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NYC high school equivalency program gets an F

For adults seeking a high-school equivalency diploma through the city Department of Education, your odds are slim to none.

Despite a $52 million budget last fiscal year, the DOE’s Office of Adult and Continuing Education, OACE, says it awarded only 150 diplomas — less than half as many as the year before.

The lame results alarm City Councilman Daniel Dromm, chairman of the education committee, who held a hearing on adult-ed in September after a Post report.

Daniel Dromm/Erik Thomas

“These students are people looking to the DOE to give them a chance of success in life. We can’t crush their dreams,” Dromm said Friday.

The DOE enrolls about 28,700 students age 21 and up who failed or dropped out of high school, or came to America with few English skills. They need a HS equivalency diploma to enter community college or land a stable job.

Insiders blame the failure on “gross mismanagement” by OACE Superintendent Rose-Marie Mills. Instead of focusing on teacher training and curriculum, she demands excessive “post-testing” as soon as after 12 hours of instruction to gauge student gains.

The data gives the program an inflated rating by the state, but does not prepare students for the Test Assessing Secondary Completion (TASC), which students must pass to graduate.

Administrators also put up roadblocks to take the TASC to avoid a high failure rate, they said.

“It seems there is a strategy to make the numbers look much better, and real-life outcomes be damned,” a veteran teacher said.

Stephanie Carrasquillo, 36, entered the DOE program in 2003 after having a baby at age 18, and hopes to attend CUNY to study business.

Stephanie Carrasquillo

“I go to class. I learn. Nobody schedules me to take the test. I feel like I’m ready. I’ve been doing this for so long, it’s time already!” she said. Now a mom of two, she is finally set to take the exam in January — in a different adult-ed program.

Since the state switched from the GED exam to the more rigorous TASC in 2014, the number of New Yorkers taking and passing the exam has declined. The test has sections on math, reading, writing, social studies and science.

The DOE says 163 adults in its programs took the TASC last year, and 150 passed. In FY 2015, 316 adults took it and 299 passed.

By calendar years, the state Education Department counts even fewer diplomas through OACE — 60 in 2016, down from 69 in 2015.

The DOE defended the program, saying it is rated “highly proficient” with 71 percent of students showing growth last year. About one percent enter at the level required to take the final exam, a spokesman said.

But that’s no excuse for abysmal results, Dromm said: “When it comes to children, the DOE says we have to meet them at their level and bring them up. The same standards should apply to adults.”

About two dozen other city nonprofits and agencies, including CUNY, offer adult-ed classes — many with better results. For instance, in the Queensborough Public Library program, which enrolls about 1,500 adults, 450 took the exam last year and 286 passed.


Outcome Health offers employees voluntary buyouts

Outcome Health, a prominent Chicago advertising startup facing fraud allegations from some of its investors, on Friday took steps to cut more staff, offering voluntary buyouts to employees.

The buyout offer comes after partners including Harvard Health Publishing and the American Medical Association recently suspended their relationship with the company.

Outcome, which places digital screens in doctors’ offices and streams drug ads and educational content to them, on Friday held a companywide meeting where employees were told the company would cull its ranks by offering “voluntary separation packages,” people familiar with the matter said. Some employees later received an email offering 10 weeks of pay and some benefits, giving them until Monday morning to decide, and warning that such severance might not be offered after the deadline, according to a copy of the email reviewed by The Wall Street Journal.

“The next few quarters will require conviction and fight for our company to succeed,” wrote a human resources staffer in the email reviewed by the Journal. “We recognize that these times are trying, and that these challenges are not necessarily right for every team member or their families.”

The company laid off 76 people in late September.

In response to inquiries about the buyouts, Outcome said in a statement it is “proud of the team that has helped continue to grow the company’s network, with several hundred medical offices and thousands of new devices added in just the last few weeks. Outcome Health understands that these are challenging times, and that the ongoing scrutiny in the media may not be the right fit for everyone so the company is offering voluntary buyouts. Outcome Health’s founders believe strongly in the long-term success of the business and that’s why they are seeking to reinvest their own money into the company.”

