For users of Philips Respironics respirators, the last few years have been a nightmare in several acts. First came complaints about illnesses and injuries caused by the devices. Then came the reports of the dead. Then came the massive recall, which was itself beset with problems.
Now ProPublica has become aware of another episode. As Philips struggled to implement a recall in 2022, it turned to its biggest distributor, a company called Lincare, to help make sure replacement equipment gets to the patients who need it most. But instead of sending those machines to vulnerable long-time users – which Philips expected – Lincare redirected thousands of machines to new customers, resulting in higher profits. Some patients did not receive replacement ventilators for two years. meanwhile, complaints to the FDA the number of reported deaths (561) and illnesses, injuries, or malfunctions (116,000) related to the recalled devices continued to rise.
Philips’ problems first surfaced publicly in June 2021, when the company warned that the soundproofing foam lining its equipment, mainly CPAP machines, could disintegrate, sending potentially toxic particles and vapors into users’ throats and lungs. (Millions of people use such “continuous positive airway pressure” devices to treat sleep apnea, a condition that causes breathing to stop and start during the night.)
Philips has announced a recall. The company pledged to stop selling to new customers and dedicate its manufacturing capacity to replacing the recalled devices with safe, upgraded CPAP machines.”as soon as possible.” ( The Philips recall and the confusing story that led to ithave been the subject of a series of investigations by ProPublica and the Pittsburgh Post-Gazette.)
But the recall was marred by problems, and many patients did not receive replacement devices until the spring of 2022. Some have been told by Philips that they may have to wait another year, meaning the company will not be able to fulfill its plan to replace all recalled equipment by the end of 2022. As a result, even a patient who would underwent a double lung transplant to wait for months on end.
Under pressure from the Food and Drug Administration, which regulates the safety of medical devices, Philips agreed to follow a “prioritized approach” by providing the new equipment first to the “most vulnerable” patients – those most dependent on breathing equipment. Philips has promised that all manufactured safe devices will be delivered to the sickest patients as soon as possible, reports a March 10, 2022, FDA Notification Order.
Lincare is America’s largest distributor of respiratory equipment. It buys tens of thousands of CPAP machines each year from Philips and other manufacturers, then collects up to 13 months of rent for providing them to patients, with Medicare and other insurance companies picking up most of the tab. Lincare also sells profitable replacement supplies such as masks, filters and hoses. The company has a long history of misconduct, including repeated instances of overbilling Medicare and elderly patients — Lincare has been placed on Medicare-equivalent probation four times in the past quarter century — according to a recent a ProPublica investigation.
According to four sources familiar with the recall, Lincare and most other distributors declined to actively assist Philips with the recall. They complained that Philips did not offer enough money to do the work of collecting the old equipment and replacing it. Meanwhile, Philips’ problems with CPAP have cut into Lincare’s profits, as the recall ran out of new machines to make money on.
But Lincare’s top manager found a way to use the recall to the company’s advantage. In late March 2022, Lincare Chief Operating Officer Greg McCarthy presented a plan to his deputies that would ease the financial blow, according to Sam Markavich, then one of the company’s four regional vice presidents. McCarthy told them during Friday’s regular conference call that he had arranged for Philips to provide Lincare with 20,000 CPAP machines free of charge.
Philips has assured the FDA that it will order all new machines to replace the recalled devices, giving priority to customers who need them most. But that’s not what Lincare planned to do with its supplies. Instead, Markavich said, McCarthy told his deputies that Lincare would provide the devices to new customers. That way the company would get more money. Lincare was able to add more patients even as existing customers continued to pay for supplies for their recalled machines. McCarthy ended the conference call, Markovic said, often repeating, “If you don’t grow, you die!”
In a private conversation that was taped, McCarthy later described how he got the machines, according to Spence Hodges, then Philips’ head of sales on the Lincare account, who was given a copy of the tape. In that conversation, McCarthy said he let Philips believe that Lincare would use the machines to replace recalled devices that it owns and that are needed for existing patients in long-term care facilities, such as nursing and nursing homes.
This article is based on reports by Markavich, other former Lincare employees, and Hodges. Lincare, which has a history of litigation with its former executives, fired Markavich in 2022 and sued him for more than $100,000 in compensation for allegedly improper expenses; earlier this year, a judge granted summary judgment in Linkare’s favor. Markavich disputes these accusations.
