Novation LLC's Healthcare Contracting Scheme Ruled Legal - Healthcare Reform on Hold

[MSC2007]

Source: 10th Circuit Court of Appeals

MSC v. Novation et al 05-0210 http://www.medicalsupplychain.com/MSC%20v%20Novation%20(05-0210).htm
Transfer 05-2299 from case 05-0210 http://www.medicalsupplychain.com/MSC%20v%20Novation%20(05-2299).htm
Appeal 06-3331 from case 05-2299 http://www.medicalsupplychain.com/Lipari%20v%20US%20Bancorp%20Appeal%20(08-3338).htm
Appeal 08-3187 from case 05-2299 http://www.medicalsupplychain.com/Lipari%20v%20US%20Bancorp%20Appeal%20(08-3345).htm

Read more: http://www.pressrelease365.com/pr/law-and-legal/novation-ge-congress-anti-trustrico-3373.htm

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Kansas City, KS April 27, 2009. A Tenth Circuit Court of Appeals panel ruled last Thursday in support of US District Court Judge Carlos Murguia’s order that the nationwide hospital supply cartel created by Novation LLC and Jeffery Immelt the CEO of General Electric could not be challenged in court for artificially inflating hospital supplies and over charging Medicare and Medicaid. The ruling in Medical Supply Chain, Inc. v. Neoforma, Inc. et al, 10th Circuit Case No. 08-3187 upholds Judge Carlos Murguia’s earlier dismissal based on a heightened pleading standard found to be unlawful by the US Supreme Court in Erickson v. Pardus, No. 06-7317 (U.S. 6/4/2007).

Last Thursday’s ruling denying the motion to reopen Kansas District Court Case 05-2299-CM effectively ends the last challenge to Novation and GE’s GHX long term anticompetitive control that assigns market share and permits only suppliers that pay a kickback the chance to sell their products to America’s hospitals. This practice was exposed by a series of New York Times articles on Novation LLC’s role in controlling the price hospitals pay in the 1.8 Trillion dollar healthcare market. The London Times on July 31, 2006 reported the US Department of Justice was investigating Novation LLC for these business practices.

Studies by the Government Accounting Office, Professor Prakash Sethi, president of the International Center for Corporate Accountability at Baruch College in New York, and Harvard Law School Professor Einer R. Elhague have called into question the benefits to hospital members of the Novation LLC cartel and the legitimacy of the $5 Billion dollars of fees Novation LLC takes from hospitals each year. A public interest group www.stopgpokickbacks.org has also been formed by patients, physicians, healthcare workers, device manufacturers, distributors, and concerned citizens committed to returning true competition to the hospital supply marketplace.

The Kansas US District Court Judge Carlos Murguia appointed to the bench by President Bill Clinton, refused to permit Medical Supply Chain, Inc. to submit evidence in support of its antitrust claims against the Novation LLC cartel members or to engage in discovery.

Medical Supply Chain, Inc.’s founder Samuel Lipari decried the ruling stating that; “Courts are unwilling to hear from competitors to the cartel, despite the collapse of General Motors and Chrysler from unaffordable employee healthcare costs. The Federal Trade Commission will need to restore competition to hospital supply markets.”

About General Electric Company:
 GE is the creator and part owner of GHX, LLC the nation's sole remaining hospital supply electronic marketplace to health system institutions. Media contacts can be made through General Electric, Fairfield Russell Wilkerson, 203-373-3193 (office); 203-581-2114 (mobile) [e-mail] www.ge.com



About Jeffery Immelt: 
Jeffery Immelt is the Chief Executive Officer of the General Electric Company (NYSE: GE). Jeffery Immelt while president of GE Medical created and took ownership in GHX, LLC the nation's sole remaining hospital supply electronic marketplace to health system institutions. Media contacts can be made through General Electric, Fairfield Russell Wilkerson, 203-373-3193 (office); 203-581-2114 (mobile) [e-mail] www.ge.com



About Novation: Novation comprises the 2,500 members of VHA Inc. and the University HealthSystem Consortium (UHC), two national health care alliances and nearly 9,000 members of Provista, LLC (formerly known as Healthcare Purchasing Partners International, LLC (HPPI). VHA, UHC and Provista members purchased $31.6 billion in supplies through Novation LLC in 2006.

About Medical Supply Chain: 
Medical Supply Chain (MSC) is a worldwide provider of web-based supply chain collaboration solutions with an electronic marketplace serving health care communities and their trading partners worldwide. In May of 2000, Samuel K. Lipari launched Medical Supply Chain, Inc. by introducing technology applications now adopted as the gold standard for delivery of institutional medical supplies for US Healthcare systems. To learn more visit: http://www.MedicalSupplyChain.com/news.htm

[mod mom]

1. Novation was tied to the US Atty Scandal (REMEMBER BRADLEY SCHLOZMAN?)

http://www.dailykos.com/story/2007/4/18/1221/55645

The Western District of Missouri US Attorney office under Todd P. Graves had been active in prosecuting Medicare fraud. Medical Supply Chain, Inc.'s civil antitrust suit against Texas based Novation LLC, Volunteer Hospital Association (VHA), University Health System Consortium (UHC) and Neoforma, Inc. alleges the companies formed a cartel and were involved in a scheme to monopolize hospital supplies to defraud Medicare through payments to administrators and kickbacks.