Also, Outcome told staff this week that Harvard Health and the AMA elected to “pause” their relationship with the company until its legal matters are resolved, according to a staff email reviewed by the Journal. Outcome announced the partnership with Harvard Health in August, whereby faculty of Harvard Medical School reviewed educational content running on Outcome Health’s network.

The AMA ran an educational campaign on Outcome’s network this summer to help patients spot signs that they are prediabetic.

“Given the serious nature of recent events, we are reviewing the situation to determine next steps,” said Dr. Gregory Curfman, editor in chief of Harvard Health Publications in a statement. The AMA didn’t respond to a request for comment.

An Outcome spokesman said more than 90% of content partners remain active.

The company also said it “continues to sign up prominent new health-care systems and advertising clients.”

Outcome last week named Carlin Adrianopoli, a senior managing director at FTI Consulting, as interim chief financial officer. Mr. Adrianopoli was previously CFO of RadioShack.

Last month, the Journal reported how some Outcome employees had allegedly misled customers about its advertising services. The company said then it “has always upheld the highest ethical standards” and adopted new policies this year to comply with customer contracts. It placed three employees on paid leave and hired former U.S. attorney Dan Webb to investigate the claims.

Investors, including funds managed by a unit of Goldman Sachs Group Inc. and Google parent Alphabet Inc., on Nov. 7 filed suit against Outcome accusing the company and its founders of knowingly providing false data and financial reports before a $478.5 million funding round earlier this year.

A request from that suit to freeze $225 million in a subsidiary controlled by the founders wasn’t granted by a New York judge on Monday. The investors dropped that claim in New York and on Thursday filed a suit in Delaware Chancery Court against Gravitas Holdings LLC, the subsidiary holding the funds, seeking a temporary restraining order. The fraud claims against the company remain in the New York suit.

Outcome and its founders, Chief Executive Rishi Shah and President Shradha Agarwal, have called the fraud allegations baseless and said the effort to freeze the funds was unfair and could financially damage the company.

In response to the Delaware suit, Sanford Michelman, an attorney for Outcome Health, said: “The Goldman Sachs group is continuing to create an inappropriate distraction after New York’s courts declined their baseless arguments multiple times. This irresponsible abuse of the legal process is seeking to prevent the founders from using their own money to reinvest in the company.”

Outcome said in a Nov. 8 court filing that while Mr. Webb’s investigation remains ongoing, he had “not come across any evidence that senior management was involved” in any misconduct.

On Nov. 9, the investors said the Justice Department was sending them subpoenas to request information as part of a fraud investigation. The Justice Department has declined to comment.

An attorney for Outcome Health said the company “is committed to fully cooperating with any government investigation.”

Jeff Bezos may be about to control $53B more in government spending

Jeff Bezos spends a lot of time directing the newspaper he owns, The Washington Post, to criticize President Donald Trump in every way imaginable. But for some reason, the federal government cannot stop giving Amazon — the retail empire Bezos also owns — a slew of taxpayer-subsidized subsidies. Now, Congress is considering a new federal purchasing plan that could result in Amazon’s most lucrative government handout yet.

The technology giant is no stranger to sweetheart deals that line its pockets at taxpayer expense. The U.S. Postal Service, for instance — which has lost $60 billion since 2007 — handles last-mile shipping for two-thirds of Amazon’s deliveries. This means overtime for workers and a good incoming revenue number on the USPS’s balance sheet, but it’s a financial bonanza for Amazon.

According to media reports, USPS delivers Amazon packages for $2 per package — even though it costs USPS $3.46 per package to make these deliveries. And that’s before you get into the $200 million three years ago for 270,000 handheld scanners to process the packages or the $5 billion or more to replace USPS vehicles with ones better suited to carry Amazon’s packages.

But even this cozy arrangement pales in comparison to the deal Amazon is now trying to push through Congress.

Buried deep in this year’s defense spending bill is a provision that would move Defense Department purchases of commercial off-the-shelf products to online marketplaces.

summary of the proposal, which was inserted into the legislation by House Armed Services Committee Chairman Mac Thornberry, argues it is needed to save money over the burdensome and expensive current system.

It pointed to a report from the Inspector General of the Government Services Administration that found some IT equipment could be purchased more cheaply on the open market than through the GSA’s “schedules.”

