Amid reports of thousands of injuries and hundreds of deaths, Lincare was supposed to supply the most ailing patients with new CPAP machines, but instead diverted the devices to new customers who would deliver greater profits for the company.
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For users of breathing machines made by Philips Respironics, recent years have been a nightmare in multiple acts. First came complaints of illnesses and injuries caused by the devices. Then came reports of deaths. Then came a large-scale recall that itself was beset by problems.
Now ProPublica has learned of another episode. As Philips struggled to execute its recall in 2022, it turned to its biggest distributor, a company called Lincare, to help ensure that replacement equipment would reach the patients who needed it most. But instead of sending those machines to vulnerable longtime users — what Philips expected — Lincare diverted thousands of machines to new customers, which resulted in greater profits. Some patients did not receive replacement breathing machines for as long as two years. Meanwhile, complaints to the FDA reporting deaths (561) and illnesses, injuries or malfunctions (116,000) associated with the recalled devices continued to climb.
Philips’ problems first surfaced publicly in June 2021, when the company warned that the noise-deadening foam lining its equipment, mostly CPAP machines, could break apart, sending potentially toxic particles and fumes 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 repeatedly during the night.)
Philips announced a recall. The company vowed to stop selling to new customers and dedicate its manufacturing capacity to replacing the recalled devices with safe, redesigned CPAP machines “as expeditiously as possible.” (The Philips recall, and the tangled history that led up to it, were the subject of a series of investigations by ProPublica and the Pittsburgh Post-Gazette.)
But the recall was marred by problems, and by the spring of 2022, many patients hadn’t received replacement devices. Some were informed by Philips that they might have to wait another year, meaning the company would fail to fulfill its plan to swap out all the recalled equipment by the end of 2022. That left even a patient who’d had a double lung transplant waiting for months on end.
Under pressure from the Food and Drug Administration, which regulates medical-device safety, Philips agreed to pursue a “prioritization approach,” providing new equipment first to the “most vulnerable” patients — those who depend on the breathing equipment the most. Philips pledged that all the safe devices it produced would go as quickly as possible to the sickest patients, according to a March 10, 2022, FDA notification order.
Lincare is America’s biggest distributor of breathing equipment. It buys tens of thousands of CPAP machines from Philips and other manufacturers every year, then collects up to 13 months of rental payments for providing them to patients, with Medicare and other insurers picking up most of the tab. Lincare also sells lucrative replacement supplies, such as masks, filters and hoses. The company has a lengthy history of misbehavior, including repeated instances of overcharging Medicare and elderly patients — Lincare has been placed on Medicare’s equivalent of probation four times in the past quarter-century — according to a recent investigation by ProPublica.
Lincare and most other distributors had refused to actively help Philips with the recall, according to four sources familiar with the recall. They complained that Philips wasn’t offering enough money to do the work of picking up old equipment and replacing it. Meanwhile, Philips’ CPAP woes had cut into Lincare’s profits, since there was a dearth of new machines to make money off while the recall was underway.
But a top Lincare executive found a way to exploit the recall to the company’s benefit. In late March 2022, Lincare’s chief operating officer, Greg McCarthy, unveiled a plan to his deputies that would ease the financial hit, according to Sam Markovic, then one of the company’s four regional vice presidents. McCarthy told them, in their regular Friday conference call, that he’d arranged for Philips to give Lincare 20,000 CPAP machines for free.
Philips had assured the FDA that it would direct that all of the new machines be sent to replace recalled devices, prioritizing customers who needed them the most. But that’s not what Lincare planned to do with its supply. Instead, according to Markovic, McCarthy told his deputies that Lincare would provide the devices to new customers. The company would make more money that way. Lincare could add more patients even as existing customers kept paying for supplies for their recalled machines. McCarthy ended the conference call, Markovic said, with his frequent admonition: “If you’re not growing, you’re dying!”
In a private conversation that was tape recorded, McCarthy later described how he had obtained the machines, according to Spence Hodges, then Philips’ top sales executive on the Lincare account, who was given a copy of the recording. In that conversation, McCarthy said he had let Philips believe that Lincare would use the machines to replace recalled devices that it owned and were needed for existing patients in long-term care facilities, such as assisted living and nursing homes.
This article is based on accounts from Markovic, other former Lincare employees and Hodges. Lincare, which has a history of litigation with its former executives, fired Markovic in 2022 and sued him for obtaining more than $100,000 in reimbursements for allegedly improper expenses; earlier this year, a judge issued a summary judgment in Lincare’s favor. Markovic disputes the allegations.
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 supposed to be used to replace recalled machines: “All of the decisions Philips Respironics has taken to allocate new and remediated devices in the United States are based solely on prioritizing patient needs. Our position has always been, and remains, that all devices manufactured to address the recall in the United States are intended for affected patients only.”
An FDA spokesperson declined to make officials available for interviews or comment on Lincare’s actions, but wrote, “Protecting impacted patients and ensuring they receive relief has been a high priority for the FDA throughout this recall.”
Lincare also declined to make executives available for comment. In response to a summary of this article’s findings, provided separately to a spokesperson and to COO McCarthy, the spokesperson emailed a two-sentence response: “We appreciate your questions. We take this matter seriously and are looking into it.” McCarthy did not provide any comment.
