Orthofix: Bribery and Fraud Scandal (2003-2017) - An Analysis of Ethical Theories in Business

Bribery and cover up have been topics covered extensively throughout the hundreds of years competitive business has been around. Orthofix, an international medical-device producer and distributor, had key executives caught in a bribery cover up scandals in both Mexico and Brazil. Heavy penalties and fines were levied against the company (to the tune of over $19 million) and their public image including relationships with stakeholders, patients, and customers took massive hits. The company continues to try to rebuild their image and gain back the trust of the public from scandals ranging from the beginning of the 2000’s until the mid 2010’s.

Orthofix Background

Founded in Verona, Italy in 1980, Orthofix is a now Texas-based medical device company specializing in the development, manufacturing, and distribution of orthopedic and spine products. Orthofix became a public company in 1992 and moved headquarters to the United States in 1995 when the company acquired American Medical Electronics. The company now operates in two segments, Global Spine and Global Extremities, doing business in over 70 countries worldwide.

 The move to the U.S. coupled with their acquisition of AME helped boost the company’s total sales over $77 million by the end of 1996 (Reference for Business). Their new business line of bone growth simulators and bone substitutes were main contributors to their success. Also, the sale gave Orthofix an extensive distribution network in the United States allowing them to sell more products internationally. In the meantime, Orthofix has continued to acquire stakes in competing orthopedic companies allowing them to expand their product line and continuously innovate.

Orthofix markets and distributes its products through direct sales representatives and independent distributors to a variety of clients including physicians, hospitals, surgery centers and other purchasing organizations. A major portion of the company’s revenue comes from sales with large hospitals and surgery centers as the company has tried to acquire a multinational market share. The company’s mission is to offer highly valued minimally invasive medical devices for the orthopedic and trauma markets and to achieve market leadership by focusing on continuous innovation in the products they serve and offer (Zippia).

The Case

             As Orthofix moved into the 21^st century, international business, specifically in Mexico and the Southern Americas, was important for the growth of the company. Orthofix did a large portion of their revenue in selling medical devices to government-sponsored hospitals in these regions and management at the corporation took steps to ensure this market for their business. From the start of the 2000’s until early 2010, Orthofix had committed acts of bribery that found the company paying routine bribes referred to as “chocolates” to Mexican officials to obtain lucrative sales contracts with government hospitals (SEC 2012 PR). These “chocolates” came in forms of cash, computers, televisions, and appliances and were given directly to officials by means of back channels and front companies. To cover the bribes, executives initially recorded them as cash advances and falsified their invoices
to support the expenditures. But, as the bribes became larger, they were eventually recorded as promotional and training costs. Yet, upon review, when an Orthofix executive noticed these expenses being consistently and significantly over budget, the bribery scandal was immediately found out and self-reported to the SEC.

            The SEC found Orthofix guilty of committing bribery from 2003-2010, illicitly spending over $300,000 to secure nearly $5 million in illegal profits with Mexican officials. The company was reported to fully cooperate with the SEC and their demands and Orthofix was eventually found guilty of violating the Foreign Corrupt Practices Act and agreed to pay $5.2 million to settle the charges.

            Yet, “where there’s smoke there’s fire”, and in 2017, Orthofix was once again charged with improperly booking revenue and making improper payments to doctors at Brazilian government-owned hospitals. The company was found improperly recording revenue as soon as products were shipped despite procedures requiring certain events in the transaction process to take place prior to receiving payment. In other instances, Orthofix immediately recorded revenue when it had provided customers with significant extensions of time to make payments (SEC 2017 PR) causing the company to misstate certain financial statements between 2011 and 2013. A separate SEC case found the company’s subsidiary in Brazil used high discounts and improper payments to induce doctors to use Orthofix products and created fake invoices to cover these services. The SEC was made aware of these crimes when the whistleblower, a doctor in Brazil, provided information to the SEC about an alleged kickback scheme operated by Orthofix (WSJ). Orthofix eventually agreed to pay $8.25 million in fines to settle their “channel stuffing” and SEC accounting fraud charges, as well as an additional $6 million in FCPA penalties, for a total of over $14 million in damages. In all, these scandals cost Orthofix over $19 million in SEC charged fines for violations relating to bribery and accounting fraud.

Stakeholders

            Because Orthofix is a public company, the future of its business and their success relies on its relationship with its stakeholders and potential customers. Their both illegal and unethical actions over the last two decades have caused public distrust and put the stakeholders in positions of risk. From a financial perspective, their stock OFIX has seen serious losses (down 85% in 2007). With that said, their share price has continued to steadily rise because they have taken steps to right their wrongs. The firing of all employees involved in these scandals was a good first step in the reshaping of their public image, but the company must make sure they don’t fall into previous practices moving forward. Orthofix prides themselves in their innovation and the high quality of the devices they provide for patients. The company should focus on continuing to rely upon the success of their products and allow for public trust to build over the positive review from customers and patients.

Individualism

            Analyzing the actions of Orthofix through the lens of an Individualist shows that while the business was certainly trying to maximize their profit, they were doing so outside the context of the law and the normally agreed-upon standards of society. According to Milton Friedman’s view on Individualism, all companies must abide by the same set of rules for this economic model to successfully work and “these laws therefore restrict what a business is ethically allowed to do to profit” (Salazar 18). In thinking of both the bribery and accounting fraud violations committed by Orthofix, it is clear that the actions performed by executives at the company were outside the bounds of legality of the system and state the company operated in and were therefore unethical in the nature of Individualism.

As a business context theory, Orthofix was certainly trying to maximize their profits, but, in doing so, broke laws and suffered penalties and fines that eventually lead to a net loss of profit in these areas where the acts were committed. The company’s system of checks and balances in their management and accounting departments was not strong nor diligent enough to uncover these crimes over the majority of time they had taken place, inevitably leading to the barrage of fines levied against the company. While Orthofix may have secured a short-term window of increased profit and brand success in Mexico and Brazil by enticing customers into using their products, they failed to see the long-term damage these crimes would carry. The severity of fines for crimes like those done by high-ranking executives inside the company should have created cause for concern, but the short-sighted mindset exhibited by these same people was the catalyst towards the penalties faced. With that said, their brand image and public trust were also hurt through these actions. Customers would now be less inclined to work with a crime-rated organization and the public was going to be less likely to invest in a company that showed trends of operating outside the bounds of the law.  