In response, the plan calls for developing an online marketplace platform through which federal agencies can buy products such as paper clips, bottled water, computers, office furniture and more — just as any business would do.

But it also calls for this platform to be designed to “enable government-wide use of such marketplaces.” This means the government is looking only for a procurement and supply management firm big enough to offer multiple suppliers for the same product with constantly changing selection and prices and serve the entire U.S. government.

That leaves just one likely possibility  – Amazon Business – for basically monopoly control of $53 billion in federal purchasing, much of the supplies for which comes from no-bid contracts.

Amazon provides a platform for e-companies to sell through to their own customers. It receives 15 percent to 20 percent of the proceeds from such sales, which means a huge revenue stream for Amazon for doing basically nothing while vendors are forced to cough up as much as half their margin.

A government deal with Amazon sets up opportunities for abuse, not to mention control over suppliers. Amazon would get to collect an enormous amount of data on agencies, which could be used to identify top competitors and drive them out of the federal marketplace with increased fees or other rules changes.

And it means any discounts that can be negotiated for the bulk rates of purchasing the federal government does would flow not to the government and taxpayers — but instead into Amazon’s pocket.

Amazon Business, which only started in 2015, already has 1 million customers and $1 billion in sales, and its revenues grew 34 percent in the last year. Adding federal procurement would effectively drive out all competitors for its business service.

It already is moving into position to do this at the local level. In January, Amazon signed a contract with U.S. Communities, a coalition of 90,000 local governments, to provide them with an online marketplace for office supplies and other goods.

The fate of the proposal is unknown. It is in the House version of the defense spending bill but not that of the Senate. This will be resolved in a conference committee, and one solution is to try it as a pilot project before committing the entire government to it.

There certainly ought to be a breathing period before yet another government agency signs yet another deal to use tax dollars to further enrich one of the richest men on the planet.

It’s beginning to get suspicious.

2/3 of US vehicles with Takata airbags not fixed

  • Takata monitor warns that some automakers lagging on repairs
  • Recalls to expand further by end of 2018 under U.S. plan

Nearly two-thirds of the U.S. vehicles containing defective air bag inflators made by Takata Corp. remain unrepaired as automakers have made varying degrees of progress addressing the largest auto recall in U.S. history.

As of mid-September, 20 million vehicles containing defective Takata air bag inflators still haven’t been fixed, 64 percent of the 31.5 million vehicles containing the defective parts, according to a progress report released Friday by John Buretta, the independent monitor overseeing the recalls and a former U.S. prosecutor.

In total, 43 million inflators have been recalled to date and 25 million still need replacements, as some vehicles have two defective air bags. The recalls are set to swell to about 65 million inflators by the end of 2018 under a National Highway Traffic Safety Administration plan to replace the parts in phases, scheduling the riskiest parts for repair first.

The defective inflators can explode in a crash, showering vehicle occupants with metal shards. The parts have been linked to 13 deaths in the U.S. and hundreds of injuries. Mounting liabilities from the recalls pushed Takata to file for bankruptcy in June.

The report concluded that the auto industry as a whole is beginning to make “meaningful progress” developing effective strategies for the recalls while noting “there remains much room for improvement.” It did not identify which automakers were the leaders or laggards.

According to the report, repair rates for the 19 automakers affected by the recalls “vary widely,” reflecting “uneven historical efforts” to alert customers and take other steps to complete the campaigns.

“Recalling these inflators requires a substantial dedication of resources and planning by vehicle manufacturers to ensure that recall efforts remain effective on a national scale,” the report said.

Motorists can check the status of their vehicles at this site:

Purdue approaches states in bid to settle opioid claims

  • Lawyers said to start talks with states who haven’t yet sued
  • Purdue said to hire ‘Queen of Torts’ to create settlement plan

Oxycontin maker Purdue Pharma LP is proposing a global settlement in an attempt to end state investigations and lawsuits over the U.S. opioid epidemic, according to people familiar with the talks.

Purdue’s lawyers raised the prospect with several southern-state attorneys general who haven’t sued the company, as they try to gauge interest for a more wide-ranging deal, said four people who asked not to be identified because the talks aren’t public.

