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A congressional investigation into global consultancy McKinsey & Co.’s role in advising its client on promoting opioid sales includes a look at “risk-management” processes that were overseen for a time by the current president of the Federal Reserve Bank of Richmond, Bloomberg News reported. Thomas Barkin, who was chief risk officer at McKinsey from 2015 through 2017 before joining the Richmond Fed, has not been a direct focus of the House Committee on Oversight and Reform’s investigation. But an interim report released April 13 shows lawmakers are delving into the firm’s oversight of its engagement with Purdue Pharma LP, makers of the painkiller OxyContin. That scrutiny extends to possible failings of McKinsey’s internal risk-management processes, which Barkin oversaw for some of the years the inquiry covers, a person familiar with the investigation told Bloomberg News. The focus on risk management is further underlined in a letter on Nov. 5, 2021 written by the committee’s chair, New York Democrat Carolyn Maloney, seeking documents from McKinsey. The firm’s actions, she wrote, “point to possible systemic issues with McKinsey’s risk management and internal controls and raise serious questions about whether the company has taken sufficient steps to prevent or detect questionable conduct.” The committee will hold a public hearing into the consultancy firm’s role in the opioid epidemic on Wednesday in Washington.

The judge overseeing Gulf Coast Health Care LLC's bankruptcy has pushed the final hearing on its proposed liquidation plan to next week to allow opponents of the deal to review a report that analyzes potential litigation against people and entities associated with the bankrupt nursing home operator, Reuters reported. The report, which was not public, became a point of contention on Tuesday, which was set to be the first full day of the hearing on the plan. But a few hours into the hearing, U.S. Bankruptcy Judge Karen Owens in Wilmington, Del., expressed frustration as witnesses for Gulf Coast attempted to rely on the results of the report in their testimony, despite the fact that the report itself was kept under wraps. "It's problematic," Owens said. In response to the judge’s remarks, Gulf Coast attorney Daniel Simon of McDermott Will & Emery said his team would make the report available to the judge and the opponents of the plan by the end of the day. The hearing will resume on April 27.

Alabama on Tuesday reached $276 million in settlements with Johnson & Johnson, McKesson Corp and Endo International Plc, resolving claims that the companies fueled an opioid addiction crisis, the state attorney general said, Reuters reported. Under the settlement, drug distributor McKesson will pay $141 million toward the state's efforts to combat the opioid crisis, while drugmakers Johnson & Johnson and Endo will pay $70.3 million and $25 million, respectively, Alabama Attorney General Steve Marshall said in a statement. The three companies will also pay $40 million in attorneys' fees. The state had accused McKesson of failing to prevent the diversion of opioids for illicit purposes, and the drugmakers of engaging in deceptive marketing practices that downplayed the addiction risks of their painkillers. The companies have denied wrongdoing. Alabama was one of four states that declined to join a nationwide $26 billion settlement of opioid litigation by McKesson, two other top U.S. distributors and J&J that was finalized in February. “These three settlement agreements affirm my decision to decline participation in the national opioid settlements, which did not adequately acknowledge the unique harm that Alabamians have endured," Marshall said in a statement.

Johnson & Johnson said yesterday that it agreed to pay $99 million to settle claims by West Virginia that it helped fuel an opioid addiction crisis in the state, removing the company from an ongoing trial that began earlier this month, Reuters reported. West Virginia is still pursuing claims against Teva Pharmaceuticals Industries Ltd and AbbVie Inc's Allergan in the Kanawha County Circuit Court trial for their alleged role in the crisis. The state accused the companies of causing a "tsunami" of addiction. J&J did not admit liability or wrongdoing in the settlement, the company said. The other companies, which have previously denied the accusations, did not immediately respond to requests for comment. West Virginia previously reached a $26 million settlement with Endo International Plc, which had also been a defendant in the ongoing trial.

The operator of the Edgemere luxury senior-living community in Dallas filed for bankruptcy Thursday after being hit by higher labor costs and lower occupancy rates during the COVID-19 pandemic, WSJ Pro Bankruptcy reported. The worsening business conditions have led the nonprofit operator, Northwest Senior Housing Corp., doing business as Edgemere, to default on its bonds and breach agreements with its landlord, according to a court filing. Edgemere has also filed a lawsuit against its landlord, Intercity Investment Properties Inc., alleging it had dealt with the senior-living operator in bad faith. According to a separate filing Edgemere made in bankruptcy court Thursday, Intercity has been attempting to oust Edgemere and take over management of the 504-unit property. In the lawsuit, Edgemere accuses Intercity of leaking confidential information about the senior community and calling residents to scare them about Edgemere’s financial conditions, the filing said. Read more. 

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Johnson & Johnson can’t use its baby powder bankruptcy to prevent a lawsuit that accuses the company of hiding evidence that its industrial talc operation exposed workers to the toxic material asbestos, a federal judge ruled. The judge overseeing the bankruptcy case of LTL Management sided with the family of a man who sued J&J in 1986. The man agreed to drop his lawsuit after the company produced sworn testimony claiming no tests ever showed J&J’s industrial talc contained asbestos, according to court documents. He died in 1994. The family now plans to sue J&J, saying that testimony was false, citing new evidence. In court papers, lawyers for the family allege that thousands of asbestos suits against J&J failed because of false information provided by the company. Asbestos is an industrial material that is known to cause fatal lung disorders. Until it was found to be toxic, the product was used in everything from insulation to automobile brakes. Since the 1980s, companies have paid tens of billions of dollars to hundreds of thousands of victims.