Utilitarianism

             In looking at this case in a Utilitarian sense, the actions of those in Orthofix would be deemed unethical because of their absence of consideration towards the owners and stakeholder’s happiness and desires. Through a Utilitarian lens, “all beings who are capable of experiencing happiness should be considered when weighing the costs and benefits of actions” (Salazar 20). Actions should lay consideration for all beings the action will affect, and a decision should be made depending on the value of the total benefit of the action.

            Prior to any crimes being committed, executives involved should have considered the pros and cons of bribing officials and its lasting effects. If executives considered their actions first knowing bribery could only lead to financial fraud (more crime), they would have seen the short-term gains weren’t worth the long-term losses. Executives failed to think about the desires of the stakeholders, the image that the scandal would cast on the company and the adverse effect it would have on the business relationships moving forward.

            More foresight should have gone into consideration for the crimes and what would follow by these executives at Orthofix. Employees continued to bribe officials for personal gain in their region and used fraudulent accounting measures to cover their tracks. As the illegal payments and profit grew, their attention towards the risks attached to not only themselves, but also innocent stakeholders only decreased. Utilitarians are concerned about the long-term costs and benefits of actions (Salazar 20), while executives at Orthofix were more concerned with their short-term profits. OFIX executives acted selfish in the short-term and ruined their long-term chance of success. Not only were the acts committed by these members at Orthofix highly illegal, they were also extremely unethical from a competitive and sympathetic view point.

Kantianism

            A Kantian view of this case would be interested in the intent or will behind the motivations of the people involved to commit the action. Kantianism would examine the ethics involved in bribing state officials for personal/business gain and using fraudulent accounting measures to cover a crime. In a Kantian analysis, the concerns are “the moral permissibility of the action and the moral worth in the motivation of the action” (Salazar 21). It was bad will for executives at Orthofix to commit crimes of bribery and put the company at serious financial risk.

            Another important aspect of Kantianism relies on the fact that people should act only according to maxims that could be universalized and acted upon. With relation to the acts of bribery – Could it be made a universal law to always bribe customers to get what you want? This would be impossible, because if everyone bribed everyone in every business transaction, it would be impossible to bribe someone. Also, according to Kant, he claimed “it is wrong to lie, cheat, and steal, no matter the positive consequences that occur” (Salazar 21). In examining the moral permissibility of this action again, executives at Orthofix cheated the law by bribing official for profit gain and lied about it by manipulating their accounting records in order to not get caught. Every aspect of this action goes against the key ideas of rationality and morality in the act of practicing good will.

            With attention to the fraudulent accounting measures used to cover their bribery scheme, this would be deemed unethical as well. Universalizing this maxim would leave: Could everyone cheat on their accounting measures to hide things from the government? I don’t believe this is possible because if everyone was hiding things from the government by improperly reporting financial statements, the government would know and it wouldn’t be possible. Also, it would be impossible to universalize cheating, lying, or manipulation because “An action is rational and permissible if it meets certain standards that demonstrates respect for the autonomy and rationality of all people affected by the action” (Salazar 21). Lying and cheating demonstrate a severe lack of respect for the government, its laws, and all other people abiding by those laws.

Virtue Theory

            Someone following the Virtue Theory model would be most interested in examining someone’s character and assessing if they are “virtuous” or not. This theory differs from the previous three in that they “analyze individual actions whereas Virtue Theory analyzes a person’s character” (Salazar 23). Important characteristics to be considered when analyzing someone’s traits include their virtues (honesty, wisdom, insight) and vices (greed, selfishness). Executives involved in these scandals showed a number of vices that can be considered unethical.

            Executives at Orthofix displayed certain vices like greed and selfishness that showed a poor judgement of their true character. By only thinking of the profits of their short-term gain, they exhibited key traits and characteristics that directly oppose the key virtues that build a good character. Bribing officials for personal gain (regionally and business) was selfish and showed a lack of temperance and no respect for their stakeholders or innocent parties involved. Also, they showed fraudulent behavior traits in the covering up of their crimes financially. Key virtues like honesty and trust were clearly missing from the people who committed these actions. Honesty and trust between themselves, clients, and customers has become strained because of the way in which these people acted, and their relationships could be negatively affected as they try to grow.

Justified Ethics Evaluation

            In my opinion, the actions of key high-ranking executives at Orthofix were unethical and highly illegal. The actions committed, both bribery and the reporting of fraudulent accounting measures, go directly against the goals and expectations of the free market. Breaking the law to gain an advantage can always seem like a good idea in the short-term, but most people will eventually slip and get caught, realizing the consequences were never worth the risk. The bribery was the steppingstone to fraudulent accounting practices used to cover up the initial scandal, leading to an avalanche of crimes and problems too big to cover. Negligence regarding the consequences of their actions resulted in heavy penalties against the company and negatively impacted many people that were never involved.

            The risks and rewards of their actions should have been considered more heavily and with much more severity. Understanding how hard it is to break the law and get away with it in this modern age of technology should have been a caution to anyone interested in doing so for their own personal gain. With that said, systems like the SEC’s whistle-blowing reward provide a strong incentive for individuals who notice unethical and illegal acts happening in business to report them. Often times, people involved in these acts can be scared of reporting incidents for loss of their job or blackmail, but through their anonymous system and monetary reward, it provides a reason for people to act lawfully.

            These executives at Orthofix did not act in an ethical manner and failed to show rational and moral judgements in their actions. Not only did they cheat to gain an unfair advantage over their competition, they lied and covered their tracks with the hopes of continuing their ruse and never be caught. They inevitably put the company and its stakeholders at extreme risk and valued their own self-interests over that of the greater whole.

Action Plan

            The company has already taken important steps in fixing the public image fallout associated with their scandals. Orthofix fired employees directly involved and responsible for the makings behind the schemes and immediately worked with necessary parties to “implement significant remedial measures” (SEC 2012 PR). With that said, the company’s image continues to fluctuate as they’ve had multiple scandals and struggle to engrain a trustworthy relationship with the public.