Opioid makers are accused of creating a public-health crisis through their marketing of the painkillers. More than a dozen states and about 100 counties and cities have already sued Purdue, other opioid makers and drug distributors, in a strategy echoing the litigation that led to the 1998 $246 billion settlement with Big Tobacco.

“This sounds like the opening bid in settlement talks,’’ said Anthony Sabino, who teaches law at St. John’s University in New York. “It also sounds like they are trying to convince some of these state AG’s that they don’t need to bring their own suits.’’

group of 41 attorneys general are also investigating how companies like Purdue and other opioid makers marketed and sold prescription opioids. It’s not clear whether Purdue’s lawyers are authorized to speak for other drugmakers facing opioid suits, but the people familiar with the talks say Purdue’s attorneys are looking for a global accord to include all U.S. states’ claims against all manufacturers.

Robert Josephson, a Purdue spokesman, declined to comment on any settlement discussions. The company said earlier that the U.S. Food and Drug Administration approved Oxycontin for use as a painkiller, and approved the safety warnings.

Company officials with J&J, based in New Brunswick, New Jersey; Dublin-based Endo International Plc; Israel-based Teva Pharmaceutical Industries; and Allergan Plc, with headquarters in Parsippany, New Jersey, didn’t immediately return calls for comment on whether they are involved in talks.

Spokesmen for drug distributors Cardinal Health Inc. and AmerisourceBergen Corp. didn’t immediately return calls for comment on whether they are participating. A spokesman for McKesson Corp. declined to comment.

Opioid makers argue in court filings that states and local governments are barred from suing because opioids are regulated by the FDA. They say judges must defer to the FDA’s finding that the painkillers are safe and effective and that companies such as Purdue properly disclosed addiction risks on warning labels.

States and municipalities disagree, saying that because the FDA doesn’t thoroughly regulate drug marketing there is a basis for suits claiming opioid makers created a public-health crisis with overly aggressive marketing.

Stamford, Connecticut-based Purdue hired Sheila Birnbaum, a veteran mass-tort defense lawyer, to help guide its legal strategy and put together a settlement game plan. She’s a partner with New York’s Quinn Emanuel Urquhart & Sullivan LLP.

Nicknamed the “Queen of Torts,’’ the 76-year-old Birnbaum is skilled at negotiating big-dollar settlements, including the $765 million NFL concussion settlement and an accord settling a suit against Pfizer Inc. over its hormone-replacement drugs. She also oversaw a $2.8 billion fund set up to compensate first responders and residents following the 2001 World Trade Center attacks.

“She’s been the go-to person over the years to come up with sweeping resolutions for mass-tort cases,’’ Carl Tobias, who teaches product-liability law at the University of Richmond in Virginia, said of Birnbaum. Birnbaum’s name is on Purdue court filings; she didn’t respond to a request for comment.

State Lawsuits

Any settlement would likely include cash, along with changes to the company’s manufacturing and marketing practices, the people said. It would resolve only the state claims, they added.

What may make an early settlement offer attractive to states is early access to money to deal with the social costs of the opioid epidemic, Sabino said. “The idea is the states wouldn’t have to go through years of discovery and trials to wind up where they could be right now — at the settlement table,’’ he said.

Governments could use their share of billions in settlement funds to recoup the costs of ramping up policing and drug-treatment programs.

Swain Wood, general counsel for the North Carolina Attorney General Josh Stein, told a group of county officials at a Nov. 15 seminar in Raleigh that his office was negotiating with opioid makers, according to a person who attended the meeting.


Wood said his office was on a “dual-track,’’ engaging in settlement talks while continuing to investigate opioid makers’ activities in North Carolina, according to the person. He said the settlement proposal offered to North Carolina would resolve only the state’s claims, but could offer an opt-in right for counties, the person said.

Laura Brewer, a spokeswoman for the North Carolina Attorney General’s Office who also attended the Nov. 15 seminar, denied that Wood said his office was negotiating a settlement.

At the meeting, Wood said “our office is vigorously investigating opioid manufacturers and distributors in cooperation with many other state attorneys general,” Brewer said in an emailed statement. “At the same time, we are open to having discussions with these potential defendants to determine what role they can play in helping to resolve this crisis.”