Philips declined to comment on Lincare’s role in the recall. But in a written statement, Philips confirmed that the new CPAP devices it provided were to be used to replace the recalled machines: “All decisions made by Philips Respironics to distribute new and refurbished devices in the United States are based solely on patient prioritization. needs. Our position has always been, and continues to be, that all devices manufactured for recall in the United States are intended for the affected patients only.”
An FDA spokesman declined to be interviewed by officials or comment on Lincare’s actions, but wrote: “Protecting the affected patients and ensuring their care has been a top priority for the FDA throughout this recall.”
Lincare also declined to comment to executives. In response to a summary of this article’s findings, provided separately to the spokesperson and COO McCarthy, the spokesperson emailed a two-sentence response: “We appreciate your questions. We take this issue seriously and are looking into it.” McCarthy had no comment.
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By Rebecca Stumpf, special for ProPublica
In early April 2022, shortly after the meeting with McCarthy, Lincare vice presidents began contacting the heads of local centers around the country that would be receiving supplies of the scarce Philips CPAP machines to convey the COO’s orders to use them for new patients. Markavich said he personally notified five supervisors in four states.
Some of them were surprised to learn that Lincare would have devices for new customers (or “installations,” in industry parlance). The new machines allowed one local center to exceed its monthly quota for new CPAP sales despite the recall, according to a former executive who spoke on condition of anonymity. “During that time, I created more than a hundred,” said the former head of ProPublica. “I just remember that every time I thought I was going to have to cancel the adjustments, they (arrive) two more pallets. It was just perfect timing.”
In June 2022, Hodges, Philips’ responsible manager for Lincare, became aware of Lincare’s plans. Hodges immediately reported what he heard to Philips management, he told ProPublica. A few weeks later, he obtained a tape of McCarthy discussing how he had misled Philips and passed it on to his bosses. “All I know is that I got the information back,” he said, “and I went through the proper channels at Philips.” I turned everything around and let them decide what to do with it.” It is unclear what, if any, action Philips took in response to this information.
Hodges, who left Philips in 2023 after 15 years with the company, said he was upset at the time. “People had to wait,” he said. “In my opinion, these devices were meant to be used by patients who needed device replacement, and I felt strongly that that’s what they should be used for. Philips was doing everything possible to fix it as soon as possible.”
It’s unclear exactly how much longer some patients had to wait for new equipment because of Lincare’s rerouting. As recently as October 2023, Philips said it had complied with “more than 99%” of requests from patients who registered for the recall. (These patients received new equipment or, in some cases, payment.) This means that some users may have been waiting up to two years for replacement equipment.
As previously reported by ProPublicaIn June 2021, Philips waited years to act on health complaints and domestic concerns before recalling CPAP machines and ventilators in June 2021. Since then, the company has faced an ongoing federal criminal investigation and more than 700 lawsuits. Philips has pleaded not guilty and agreed to a $1.7 billion settlement and a federal consent decree indefinitely barring the sale of any new respiratory devices in the U.S. from December 2023, and providing health monitoring and payments to affected customers.
Philips has long maintained a good relationship with Lincare. Philips’ efforts to increase sales to Lincare and other distributors led to three federal civil lawsuits alleging that Philips gave kickbacks to distributors. In 2016 Philips agreed to pay $34.8 million to resolve claims of illegal provision of free call center services in exchange for the companies’ purchase of Philips CPAP masks. In 2022, he agreed to pay 24 million dollars to resolve claims that it provided prescriber data to Lincare and other companies in exchange for equipment orders, and will pay $1.3 million allegedly for the organization of interest-free lending for the purchase of equipment. (Philips has denied wrongdoing in each case.)
These days, Lincare and Philips are fighting in court, with Lincare acting as the plaintiff. In February, the company sued Philips in Pennsylvania state court, where Philips makes its devices. Lincare is seeking payment of “many millions of dollars” in costs and damages that Lincare has blamed on the recall, citing an indemnification provision in its contract with Philips. Philips has not filed a response to the lawsuit. However, in a public filing with the Securities and Exchange Commission, Philips said it was “engaging with some of its business partners regarding the level of compensation they may be entitled to” as a result of the recall.
Tom Wilson, administrator of the 7,700-member CPAP Recall Support Group on Facebook, called Lincare’s actions during the recall “appalling.” According to him, in the middle of 2022, many patients were still waiting for new safe devices. Those with severe cases of apnea who could not simply stop using the recalled devices were particularly frightened and desperately sought replacements. “You have something that’s on your face for eight hours a day, and you don’t know how safe or unsafe that piece of equipment is.”