The problem with Orthofix seems to be a lack of training with regards to ethical responsibility in the workplace and helping employees make rational and grounded decisions based on their experiences. I recommend an extensive overhaul of the current training and orientation-type processes in order to start from the ground-up. All existing and new employees should be required to take these training courses that thoroughly cover the expectations and ethical practices members of their organization should abide by. Provide case examples from your own company in order to show people how serious the consequences can be for acting in a way that could hurt the company. Team members will have a better understanding of what is required from them and will be able to make grounded and rational decisions to benefit the entire organization.

Benjamin Wosky - Western New England University senior

References

“Orthofix History.” Zippia, 27 Aug. 2020, www.zippia.com/orthofix-careers-33893/history/.

“Orthofix International NV.” Reference for Business, www.referenceforbusiness.com/history/Oe-Pa/Orthofix-International-NV.html.

“Press Release.” SEC Emblem, 10 July 2012, www.sec.gov/news/press-release/2012-2012-133htm.

“Press Release.” SEC Emblem, 18 Jan. 2017, www.sec.gov/news/pressrelease/2017-18.html.

Sun, Mengqi. “Whistleblower in Orthofix Bribery Case Awarded $1.8 Million.” The Wall Street Journal, Dow Jones & Company, 25 Sept. 2020, www.wsj.com/articles/whistleblower-in-orthofix-bribery-case-awarded-1-8-million-11601064562. 

 

CityMD: Wrongly Tells Patients They’re Immune From COVID-19 (May 2020)

    CityMD is a healthcare company that runs urgent cares based in New York.  When COVID-19 came to the United States and testing became available, many turned to CityMD for these services.  They also had antibody testing to determine if patients had antibodies to the coronavirus.  However, they ended up mistakenly telling patients that were positive for antibodies that they were now immune to the coronavirus, something that was not proven and might not be true.  After the news broke, CityMD came forward and acknowledged their mistake, and contacted the affected patients.  This analysis will look at this case from the ethical theories of individualism, utilitarianism, Kantianism, and virtue theory.  An individualist, who values maximizing profits within the law, would argue that this was wrong, as a mistake like this could hurt profits, even though nothing illegal was done.  A utilitarian, who values happiness for all, would feel negatively about this case because being lied to and in danger would make people unhappy.  A Kantian, who values treating people with respect, would say that this is wrong because people were lied to.  Lastly, a virtue theorist would say that CityMD acted unethically because they lied, violating the cardinal virtues.  Going forward, CityMD should be more proactive with reviewing what they put out and doing their research.  They should also continue to maintain transparency and take responsibility for their actions.

Company Background

    CityMD is an urgent care company that was co-founded in 2010 in New York, New York by four ER doctors, including Dr. Richard Park, CEO.  The company operates 136 urgent care centers throughout New York, New Jersey, and Washington state. (CityMD)

    CityMD’s aim is to make healthcare inclusive.  Their mission is to serve their communities by “providing quality medical care through convenient access and an exceptional experience, and we consider this mission with every patient that walks through our doors.”  They state that they hire the best board-certified doctors, and provide them with “ongoing medical training and information, along with the most modern technology.”  They are also “built upon the philosophy of serving patients with kindness.” (CityMD)

People wearing masks waiting to be tested
for COVID-19 outside CityMD in
New York City, April 30, 2020

    When the coronavirus came to the United States, with the first case being in Seattle and cases skyrocketing in the New York area, CityMD stepped up and started testing many people.  They now offer three tests for COVID-19: the rapid test, the PCR test, and the blood (antibody) test. (CityMD, 2020) The first two test for whether you currently have the virus, and the third tests if you have antibodies for the virus.  According to the Daily Telegraph, “CityMD administered about 314,000 [COVID-19] tests across New York City, as of June 26. In total, 26 per cent of the tests came back positive.” (Gale) They test at all their locations across New York, New Jersey, and Washington.

Ethics Case Controversy

    When the first COVID-19 case was diagnosed in the US on January 20th, no one expected it to get as big as it did.  But on March 11th, the World Health Organization (WHO) declared COVID-19 a pandemic.  Many places countrywide started to quarantine, and New York and New Jersey, being some of the first, started on March 28th. (NBC) On April 2rd, after many people had contracted and recovered from the coronavirus, the FDA approved the first antibody test for COVID-19. (Mandavilli)

COVID-19 antibody test

These tests were very new, and no one quite knew what they could tell us, other than whether or not someone had had COVID-19 at one point.  According to the University of Maryland Medical System, antibody tests are primarily being used to “help determine how widespread coronavirus infection is in certain communities.” (UMMS) They go on to say that “this can be beneficial for creating public policy and better understanding how to keep communities safe.”  Many, though, have taken these antibody tests as a sign of being immune to the coronavirus.  This is what most likely led to CityMD’s mistake.  The World Health Organization says that “most people who are infected with COVID-19 develop an immune response within the first few weeks after infection. Research is still ongoing into how strong that protection is and how long it lasts. WHO is also looking into whether the strength and length of immune response depends on the type of infection a person has: without symptoms (‘asymptomatic’), mild or severe.” (WHO)  While the antibody test shows that you had an immune response from the coronavirus, it doesn’t tell you whether you are protected enough from reinfection.  “In general, reinfection means a person was infected (got sick) once, recovered, and then later became infected again. Based on what we know from similar viruses, some reinfections are expected. We are still learning more about COVID-19.” (CDC) Dr. Maria Van Kerkhove, head of the WHO’s emerging diseases and zoonosis unit, said, “Four months into this pandemic, we’re not able to say an antibody response means someone is immune.” (WHO) Some sources “found that people who recover from even mild cases of COVID-19 produce antibodies that are believed to protect against infection for at least 5 to 7 months, and could last much longer.” (Schimelpfening) However, this is a new virus and the little evidence we have is not enough to prove immunity, “simply because not enough studies have been done yet.” (Schimelpfening) Despite the lack of evidence, on May 11th, the news broke that CityMD had told 15,000 people who had positive antibody test results that they were immune to the coronavirus. (Feuer)  They had made antibody tests available to those who had previously tested positive for COVID-19, those who believed they already had it and have been symptom-free for at least two weeks, and for those who believe they were exposed to the virus. (ABC) There was also no charge from CityMD for these tests, as they waived insurance copays.  This led to many people getting tested and being told that they were now immune, even though there was no solid research to show that this was true.  While CityMD might have been using unproven assumptions about immunity, it could also have been an honest mistake.  According to CityMD, the mistake was “due to an editing error in the patient portal,” and they described the situation by saying that “some CityMD patients have received incorrect information saying a positive result on the COVID-19 antibody test confers immunity...CityMD patients getting the COVID-19 antibody test are given several documents explaining that a positive result does not mean they are immune to COVID-19.” (Feuer) While we don’t have access to the exact documents that patients received, this must have confused many patients.  That being said, this mistake may have been an error from reusing documents from past viruses where immunity was known.  This led many people to believe, for at least a short time, that they were immune, which put them in danger of being careless and exposing themselves to getting reinfected. 

