were the doctors then presumably selling the devices they got for free to a patient, what was the doctor's benefit?
- [16:53]
Tom Schrader
There was no benefit from the physicians as it relates to the inventory that was purchased. The benefit that the physicians were gaining from this scenario was at the VA just the time that it took to implant these devices, which is another more insidious component of what I uncovered and I've alleged in the lawsuit, which is to your. To what we discussed as far as the number of devices. Some was getting thrown away, some was getting walked out the door. A huge portion of those devices were getting implanted unnecessarily, as I allege in the patients in the veterans. So the incentive for those physicians, as wild as it sounds, is just the more time they spend implanting devices at that va. Their contract paid them more money. And so that's where the advantage came in. And the advantage at the hospital where they were being used to offset bids. That's just like any organization. If I buy 100 of them and I get 20 of them off the books for free, I just net my cost down by 20%. So the overall health of a private facility is just saving 20, 30, 50% on their cost.
- [18:12]
Cheryl Akison
I know this went on for quite some time, so if you could just pick maybe the moments or the best way to describe your efforts to bring this to light and do something about it. Most whistleblowers that I interview, they start off trying to kind of work within the system. They think, well, if only the right person is in management, knows about this above me, or parallel to me, surely this will be fixed. And then disappointingly, they often find that either that person's part of it or doesn't do anything about it and it comes back on them. But what was your journey, if you can kind of summarize your efforts to try to bring this to light and do something about it?
- [18:48]
Tom Schrader
Exactly that. Only difference being I wasn't a part of the initial attempts to prevent what was going on, but I was able to see those, meaning other colleagues of mine, competitors that are all friends or acquaintances would tell me, I went to the VA ethics department and told them that this was going on. Nothing happened. I called the hotline at the VA office. Nothing happened. I reported it to the management at the VA system. Still nothing has happened. One of them went so far as they went to the US Congressman in Kansas and said, this is going on, and met with the staff and the congressman. Nothing happened. Then I came in and really got that firsthand experience of what was going on, as opposed to just rumors or hearsay, having the knowledge that they've exhausted every option that we've got. Nobody cares or is doing anything to stop this. There was only one option left, and that was to file a lawsuit. And, and that's the only way I knew that if what I was alleging was happening, that the abuse that was happening to these veterans would be stopped immediately or as quickly as possible.
- [19:56]
Cheryl Akison
So you were complaining to the va, but did you also complain within your company that your company was doing something unethical by selling these devices in great numbers to the va?
- [20:06]
Tom Schrader
Well, that's a unique component of this lawsuit is people have to remember I wasn't normal whistleblower suits or common whistleblower suits are internal employees blowing the whistle against their own organization. I wasn't. I was blowing the whistle against a competitor organization. And so it was me watching another company, in this case Medtronic, abusing a system and what I allege, abusing veterans care. And so that's where it's a little bit different. I wouldn't have had recourse to my own company because they don't have responsibility for Medtronic employees.
- [20:40]
Cheryl Akison
And did your own company care like at the top? I mean, were you the highest level person? It sounds like you had a pretty high level job. But was there anybody above you that also thought something should be done about.
- [20:50]
Tom Schrader
This before I filed the suit. And again, something that is probably a little unique is I went because I wanted to do everything as forthright with my company as possible, seeing as this wasn't even against my company. And so I did. I met with my top leadership and my legal team, and they supported it and said they understood it. And my worldwide president at the time said, yeah, I can see why you're doing what you're doing. It sounds really bad.
- [21:20]
Cheryl Akison
And what happened to you as a result of the complaints? Did you find yourself targeted or anything coming back upon you from the VA or anybody that knew that you were complaining?