He was replaced by Bradley J. Schlozman. Get this: He worked in the Justice Department - and was one of the primary guys who helped get approval for Tom DeLay's controversial Texas redistricting plan. In other words, a true Bush supporter. Schlozman not only didn't prosecute Medical Supply Chain's case, according to Lipari he helped get Lipari's lawyer disbarred:


Attorney General Alberto Gonzales used a little known provision of the USA PATRIOT Act to replace Todd P. Graves with Bradley Schlozman. Bradley Schlozman failed to prosecute public corruption related to the Medical Supply Chain litigation and failed to enforce civil rights laws related to the Novation LLC defendants success in getting Medical Supply Chain's counsel Bret D. Landrith disbarred. Samuel Lipari raised these concerns before the US Court of Appeals for the Eight Circuit. On January 16, 2007 Attorney General Gonzales tried to quell criticism of the mass US Attorney firings and the misuse of the USA PATRIOT Act by announcing John Wood would be taking Schlozman's place in Kansas City.


John Wood:


John Wood, U.S. attorney in Kansas City, who's the husband of Assistant Secretary of Homeland Security Julie Myers and an ex-deputy general counsel of the White House Office of Management and Budget.


So Kyle Sampson puts Todd Graves on the list of U.S. Attorneys to be fired. The new guy cones in and Liparai's case gets damaged, if not killed. Obviously there have been other reasons put forward for the firings of the USAt.s - but was one missed is the question. Today's article says Carol Lam was working on similar investigations when she was sacked. Were any of the others?

-snip
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=758013&mesg_id=758013

[mod mom]

2. Here's more on Novation:

PART ONE: Novation LLC

I. Novation LLC

Allow me to start with a letter written to Senator Clair McCaskill by the President and CEO of the company, Medical Supply Chain, Samuel Lipari:

The U.S. Justice department has been reported by the New York Times and the London Times to be investigating Novation LLC for its anticompetitive practices in the market for hospital supplies. The Assistant U.S. Attorney in Ft. Worth Texas who signed the subpoenas against Novation LLC passed away as did the Ft. Worth office’s Assistant Attorney in charge of Medicare Fraud two months earlier. The U.S. Attorney General Alberto R. Gonzales immediately fired three more Assistant U.S. Attorneys with extensive experience in prosecuting white collar crime that worked in the Ft. Worth, Texas U.S. Attorney Office which started the investigation of Novation, LLC. The US Attorney General Alberto R. Gonzales while in private practice was a partner with the law firm of Vinson & Elkins L.L.P. that represents Novation, LLC in my complaint and other hospital supply antitrust litigation.

Novation is owned by Tenet Healthcare Corp where Jeb Bush is on the Board of Directors, and where Jerry Barbakow, the CEO, resigned in 2003; he was not missed:"Barbakow’s departure was welcomed by investors, who saw Tenet’s stock plunge in October after several investigations into the company were launched. Barbakow is an active member of the Bush Crime Family as a Bush Pioneer, for the 2004 campaign. Here is a brief summary:

Tenet Healthcare’s board ended Jeffrey Barbakow’s 10-year reign as CEO in May 2003 with the company where it was at the start of his 10-year reign--under a massive scandal cloud. Federal investigators raided Tenet facilities in 2002, probing federal charges that Tenet hospitals, officials and doctors: Over-billed Medicare; Paid doctors illegal referral kickbacks; and Performed unnecessary heart surgeries. A 2003 shareholder committee reported that Tenet could face legal liabilities of up to $6 billion for its Medicare billing practices alone. Tenet agreed to pay a record $54 million in 2003 to settle federal charges that doctors at one of its California hospitals billed Uncle Sam for unnecessary surgeries.

From the New York Times:

The central issue, according to current and former industry executives, is whether the industry's use of rebates, discounts, barter arrangements and refunds to hospitals and other medical centers means that Medicare and Medicaid are being charged higher prices for products than the hospitals are actually spending.

The investigation appears to be centered on the medical-supply industry's dealings with Novation, a company in Irving, Tex., that is an industry leader in negotiating the contracts that thousands of hospitals, clinics, nursing homes and other facilities use to buy drugs and other supplies.

About $20 billion a year in medical products and services are sold under contracts arranged by Novation, which is owned by about 2,200 of the hospitals and care centers that use its services. They include well-known medical centers like New York-Presbyterian Hospital, Yale-New Haven Health Services and Baylor Health Care System in Dallas.

Because Novation is the link between thousands of health facilities on one side, and hundreds of medical goods and services companies on the other, the scope of the federal investigation appears to be broad.

-snip
http://www.dailykos.com/story/2007/4/17/18120/2944

[mod mom]

3. This is an important ruling regarding Healthcare reform folks-siding w the big guy!

BAD news!