Brewer added that Wood spoke about “multi-state settlements” in general and noted that “an opt-in for counties is one such way a settlement could be done.”

More than 60,000 people died from drug overdoses in 2016, and there was a five-fold increase in overdose deaths involving synthetic opioids — from 3,105 in 2013 to about 20,000 in 2016, according to the Centers for Disease Control.

One Judge

A study in the October 2016 issue of Medical Care Journal put the economic cost of opioid overdose, abuse and dependence at $78.5 billion. Health care accounts for about a third of that cost, while lost productivity in nonfatal cases add another $20 billion, according to the journal published by Wolters Kluwer.

Against a backdrop of early settlement talks, opioid makers are calling for 69 lawsuits pending in 15 federal courts across the U.S. to be gathered before before a single judge, according to court filings. A hearing on the multidistrict litigation request is set for Nov. 30 in St. Louis.

The companies and some plaintiffs’ lawyers are asking that opioid suits filed by states, counties and cities be combined for information exchanges and test trials. The consolidation is intended to save money by streamlining the document exchanges and avoiding duplication.

Drugmakers have suggested collecting the cases in federal court in Chicago while plaintiffs recommended that they be sent anywhere from New Hampshire to opioid-ravaged southern West Virginia, according to court filings. The city of Chicago officials filed one of the first cases against opioid makers in 2014.

The case is In Re: National Prescription Opioid Litigation, MDL NO. 2804, Before the U.S. Judicial Panel on Multidistrict Litigation (Washington).

Array to exchange $107M of 3% debt for 2.65% debt and stock, extend maturity

Array BioPharma, Inc. announced today that it has entered into separate, privately negotiated exchange agreements with a limited number of holders of its 3.00% Convertible Senior Notes due 2020 (the “2020 Notes”). Pursuant to the exchange agreements, Array will exchange approximately $107 million in aggregate principal of 2020 Notes for (i) a number of newly issued shares of its common stock (with such number rounded down to the nearest whole share for each holder) to be determined based on the volume-weighted average trading price of its common stock on November 17, 2017 (the “Reference Date”) (collectively, the “Exchange Shares”), and (ii) approximately $107 million in aggregate principal amount of its newly issued 2.625% Convertible Senior Notes due 2024 (the “2024 Notes”). The Company will not receive any cash proceeds from the issuance of the Exchange Shares or the 2024 Notes.

The Company anticipates that the settlement of the transactions under the exchange agreements will occur on or about December 1, 2017, subject to satisfaction of customary closing conditions. Upon completion of the exchanges, the aggregate principal amount of the 2020 Notes will be reduced to approximately $25.2 million. In connection with the exchange, holders of the 2020 Notes may decide to adjust their hedge positions by purchasing shares of the Company’s common stock or entering into other hedging transactions in the Company’s common stock. These activities could have the effect of increasing, or limiting a decline in, the market price of the Company’s common stock on the Reference Date.

Sutter Health destroyed evidence in key antitrust case over high prices: Judge

Sutter Health intentionally destroyed 192 boxes of documents that employers and labor unions were seeking in a lawsuit that accuses the giant Northern California health system of abusing its market power and charging inflated prices, according to a state judge.

In a ruling this week, San Francisco County Superior Court Judge Curtis E.A. Karnow said Sutter destroyed documents “knowing that the evidence was relevant to antitrust issues. … There is no good explanation for the specific and unusual destruction here.”

Karnow cited an internal email by a Sutter employee who said she was “running and hiding” after ordering the records destroyed in 2015. “The most generous interpretation to Sutter is that it was grossly reckless,” the judge wrote in his 12-page ruling.

Sutter, which has 24 hospitals and nearly $12 billion in annual revenue, said the destruction was a regrettable mistake.

Employers and policymakers across the country are closely watching this legal fight amid growing concern about the financial implications of industry consolidation. Large health systems are gaining market clout and the ability to raise prices by acquiring more hospitals, outpatient surgery centers and physician offices.

“It’s stunning what Sutter did to cover up incriminating documents in this case,” said Richard Grossman, the lead plaintiffs’ lawyer representing a class of more than 1,500 employer-funded health plans.