- [21:32]
Tom Schrader
Not from my company, no. They. And it was under seal for three years. So it was a. Again, this is a really unique scenario where three years, a long time for a case to be under seal where nobody knows about it and I can't talk about it. When it became unsealed in April of 2020, that's when I informed my immediate management that I hadn't talked with earlier and told them. But, no, I would say nothing because of the extreme nature of this situation. I don't know anybody who looks at. As long as it's true or there's some evidence or it can be substantiated. I haven't met a single person that was like, I can't believe you would try to stop abuse of veterans and stealing millions of dollars. I would say the only flack or pushback I've gotten would be anybody who's somehow related to that inner circle of Medtronic in the industry. Of course, they have a different version that they'd like to spin, and that's fine. I knew that was coming.
- [22:29]
Cheryl Akison
I haven't looked at the depositions yet, but are there a couple of moments you'd like to describe that when you saw those later, if you weren't present and you looked at the tapes later, maybe you were present that you just went, wow, you know, that's pretty powerful.
- [22:43]
Tom Schrader
Yeah, there's too many. I laugh at my lawyers because there's too many to count. And I don't mean that hyperbolically. I mean that seriously. But even then, there's still a few that I'll never forget the rest of my life. The biggest one being. We talk about people who deserve a lot of credit in the VA system, and Rick Ament is one that deserves the most credit of anybody I've ever met at a va. He was the executive director that was brought in after I'd already filed the lawsuit, after it was under Investigation under seal. He came in as a new executive director of that va, and just as any normal administrator would, immediately put a task force together to kind of get a health sense of the health of the company where they can trim things up, save money, be more efficient. And as you can imagine, his team quickly identified that we got a major problem, and we're losing millions of dollars every year, and we can't account for any of this product that is being brought into the cath lab. So to make a long story short, during his interview, which I had never met with him, never knew his name, and even existed until depositions and then we deposed him, he recounted with my attorney an identical scenario just a year after mine, where he recounted witnessing, seeing, and uncovering everything that I've put in my complaint, to the point that he independently, mind you, he didn't even know that my investigation or the investigation that my lawsuit had triggered with the OIG was even underway in his own hospital, which is normal. He referred to the criminal OIG investigators, the same investigators that were already investigating for over a year the case and allegations I made his own internal investigation. And so when I listened to that in our deposition in Chicago, it was powerful.
- [24:42]
Cheryl Akison
Where do things stand today with your case?
- [24:46]
Tom Schrader
Right now we are. We just finished depositions and all of the discovery. The only thing that's left is probably the most unfortunate part about the whole scenario, is the medical records of the veterans, because this isn't a disease or a treatment that you could necessarily know. I shouldn't have gotten that. I've been injured, I've been wronged. Your average person just generally wouldn't know that because of the type of disease and treatment. And so as an expert in my expert physicians, by seeing the data that we have seen, there's a lot of harm that we allege has been done, tremendous harm. Amputations, which any amputation is going to lead to an earlier loss of life, and then any number of other issues that come with amputations, repeated treatments. And so we're currently. The last step of the process is getting the medical records from the va, which they are in the process of turning over to us. And then, of course, they'll be redacted, so no patient information. But then our experts, who are an independent specialist in vascular medicine, two surgeons, they'll get to review those records and then make a determination. Is what happened to these veterans necessary? Was it harmful? And then how much damage was done.
- [26:00]
Cheryl Akison
So we should say, or you should explain for us, it may sound kind of benign, while Someone has an artery opened up, maybe they didn't totally need the artery to be opened up, although hopefully the doctors didn't do too many of those they didn't need. But what are the potential downsides of having something like that done if you don't need it?
- [26:19]
Tom Schrader
Catastrophic. So you can imagine anytime you have an artery in your body, it's there for a reason, right? It's got a supply, blood, blood to some important function to sustain life. The artery is a sensitive part of the body like anything else. And so if you treat it, meaning you angioplasty it, you atherectomize it, you're shaving or damaging the wall of the artery. Well, just like your skin, if you cut it, it's going to scar down and heal. Well, when you're dealing with arteries, they're going to scar down and heal, but they're going to shut off blood flow. So this is a degenerative treatment process, meaning we're opening your arteries in your leg to help blood flow immediately resolve any pain or potential amputation you were going to get if you didn't need it, you in fact cause exactly what you would normally be trying to prevent or restore, if that makes sense. So by doing the procedure, if I right now went in and angioplastied and atherectomized your legs and you didn't need it, I've just sent a ticket for you for. For probably the rest of your life to be getting treatments, further treatments, further stents, further atherectomies, until eventually a doctor tells you, I'm sorry, there's nothing I can do anymore. It's so bad, we're gonna have to take your leg off. That's how bad it gets people watching.