People in New York City during the pandemic
being careless by not wearing masks,
putting themselves and others at risk

“The common perception is that if you test positive for COVID-19 antibodies, you’re “safe” from COVID-19 and are immune. But there are many factors in antibody testing, and not all tests are created equal.” (Tripucka) In fact, Professor Helen Ward says, “This very large study has shown that the proportion of people with detectable antibodies is falling over time...We don’t yet know whether this will leave these people at risk of reinfection with the virus that causes COVID-19.” (Ellis) After CNBC reached out, CityMD did say that they “removed the incorrect language and will contact all patients to ensure they have the correct information,” however, it is uncertain how much damage had already been done by then by a company that many people looked to for safe, accurate information.  As of now, their website currently states, under the description for the antibody test, “This test will detect if you have had prior exposure to or infection with COVID-19 and have built antibodies for the virus. For most viral illnesses, a positive antibody means prior exposure to a virus and possible immunity to future infection. As COVID-19 is a novel (new) infection, it is unclear if a positive antibody offers immunity.” (CityMD, 2020)

Stakeholders

    This particular case has two main stakeholders.  On one side, we have CityMD and its executives, and on the other side, we have the patients of CityMD.  CityMD is responsible for the information they provide to their patients, and their patients should be able to trust CityMD to care for them and provide them with accurate information.  CityMD will be affected depending on how they handle situations of misinformation.  Patients will be affected based on who they trust and how long they believe potential lies.  Since CityMD is popular for its health care, people should be able to trust it, and breaching that trust could have dangerous effects.

Individualism

    One way to view this case is from an individualist perspective.  Milton Friedman’s theory of individualism states that a company has the responsibility to maximize profits for the owners (which are most often stockholders) within the law.  Right or wrong aside, as long as it’s legal and makes a profit, an action is considered permissible according to individualism.  The individualist would not view the CityMD case as permissible.  While nothing they did was against the law, they told patients misleading information, and as a healthcare company, this breach of trust could hurt their business.  When the news came out that they had done this, they acknowledged their mistake, but by then it was after the fact and the damage had already been done.  They surely must have lost customers and business from this situation, which means they aren’t operating individualistically.  They didn’t maximize profits and in this way, their action is deemed impermissible.

Utilitarianism

    Another way to view this case is from a utilitarian perspective.  The goal of utilitarianism is to maximize happiness for all in the long run.  Instead of “good” versus “bad”, things are measured based on what is good, better, or best according to how many people are happy, and how happy they all are.  A utilitarian would most likely take a negative view of CityMD’s case.  The two main stakeholders in this case were CityMD and its patients.  After we found out that CityMD made the mistake that it did, many patients had to find out that they were lied to, and CityMD had to own up to their faults and contact everyone.  Long term, neither party will be very happy.  After finding out they were lied to about their immunity and indeed in danger of reinfection, patients won’t be happy.  And after having to admit they were wrong and take a hit to their public image, CityMD also won’t be very happy.  While it is unclear from the research available whether there was backlash or a spike in COVID-19 cases after this incident, this was still an impermissible action that made many people unhappy.

Kantianism

    Another way to examine this case is with Kantianism, which is the philosophy of Immanuel Kant.  Kantianism’s goal is to treat every person with respect, not using anyone as a mere means, and not lying or manipulating in any way.  It doesn’t regard the ends so much as the means of how one got there.  No matter how “good” the results of an action are, the means to get there must follow Kant’s ethics to be considered permissible.  A Kantian would argue that CityMD’s case was a very bad situation.  First and foremost, 15,000 patients were lied to.  Even if it was an honest mistake, not putting in the effort to research or review what they’re saying is a disrespectful move by the company.  CityMD didn’t take the patients’ health and safety into consideration before releasing the information that said they were immune, and in this way, they violated the formula of humanity, which is the claim that people should not just be a means to an end.  CityMD treated their patients as mere means (by lying to them) to an end (making their company look good and profit).  Kant would be pleased that CityMD later told the truth, respecting their patients by correcting their mistake, but overall, this situation would be considered unethical according to Kant.

Virtue Theory

    The last way we’ll look at this case is with virtue theory.  This ethical perspective is all about one’s character, and whether or not they not only act virtuously but are virtuous.  It judges based on whether one acts with good character traits, specifically the four cardinal virtues.  The four cardinal virtues associated with virtue theory are courage, justice, honesty, and temperance.  In order for an action to be considered ethical, or permissible, one must act with all four of these virtues.  A virtue theorist would overall take a negative view of this case.  We can look at both the action and the aftermath to determine whether CityMD demonstrated these virtues.  CityMD did not act with honesty or temperance when they carelessly released false medical information regarding immunity.  However, CityMD did act with courage and justice when they owned up to their mistake and sought to tell all their patients the truth.  Other good business virtues such as fairness, humility, and good leadership were also shown by the way CityMD reacted to the problem they were faced with.  Since they didn’t show all of the cardinal virtues though, virtue theory would count this situation as unethical.

Justified Ethics Evaluation

    In my opinion, CityMD acted unethically.  They released significant medical information about immunity without making sure it was completely accurate, and for a healthcare company, that could have very dangerous effects, such as many patients getting reinfected with COVID-19 after thinking they were immune.  They did try to fix their mistake, but we don’t know how much damage was already done by then, and the fact that they made this mistake in the first place trumps the fact that they fixed it.  All four of the ethical theories we looked at agree with this view as well.  Lying to people about important health information is not ethical on any level.  This could have been avoided simply by reviewing things and being more proactive with doing research.

Company Action Plan

    CityMD’s problem was that they had led their patients to believe that they were immune to the coronavirus if they had received a positive antibody test.  When this mistake went public, CityMD was quick to admit that it was wrong and that this was because of an error in the patient portal.  They also contacted the affected patients to let them know as well.  CityMD did a very good job in resolving the issue by themselves, but they can still go a step further to improve.  They should be proactive in spreading the truth about COVID-19 and immunity to their patients and communities.  They should also be vigilant about the accuracy of the information they use or provide to patients.