In April 2014, a grocery workers’ health plan sued Sutter and alleged it was violating antitrust and unfair competition laws. The plaintiffs began requesting documents related to contracting practices, such as “gag clauses” that prevent patients from seeing negotiated rates and choosing a cheaper provider and “all-or-nothing” terms that require every facility in a health system to be included in insurance networks.

Sutter disputes the broader allegations in the lawsuit over its market conduct and said its charges are in line with its competitors’.

The judge said that in 2015 Melissa Brendt, Sutter’s chief contracting officer in the managed-care department, and an assistant general counsel, Daniela Almeida, authorized Brendt’s executive assistant to destroy 10 years’ worth of managed-care documents going back to 1995. The company earlier had scheduled the documents to be destroyed in 2035 — 20 years later.

The executive assistant, Sina Santagata, testified in a deposition she wasn’t aware of any other time in her 17 years at Sutter when the managed-care department destroyed records held in storage.

In his Monday ruling against Sutter, the judge singled out an email by Santagata as “particularly noteworthy.”

The executive assistant emailed Brendt, the chief contracting officer, on July 30, 2015, after sending the order to destroy the records. She wrote, “I’ve pushed the button … if someone is in need of a box between 3/15/95 & 11/23/05 … I’m running and hiding. … ‘Fingers crossed’ that I haven’t authorized something the FTC will hunt me down for.”

The Federal Trade Commission enforces antitrust laws in healthcare to prevent hospitals, drugmakers and other industry players from engaging in anti-competitive behavior that could harm consumers.

Santagata testified that she was being “sarcastic” in her email, and Sutter told the judge that the FTC reference was just a “joke.”

Karnow saw no humor in it. “There are infinite topics for jokes, and the choice of this one is strong evidence” in the plaintiffs’ favor, he wrote in his order Monday.

As part of his sanctions against Sutter, the judge ordered the health system to examine email backup tapes covering 2002 through 2005 to search for documents on some of the same topics as the destroyed records. Also, Karnow said he will consider a plaintiffs’ motion for issuing jury instructions that are adverse to Sutter in light of the document destruction. The trial is scheduled for June 2019.

“The record shows that Sutter’s conduct was more than just an inadvertent error,” Karnow wrote.

Sutter spokeswoman Karen Garner said the incident was a “mistake made as part of a routine destruction of old paper records” and the Sacramento-based health system disclosed the error as soon as it was discovered.

“We regret that as part of a routine archiving process we failed to preserve some boxes of decades-old hard-copy documents,” Garner said.

The United Food and Commercial Workers and its Employers Benefit Trust initially filed the case against Sutter in 2014. The joint employer-union health plan represents more than 60,000 employees, dependents and retirees. The court certified the case as a class action in August, allowing hundreds of other employers and self-funded health plans to potentially benefit from the litigation.

In addition to its 24 hospitals, Sutter’s nonprofit health system has 35 surgery centers and more than 5,000 physicians in its network. It reported $11.9 billion in revenue last year and income of $554 million.

Grossman, the plaintiffs’ counsel, said he welcomed the judge’s ruling. But he said much of the evidence is irreplaceable, particularly handwritten notes from negotiating sessions and meetings involving key Sutter executives.

He said those records covered a critical period in the early 2000s when there was a “sea change in Sutter’s contracting strategy” and it implemented provisions that insulated the health system from price competition.

“This was groundbreaking in the industry,” Grossman said. “Until we address the anti-competitive behavior of entities like Sutter, we will not solve the problem of high costs in healthcare.”

The plaintiffs are seeking to recover hundreds of millions of dollars from Sutter from what it claims are illegally inflated prices. The lawsuit alleges that an overnight hospital stay at Sutter hospitals in San Francisco or Sacramento costs at least 38% more than a comparable stay in the more competitive Los Angeles market.

A study published last year found that hospital prices at Sutter and Dignity Health, the two biggest hospital chains in California, were 25% higher than at other hospitals around the state. Researchers at USC said the giant health systems used their market power to drive up prices — making the average patient admission at both chains nearly $4,000 more expensive.