- [27:37]
Cheryl Akison
This who aren't directly impacted. What is a lesson learned from the things that you've seen and the things doctors have been willing to do and salespeople have been willing to do? What is sort of a lesson, there's.
- [27:50]
Tom Schrader
My takeaway or the lesson that I would express to everybody is the system works. The vast majority of physicians, just like any profession, are phenomenal people. The men and women that do these procedures, the sales reps and the manufacturers that help make these procedures possible and advance innovation, they are inextricably linked to the health of Americans. So it's a good function that they're performing. So I wouldn't say this should taint everybody's view of medicine or the sales industry or the manufacturing industry. The lesson it should pose is the lesson everybody should be learning. From any number of things in society today, which is take control of your own health. If something's not right in your scenario, you should be informed about it. And I would say the last lesson I would say is for anybody in the industry or manufacturing device companies, this was obvious. This was going on. I'm not some super sleuth or, you know, special power. This was very clearly happening. And there was a number of people over the years that knew this was happening or at least knew that something was bad enough that they should look into it and figure out what was going on. Because it took me months to figure out what they had been doing for over a decade. And I would say you need to stop and you need to take responsibility. Whether it's you, your employee or your company, you need to speak up and do something because there are hundreds of veterans right now that aren't going to have a chance and that could have been prevented if somebody would have done something earlier.
- [29:24]
Cheryl Akison
Has anyone been held responsible at the VA hospital?
- [29:27]
Tom Schrader
Not a single damn person has yet been held responsible. In fact, most disturbingly, is the fact that Medtronic has simply moved those reps to manage other VA hospitals in Florida and in Oklahoma City. And so, knowing everything we've seen in discovery, everything that all the witnesses have alleged in depositions, I've been involved. We've terminated people for buying too many sandwiches for their family. And as opposed to abusing simple expense policies or car policies, they know what happened. They know what their reps are responsible for, and they've simply moved them to other VA facilities to manage in the interim. And so not only has nobody been held accountable, I would say that we've just actually put more people, more veterans at risk, unfortunately.
- [30:25]
Cheryl Akison
I hope you will watch on Sunday, April 21 for a lot more on all of this. More information, including text messages and some videotape depositions that reveal the large sums of money Medtronic spent whining and dining some of the VA surgical staff that were allegedly involved in the supposed violation of ethics rules that prohibit that sort of thing. To find out where you can watch Full Measure, you can go to cheryl akison.com click the full measure tab for a list of stations and times. Or you can always watch online on Sundays at FullMeasure News. The show airs about 9:31am Eastern Time at FullMeasure News, and then it gets posted thereafter, usually around noon on Sunday. So if you happen to be listening to this after Sunday, April 21st, you can go to FullMeasure News and watch a replay. I hope you enjoyed today's podcast and that if you did, you'll leave a great review. Subscribe to it and share it with your friends. And check out my other podcast, the Cheryl Akison Podcast. And now you can support independent journalism causes by visiting cherylakkisson.com and clicking on the store tab for some thought provoking and fun products exclusively designed for independent and free thinkers like you, with proceeds benefiting independent reporting causes. Some unique slogans you will find on original products include I need to find some new conspiracy theories. All my old ones came true. And I hope you'll consider pre ordering my new book. Follow the How Big Pharma Misleads, Obscures and Prevails. You won't want to miss this one. You can order Follow the Science from the bookstore of your Choice or at HarperCollins or Amazon. Do your own research. Make up your own mind. Think for yourself. Sa.