    CityMD’s mission statement is to “make healthcare as inclusive as possible.”  An improvement to this statement would be a mission to “make healthcare inclusive while maximizing accuracy and transparency for patients.”  As of now, their focus is on the people they serve and how they serve them.  However, especially in the medical community, they need to pay just as much attention to the accuracy of the information they provide as to who it’s for.  This new mission strikes the right balance that allows CityMD to best care for their customers.

    There are a few core values that exemplify what CityMD should strive for.  These include customer safety, honesty, accountability, and learning.  They should work first and foremost for the patients and making sure they are safe and well taken care of, then they should be committed to continually learning and being honest about medical facts and about when they make mistakes.

    In order to ensure that this problem doesn’t happen again, CityMD can make sure to review all of the information that comes out of their company.  This may include hiring people to proofread their documents, or researchers to double check the accuracy of what they’re saying.  And if the issue was just a technical error in the patient portal, they can train people on how to use this resource and have IT make sure no mistakes go out.  In regards to their public image, no improvements or marketing schemes need to be made.  They did a great job at correcting their error and are currently back to being a thriving, respected business, opening new locations to this day.  However, this plan of committing to research and transparency will benefit them as a whole because they will become more knowledgeable and trusted, which is sure to increase profits as more people come to CityMD for their medical needs as a place that values inclusion and honesty, which is key for being an ethical business.

Sarah Mollin

References

“Coronavirus News: CityMD Changes Messaging after Telling 15,000 Patients with Antibodies in New York, New Jersey They Have Immunity.” ABC7 New York, WABC-TV, 13 May 2020, abc7ny.com/citymd-coronavirus-antibody-immunity-tests/6176201/.

Feuer, Will. “CityMD Mistakenly Told 15,000 People with Coronavirus Antibodies They're Immune.” CNBC, CNBC, 11 May 2020, www.cnbc.com/2020/05/11/citymd-mistakenly-told-15000-people-with-coronavirus-antibodies-theyre-immune.html.

“Coronavirus Disease (COVID-19): Herd Immunity, Lockdowns and COVID-19.” World Health Organization, World Health Organization, 2020, www.who.int/news-room/q-a-detail/herd-immunity-lockdowns-and-covid-19.

“Coronavirus Immunity.” University of Maryland Medical System, 2020, www.umms.org/coronavirus/what-to-know/diagnosis-symptoms/immunity.

Schimelpfening, Nancy. “How Long Does Immunity Last After COVID-19? What We Know.” Healthline, Healthline Media, 14 Oct. 2020, www.healthline.com/health-news/how-long-does-immunity-last-after-covid-19-what-we-know.

"Immunity in New York as high as 68pc, tests suggest; Antibodies Findings raise hope that affected areas in London could protect themselves from a second wave." Daily Telegraph [London, England], 10 July 2020, p. 11. Gale OneFile: Health and Medicine, https://link.gale.com/apps/doc/A629046739/HRCA?u=mlin_w_westnew&sid=HRCA&xid=35f0a5aa. Accessed 14 Nov. 2020.

“Reinfection with COVID-19.” Centers for Disease Control and Prevention, Centers for Disease Control and Prevention, 2020, www.cdc.gov/coronavirus/2019-ncov/your-health/reinfection.html.

Tripucka, Jennifer. “If You Tested Positive for COVID-19 Antibodies via City MD, You Should Read This.” Hoboken Girl, Hoboken Girl Publishing, 13 May 2020, www.hobokengirl.com/city-md-covid-19-antibody-testing-news/.

Ellis, Ralph. “COVID-19 Antibodies Decline Over Time, Study Shows.” WebMD, WebMD, 2020, www.webmd.com/lung/news/20201028/covid-19-antibodies-decline-over-time-study-says.

“On a Mission to Do More.” CityMD, www.citymd.com/our-story.

“COVID-19 Testing Information.” CityMD, 2020, www.citymd.com/news/covid-19-testing-update.

Mandavilli, Apoorva. “F.D.A. Approves First Coronavirus Antibody Test in U.S.” The New York Times, The New York Times, 2 Apr. 2020, www.nytimes.com/2020/04/02/health/coronavirus-antibody-test.html.

NBC New York. “CDC Issues 14-Day Travel Advisory for New York, New Jersey, Connecticut.” NBC New York, NBC New York, 28 Mar. 2020, www.nbcnewyork.com/news/local/even-with-relief-bill-passed-no-rest-for-ny-as-cuomo-says-peak-of-crisis-still-yet-to-come/2348306/. 

Medique: Recalls 31 Medications Sold Exclusively on Amazon (2018-2020)

 

Abstract

Medique was founded in 1974 as a company that sold first-aid products and medical supplies.  They strived to supply workplaces but have since expanded.

On September 11, 2020 Medique recalled thirty-one of their over-the-counter medications.  Roughly 143,300 units were recalled at this time.  However, the recall was not due to the medication themselves, it was due to the packaging that the medication was in.  Product’s containing certain substances, by law, have to be in child resistant packaging.  The packaging that these products were sold in did not meet the regulations of child-proof packaging set by the PPPA.  The recall is for any of these medications sold solely from Amazon.com between the date of June 2018 and June 2020.  The price ranged from two dollars to fifty-nine dollars and those who go through the recall process will receive a full refund for their purchase. Thankfully, there was no incidents between these times. In this paper we will go over each of the ethical theories that we learned about in class and determine if this situation would be considered ethical or unethical from their point-of-view.  From the point-of-view of individualism this would be considered ethical, they maximized profit.  From the Utilitarianisms point-of-view they were ethical, they maximized happiness.  Looking from a Kantianism’s point-of-view they were also ethical.  The customers weren’t treated solely as a mere means but also as an end.  Finally, regarding Virtue Theory, they were also ethical.  They expressed all four cardinal virtues which allows them to be ethical in their decision making.  I would suggest for the company to place another level of double-checking into their process in order to prevent this from every happening again.  It would also be a good idea for them to make sure that their customers know that they are aware that they’re supplying to families.  Having the company acknowledge the families and make them their top priority they could possibly bring in more customers as the medicine company that takes families into consideration.     