Jeff Smith, a partner with the influential consulting firm McKinsey & Company, accepted a highly sensitive assignment in December 2017. The opioid manufacturer Purdue Pharma, beleaguered and in financial trouble, wanted to revamp its business, and an executive there sought out Dr. Smith. Over the following weeks, he traveled to Purdue’s offices in Stamford, Conn., meeting and dining with executives. His team reviewed business plans and evaluated new drugs that Purdue hoped would help move the company beyond the turmoil associated with OxyContin, its addictive painkiller that medical experts say helped to spark the opioid epidemic. But the corporate reorganization was not Dr. Smith’s only assignment at the time. He was also helping the Food and Drug Administration overhaul its office that approves new drugs — the same office that would determine the regulatory fate of Purdue’s new line of proposed products. The story of Dr. Smith’s simultaneous work for Purdue and its federal regulator is told through previously undisclosed internal McKinsey records that more broadly call into question the consulting firm’s firewall between its work for private companies and for the authorities that oversee them. A review by The New York Times of thousands of internal McKinsey documents found that the firm repeatedly allowed employees who served pharmaceutical companies, including opioid makers, to also consult for the F.D.A., the drug industry’s primary government regulator. And, the documents show, McKinsey touted that inside access in pitches to private clients. In an email in 2014 to Purdue’s chief executive, a McKinsey consultant highlighted the firm’s work for the F.D.A. and stressed “who we know and what we know.” The documents reviewed by The Times were obtained by the House Committee on Oversight and Reform, which on Wednesday released initial results from its investigation into McKinsey’s work with the federal government, and by a coalition of state attorneys general as part of a 2021 settlement resolving an investigation into the firm’s work with Purdue. The records detail the firm’s work for Purdue and other opioid manufacturers over a 15-year period, from 2004 to 2019.

The probability of default across most U.S. business sectors increased in the first quarter, but the healthcare sector — including senior living — is projecting the highest probable default rate, according to a new report from S&P Global Intelligence, McKnight Senior Living reported. Staffing shortages and pandemic fears stressed the healthcare sector, which also was one of the leading industries with bankruptcies so far in 2022, S&P Global Market Intelligence data show. Looking at trends in bankruptcy filings in Florida, Tampa-based attorney Scott Underwood of Underwood Murray said his firm is definitely seeing more distress in senior living and care — including assisted living, memory care and some nursing homes — since the onset of the pandemic. “While healthcare was always a bit of a volatile industry, it seems that particular sector has really taken a hit for a while due to various reasons, including a large census drop,” Underwood told McKnight’s Senior Living. A previous Polsinelli-TrBK Distress Indices report from the Polsinelli law firm noted that senior living-focused organizations, independent and assisted living communities, and skilled nursing facilities made up a significant portion of healthcare bankruptcy filings in the fourth quarter of 2021. BDO noted in its 2022 Healthcare CFO Survey, which included long-term care organizations, that many healthcare organizations will continue struggling to meet their bond covenant obligations given the increased cost of supplies, staffing challenges and the risk of supply chain disruption. The BDO survey of 100 healthcare chief financial officers — including long-term care industry executives — revealed that 42% of organizations defaulted on bond or loan covenants in the past 12 months. And 25% said that although they had not yet defaulted, they were concerned about defaulting in the next year. Read more.

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States from Arizona to Maine are deploying billions of dollars in federal aid to hospitals in a desperate attempt to retain and recruit overworked health-care professionals facing the threat of yet another spike in Covid-19 cases, Bloomberg News reported. Pennsylvania hospitals are getting $210 million for bonuses or wage increases for front-line health-care workers. Texas approved $378 million to address “critical staffing needs” at nursing homes and home health agencies. Tennessee health-care facilities are receiving $120 million. And while hospital executives and workers say they’re grateful for the one-time infusion from President Joe Biden’s American Rescue Plan, many say long-term structural problems like low pay, difficult working conditions and nursing faculty shortages mean the effort is unlikely to succeed. “We’re all about more money for nurses,” said Wayne Reich, chief executive officer of the Pennsylvania State Nurses Association. “But really what we hope the hospitals use it for is to help correct the issues that are driving nurses out of the health-care system.” One telling piece of data from the Bureau of Labor Statistics projects an annual average of 194,500 job openings for registered nurses from 2020 through 2030, as exhausted workers retire, change careers or find more-lucrative positions as contracted travel nurses. The Covid-19 pandemic exacerbated a health-care labor shortage that is driving up U.S. hospital costs, putting pressure on profits and even threatening to plunge some into bankruptcy. According to a study last year by recruiting and retention firm NSI Nursing Solutions, turnover costs hospitals an average of $40,038 per bedside registered nurse.

Congressional negotiators are slated to announce a deal for $10 billion in additional funding for the U.S. Covid response, but were unable to agree on global aid and dropped it from the agreement, the Washington Post reported. The package would enable U.S. officials to purchase more therapeutics, tests, vaccines and other supplies, after the White House repeatedly warned that it needed new funding for those things. But it includes no money for the global response, which Biden officials have said is critical to protect Americans from the emergence of new, potentially dangerous variants in other parts of the world that would likely make their way to the United States. Senate negotiators, including Sens. Mitt Romney (R-Utah), Roy Blunt (R-Mo.) and Richard Burr (R-N.C.), were seeking a compromise with Democrats, after lawmakers could not agree on a $15 billion package that would have included about $10 billion in domestic funding and $5 billion for the international response. The deal set to be announced Monday is expected to repurpose funding from previous stimulus packages, lawmakers said last week.