More dominoes have fallen in the ongoing investigations into financial dealings of Marietta-based MiMedx.
The biopharma company announced late Thursday that Parker “Pete” Petit, who had resigned as CEO and chairman in July, has now resigned from the board of directors as well, effective immediately. What’s more, the company said it would treat his previous resignation and that of three other top executives as terminations for cause.
Petit and the others — the ex-COO, the ex-CFO and a former controller/treasurer — “engaged in, among other things, conduct detrimental to the business or reputation of the company,” a MiMedx news release said. The statement didn’t elaborate on the conduct, but said all four are forfeiting all outstanding equity and incentive awards.
“It’s a start that this board is holding Petit and the others accountable,” said short seller Mark Cohodes, a prominent critic who runs a website called PetiteParkerTheBarker.com. He said the nature and severity of the clawbacks are remarkable and could point to the seriousness of the federal investigations.
Also on Thursday, The Atlanta Journal-Constitution reported that the Veterans Affairs Medical Center in Minneapolis had parted ways with four podiatrists and a dermatologist over improprieties involving MiMedx products. The VA had proposed firing all five doctors, but all opted to either resign or retire, a spokesman said.
The moves come amid ongoing scrutiny by the VA, the U.S. Department of Justice, the U.S. Securities and Exchange Commission, and the Food and Drug Administration, as well as an internal investigation by the company’s audit committee.
Insurance companies have also backed away from MiMedx, which sells regenerative injections, used in orthopedics, and wound coverings derived from human placental tissue, used to treat burn victims and other injuries.
Last month, Blue Cross/Blue Shield’s parent company announced it would no longer cover MiMedx’s injectable amniotic tissue products, calling them experimental and unproven. Coming to a similar conclusion, United Healthcare last month said it would not reimburse patients for use of amniotic tissue products by MiMedx and other manufacturers.
Petit, a 79-year-old prominent Atlanta businessman, has been the face of the company for years, sparring publicly with short sellers and others who accused him of shady practices.
But in June, a day after parting ways with two top finance officials, the company announced it had to revise more than five years’ worth of financial statements.
Neither Petit nor a company spokesman returned calls from the AJC on Thursday. The company has not yet released its revised financial statements.
MiMedx has faced repeated accusations by ex-employees of “channel stuffing” at VA facilities — allegedly lobbying friendly doctors and medical staffers to overstock and over-use products, thereby inflating financial reports and driving up stock prices.
In May, three South Carolina VA workers — a podiatrist, a nurse and a physical therapist — were indicted on federal health care fraud charges, accused of excessive use of MiMedx products on veterans after accepting gift cards, meals and other inducements from a company representative. The podiatrist and the nurse were also charged with accepting bribes.
No one at MiMedx was charged, and Petit told the AJC at the time that it was the company that alerted the VA’s Office of Inspector General.
“It’s very obvious that the VA is taking a look at the practices that MiMedx is using,” said Mary Armstrong, a former MiMedx account executive who says the company fired her two months after she told Petit and others about overcharging, up-charging and over-shipping at dozens of medical facilities in the Dallas-Fort Worth area.
“It’s not going to be just one or two spots in the country,” she contends, “it’s going to be all of the VAs across the country.”
The details of what occurred in Minneapolis aren’t clear. The VA spokesman there, Ralph Heussner, provided an emailed statement that the doctors “engaged in behavior that is not in line with the norms and values of the department.”
The “personnel moves” will leave the facility without any podiatric services for the next two to three months, the statement said. Patients needing routine care will be routed to outside clinics at the VA’s expense.
“VA has made clear that it will hold employees accountable when they to fail to live up to the high standards taxpayers expect from us,” the statement from the Minneapolis office said, “and that’s exactly what we’re doing in this case.”
Asked for the names of the doctors recommended for termination, and what the alleged improprieties entailed, Heussner referred questions to the VA’s national press office in Washington, which refused to comment.