Ethics Case Controversy

            When one buys a product, they assume that it doesn’t pose any threat to their family when said product is brought into their home.  However, the packaging that the product is contained within can pose a threat that consumers don’t even think about.  This is due to the fact that there are laws and regulations set in place to make sure that potentially dangerous products are as safe as they can be.  Consumers bank on the fact that they are assuming the product they are buying abides by those laws and regulations.  However in 2020, which seems very fitting, it was announced that for two whole years 143,000 products did not meet those laws and regulations posing threats of life-threatening situations for those who had purchased them (.

            On September 11, 2020 a well-known medical brand, Medique, recalled thirty-one of their over-the-counter medications (CPSC).  These medications came from their Medi-First, Medi-First Plus, Medique, Dover, Otis Clapp, and Ecolab product lines (CPSC).  Of these product lines 143,000 units in total were sold and needed to be recalled (CPSC).  One of the products was the Medi-First Non-Aspirin Acetaminophen containing 325mg of acetaminophen (Desk).  There were 2 tablets per packet and they were sold in a quantity of 50 packets or 250 packets (Desk).  The next was Medi-First Extra Strength Non-Aspirin Acetaminophen containing 500mg of acetaminophen (Desk).  This product also has 2 tablets per packet and was sold in a quantity of 50 packets, 125 packets, and 250 packets (Desk).  Medi-First Sinus Pain and Pressure contained 500mg of acetaminophen and came as 2 tablets per packet (Desk).  These packets were sold also as 50 packets, 125, or 250 packets (Desk).  Medique APAP contained 325mg of acetaminophen and came as 2 tablets per packet (Desk).  However, they only came in a quantity of 250 (Desk).  

Medique Extra Strength APAP contained 500mg of acetaminophen and came with 2 tablets per packet (Desk).  The quantity that was offered for this product was 50, 125, or 250 (Desk).  Medique Back Pain-Off contained 250mg of acetaminophen and had 2 tablets per packet (Desk).  This product was sold in quantities of 50, 100, or 250.  Medique CCP Caffeine Free had 325mg of acetaminophen in it and came with 2 tablets per packet (Desk).  The quantities for this product was 50 or 250 (Desk).  Medi-First Cold Relief had 325mg of acetaminophen and 2 tablets per packet (Desk).  They were sold as either 50, 125, 250 packets (Desk).  Medique Cramp Tabs was sold as 2 per packet with 325mg of acetaminophen in quantities of 50, 125, or 250 (Desk).  Medique Decorel Forte Plus had 325mg of acetaminophen in them and 2 tablets per packet (Desk).  The quantities that were offered for this product was 50 and 250 (Desk).  Medique Medicidin-D had 325mg of acetaminophen and 2 tablets per packet with quantities of 50, 100, and 250 (Desk).  Dover Aminofen had 325mg of acetaminophen and also had 2 tablets per packet the quantity offered in this product was only 250 (Desk).  Otis Clapp Back Quell has 200mg of acetaminophen and sold in quantities of 150 packets (Desk).  Otis Clapp Mygrex has 500mg and sold in quantities of 150 packets and Otis Clapp Valihist has 325mg and is sold as 150 packets (Desk).  Medi-First Pain Relief Extra Strength has 110mg of acetaminophen and 162mg of aspiring which is sold in quantities of 50, 100, and 250 (Desk).  Medi-First Plus Pain Zappers has 250mg of acetaminophen and 250mg of aspirin and is sold in quantities of 50 and 125 (Desk).  Medique Pain-Off has 250mg of acetaminophen and 250mg of aspirin and is sold as 50, 100, or 250 (Desk).  Medi-First Aspirin has 325mg of aspirin and is sold as 50, 125, or 250 (Desk).  Medi-First Plus Aspirin has 325mg of aspirin and is sold as 50 or 125 (Desk).  Medique Aspirin is also 325mg of aspirin and is sold as 12, 100, or 250 (Desk).  Medique Diphen has 25mg of diphenhydramine and is sold as 24 or 200 (Desk).  Medi-First Ibuprofen has 200mg and is sold as 4, 50, 125, or 250 (Desk).  Medique I-Prin has 200mg of ibuprofen and is sold as 3, 100, or 250 (Desk).  Dover Addaprin also has 200mg of ibuprofen and is only offered in a quantity of 250 (Desk).  Medi-First Burn Cream with Lidocaine has 0.9 grams of lidocaine and comes as a set of 25 individual packets (Desk).  Medi-First Burn Spray only comes as a 2 oz bottle containing 2% of lidocaine HCI (Desk).  Medi-First Blood Clotting Spray comes in a 3 oz bottle with 4% lidocaine (Desk).  Ecolab Burn Cream comes as a set of 25 individual packets each with 0.9 grams of lidocaine in them (Desk).  Medique Diamode comes in a packet of one with 2mg of loperamide HCI and is offered as 6, 50, or 100 (Desk).  Medique Mediprozen comes in a packet of one with 220mg of naproxen sodium, offered in quantities of 50 and 100 (Desk).

            Each of these products were recalled because the packaging didn’t take significant effort for a child to open.  They are required by PPPA to make it almost impossible for a child under 5 to open any sort of packaging containing the substances such as aspirin, acetaminophen, ibuprofen, lidocaine, diphenhydramine, loperamide, and naproxen (CPSC).  Each of the products above contained one of those substances therefor requiring the recall of the product.  The products were sold solely by

 Amazon.com between the time of June 2018 and June 2020.  The prices ranged from two dollars to fifty-nine dollars depending on the product and the quantity that was purchased.  

            According to the PPPA the products shouldn’t have been sold to the consumers to begin with because of the packaging not meeting the child-proof regulations (Medique).  Thankfully, there isn’t any known circumstances where anyone was hurt due to the packaging or consumption of the medication due to the packaging.  The company did the recall as a precaution to prevent any future situations that could result in poisoning due to the packaging.  The recall number is 20-780 where is states what products are being recalled under the CPSC and the time frame of the recalled products.  If a consumer goes to the company’s website, they can find the recall link that will lead them to the details of the recall (Medique Products).  The link will also lead them to where they can fill out their claim if they are someone that happened to buy one of the recalled products.  Once they fill out the claim the company is issuing a full refund to the consumers.  The website also informs the reader how to properly dispose of the recalled item so that it no longer poses any sort of threat to their household.  There is also a number that is can be called if someone doesn’t have access to the website. 

Stakeholder’s

            This situation had many different stakeholders, those whom won’t even be able to be individually listed due to the circumstances of the situation.  However, a stakeholder is anyone that would be affected by this situation.  The first and most important stakeholder in this situation would be the customers who bought the recalled products.  They purchased something as normal as cold medicine and had no idea there was a massive threat sitting in their cabinets if they had kids in the house.  

Thankfully no one was hurt or died, but the idea that someone messed up a product and it posed a threat to their children would be enough to enrage most parents.  The consumers had trusted the company to make sure that their product was in safe packaging to safeguard them from any incidents and they failed to do so.

            The next stakeholder would the company themselves.  They spent time and money on factories and facilities to package their product the correct way so that they could be trusted by their consumers.  This could have been a very big problem for them had someone died or been poisoned by the non-child-proof packaging.  Had there been a horrible circumstance, the consumer could have sued causing an even larger problem for the company.  It  benefits the company to take the extra steps and make sure that their packaging meets all regulations set by the PPPA so that way they have something to fall back on in situations like these.

   

        The next stakeholder in this situation would be amazon.com.  The recalled products were solely sold by them and no other distributor or company.  The fact that other Medique products were sold in the time frame of 2018 and 2020 by other distributors and weren’t recalled pointed the finger towards amazon.com.  Had they had anything to do with packaging the products and something were to have happened the blame would have also been on them.  However, they were the second set of people who should have caught the faulty packaging.  Amazon.com were the workers that looked at the product before it was put into a box and sent to the consumers household so they should have checked to make sure that everything was correct before sending it off.  This falls on them too because they were the party that actually handed the medicine to the consumers.  If something had gone horribly wrong the consumer could have said something along the lines of “I got it off Amazon.”.  In order to safeguard themselves, Amazon should know exactly what they are sending to the customers that use their website and make sure that it meets all regulations.

Individualism

            There are two different versions of Individualism that essentially mean the same thing.  The first version is from Friedman who believed that the only job of the company was to maximize profit from the company (Salazar).  Make sure that no one steals from money from the owner’s and if anything is given away that qualifies as stealing (Salazar).  He also believed that corporations should have the same rules as small businesses.  The second version of Individualism is Machan’s version.  This versions goal was to make a profit off the business and to maximize that profit within what the law allows (Salazar).  However, sometimes in order to achieve this goal you have to go about it indirectly and try to achieve something else in order to maximize profit (Salazar).

            Looking at the Medique recall of the 31 over-the-counter products, this situation wouldn’t be considered ethical from an Individualisms point of view.  The company initially maximized their profit by selling all those different products from their product lines.  However, because there was a recall and they had to issue refunds for everyone that made a claim they ended up losing money.  Losing money is the opposite of what the goal of Individualism is.  Also, most likely, not everyone that bought one of the recalled products had children which means that they probably didn’t dispose of the recalled product.  They could have not only kept the recalled product because a child-proof package didn’t mean anything to them, but they could have received the refund of the recalled product as well.  Essentially, from an Individualism point of view, that person would be stealing from the company because the good or service would have been given to them. However, from a different standpoint, the company could have been profitable from the recall because they are ensuring the trust of their consumer.  This would be an indirect goal that would bring them to their direct goal of making a profit.  The company righted their wrongs and therefor the consumers may still purchase their product providing profit to the company.

Utilitarianism

            The main goal of Utilitarianism is to maximize happiness in yourself and in others (Salazar).  This is because happiness and pleasure are the only things of intrinsic value and everyone who can feel them should feel them (Salazar).  That also means that if happiness is valuable then there isn’t a difference between your happiness and my own (Salazar).  With Utilitarianism in mind, I believe that the company was ethical from their point of view.

            The company maximized happiness the best they could with the recall.  The customers who had bought the recalled products most likely weren’t pleased that the products didn’t meet packaging regulations however I’m sure they were happy that nothing was wrong with the product itself.  The product itself was safe to consume when used properly which must have been a huge relief for the customers who purchased them over two years.  There were also no incidents with children getting into the products even though they weren’t child-proof.  This made everyone involved in the situation happy.  The customers also received a refund on their products if they made a claim which must have brought them happiness.  The company themselves must have been thrilled that they didn’t have any lawsuits on their hands regarding children who had been poisoned because of the faulty packaging of their medicine.  Amazon must have also been happy that there weren’t any lawsuits taken out on them because they were the middleman who sold the products and then distributed them directly to the customers.  Overall, even with the circumstances, happiness was maximized as best as possible which makes it ethical from a Utilitarian’s point of view.  No one was hurt, no one was sued, and some even got money out of the entire situation.

Kantianism

            Kantianism is one of the more difficult ethical theories to wrap one’s mind around even though it’s something that everyone should be living by.  The basis of Kantianism that determines if something is ethical or not would the formula of humanity.  The formula of humanity means that you can never treat someone as simply a mere means but always also as an ends (Salazar).  With that being said I believe in the regards to Kantianism Medique was ethical in their recall of the 31 over-the-counter products. 

            Medique didn’t treat their customers as a mere means because if they had they would have sold their products and then not looked back or cared if anyone had gotten hurt.  The company not only recognized their mistake but also acknowledged that someone could get hurt and reached back out to their customers in order to try and right their wrong.  They offered different ways that customers could get in touch with them in order to try and reach all those affected and then they stepped up and gave refunds for products that they were advising customers to dispose of.  Medique thought of these customers not only as customers but as people with families and loved ones who would be heartbroken if something had happened.  In order to not be the culprit of any of that chaos, they alerted their customers and took all the steps that they could to further prevent anything from happening.  Granted, they were the ones that messed up in the first place, but what was done was done and there was no going back.  They had to move forward with their customers and do what they could to protect them once they were aware of the mistake that had taken place.  This is treating there customer also as a means which is the reason that this circumstance would be considered ethical from that point of view.  The customers were not only a mere means but always also an ends to the Medique company and they stepped up when the customers needed to be notified and amends needed to be made.

Virtue Theory

            Virtue theory is different than any of the other ethical theories that have already been discussed in this paper.  This theory looks at a person’s individual traits to determine why they make the decisions that they make.  There was a presentation by Andrew Havard that discussed the topic and explained the four cardinal virtues which are prudence, courage, self-control, and justice (Havard).  Prudence is the virtue of making the right choices, courage is the virtue of having the courage to stick with it, self-control is the virtue that allows someone to appropriately use their emotions, and justice is the virtue to treat everyone equally and give them what they deserve (Havard).  A person also has magnanimity which means that they want to know who they are as a person (Havard).  If someone is missing one of these traits then they are missing them all (Havard).  

            When the Medique situation is taken into consideration I believe that the situation is ethical.  They exercised prudence by making the right decision to recall their products that had faulty packaging.  They had the courage to stick with the plan of the recall and the refund and then correct their mistake and make it better.  They had self-control allowing them to put aside the fact that they were going to lose money and instead be thankful that no one was harmed in the process of selling of the faulty products.  Finally, they showed justice to the people treating all those that received the recalled products the same.  The company also had magnanimity which means that they know who they are as a company and it’s a company that wants to ensure that their products are safe for their consumers.  They also want to ensure that their customers return to them even when mistakes are made. The company expressed all four cardinal virtues which is a good thing because if they’re missing one then they are missing them all.  Hence, I believe that in regard to the virtue theory Medique was ethical in their decision to recall and refund the products.

Justified Ethics Evaluation

After reviewing all the ethical theories and analyzing the situation with Medique, I believe that they were as ethical as they could be considering the situation.  Granted, I don’t believe that the product should have ever been sold if the packaging didn’t meet the regulations of the PPPA.  They were lucky that nothing worse came out of this and that no children got into the non-child-proof packaging and ended up poison.  They maximize happiness in all that is required to be ethical from a Utilitarian’s point-of-view.  The customers weren’t solely treated as a mere means but also as an end which makes it ethical from a Kant’s point-of-view.  They have all four cardinal virtues which makes it ethical from a virtue theorists’ point-of-view.  Individualism is the only one that is being teetered on if it’s ethical from their point-of-view or not.  However, when you look at it from the angle of sometimes needing to aim for something else in order to maximize profit, I believe that it is ethical.  They had to resolve the situation in order to keep their customers which in turn will maximize profit.  To conclude, the company controversy was ethical in my opinion after looking at the ethical theories and the circumstances of the situation.

Company Action Plan

On September 11, 2020 Medique recalled thirty-one of their over-the-counter products.  These products were sold solely on Amazon.com between the time frame of June 2018 and June 2020.  There was nothing wrong with the medications themselves, however their packaging did not meet the PPPA child-proof regulations of medications containing the substances of aspirin, acetaminophen, ibuprofen, lidocaine, diphenhydramine, loperamide, and naproxen.  These products were sold for between two dollars and fifty-nine dollars.  They reached out to those of their customers that they could but because the products were sold on amazon.com they didn’t have a record of everyone that bought a recalled product.  From there they provided customers with different ways for them to be able to reach the company.  Once the customer reached the company, they were supplied with information on how to properly dispose of their recalled products so that they no longer posed any sort of threat to anyone’s family.  The customer was supplied with a link or place that they could claim their recall and then were refunded for the products that they purchased.  

    A mission statement that the company should take on would be “To supply medicine and first-aid products to families like ours”.  Their original mission statement was to the number one supplier of workplaces, however this new mission statements coincides with their expansion.  Their products have made their ways into people’s homes and their mission statement should reflect that.  This mission statement brings comfort to their customers allowing them the opportunity to feel that the people behind this company has families that they care about as well.  The customers feel they aren’t just a dollar sigh but that they are viewed as people with families.  When they are viewed as people and not profit more precautions will be taken.  Along with a new mission statement they should set core values for the company to keep in mind.  Customer safety should be their number one core value.  They are supplying medicine that is consumed by their customers, their safety needs to be the top priority.  Honesty should be the second one that they take in.  They need to be up front and honest with their customers about their products.  If their honest to their customers than their customers will trust them because they will know exactly what the company stands for.  They will also know exactly what they are putting in their bodies and giving to their loved ones.  The final core value that should be applied would be caution.  The mistake that was made by the fact that the packaging wasn’t child-proof should never happen again.  The result of that mistake could have been fatal to someone and they need to take the extra precautions to make sure that it never happens again.  Medique needs to be cautious with what they are making and placing in other’s homes within the reach of their children’s little hands.

            They also need to set into place different levels of checking to make sure that everything is safe.  If they needed to, they could fire another set of staff solely to make sure that the packaging meets regulations.  They may want to consider firing those that messed up two years’ worth of products as well.  My plan will promote profit because they will be rebranded as the company that protects the little ones.  They won’t be a company that only wants to make money, they’ll be the company that cares about families.  They acknowledge that they have families and will therefor think like they are putting these products in their own homes with their own loved ones.

Citations

“Medique Recalls 31 Different Over-the-Counter Drugs Due to Failure to Meet Child Resistant Packaging Requirement; Risk of Poisoning; Sold Exclusively on Amazon.com (Recall Alert).” U.S. Consumer Product Safety Commission, 11 Sept. 2020, www.cpsc.gov/Recalls/2020/medique-recalls-31-different-over-the-counter-drugs-due-to-failure-to-meet-child. 

“Poison Prevention Packaging Act.” CPSC.gov, 17 Nov. 2020, www.cpsc.gov/Regulations-Laws--Standards/Statutes/Poison-Prevention-Packaging-Act.

“What is Virtuous leadership? by Alexandre Havard” YouTube video, 45:52. Posted by “Strathmore University” July 17, 2013. https://www.youtube.com/watch?v=hWqAYDJYxak 

Desk, WGN Web. “Medique Issues Recall on Medicine Sold on Amazon.” WGN, WGN-TV, 14 Sept. 2020, wgntv.com/midday-news/medique-issues-recall-on-medicine-sold-on-amazon/. 

Limbach A Washington, James. “Medique Recalls 31 Different over-the-Counter Drugs.” ConsumerAffairs, 18 Sept. 2020, www.consumeraffairs.com/recalls/medique-recalls-31-different-over-the-counter-drugs-091820.html. 

Medique Products. “Safety Notice.” Medique Products - The Brands That Work, 2020, mediqueproducts.com/safetynotice.html. 

Medique. “Medique OTC Products.” Home Page - MediqueOTC, 2020, www.recallrtr.com/mediqueotc.