A Medical Device Daily

In what may likely turn into a court matter, Johnson & Johnson (J&J; New Brunswick, New Jersey) this week said it has "voluntarily" disclosed to the U.S. Department of Justice and the U.S. Securities and Exchange Commission that certain of its subsidiaries outside the U.S. are believed to have made improper payments in connection with the sale of medical devices in what it termed "two small-market countries."

J&J said that these actions were "contrary" to its policies, and that the payments made "may fall within the jurisdiction of the Foreign Corrupt Practices Act."

J&J said it planned to provide information to the DOJ and the SEC about these matters and will cooperate in investigating them.

With this announcement, the company also said that Michael Dormer, worldwide chairman, medical devices & diagnostics, has retired from the company.

While it did not point a finger of blame at Dormer, it cited a letter it received from Dormer in which he referenced the "internal review" of these matters and acknowledged "ultimate responsibility by virtue of my position" for those subsidiaries that were the subject of the disclosure.

All worldwide businesses within the Medical Devices & Diagnostics segment now will report to Nicholas Valeriani, worldwide chairman, a company executive with nearly 30 years' experience. Valeriani will have responsibility for businesses previously under the management oversight of Dormer, in addition to those for which he is already responsible.

In other legalities:

Saint Vincent Catholic Medical Centers (New York) reported another step in attempting to exit bankruptcy, saying it has filed a plan of reorganization with the U.S. Bankruptcy Court. The hospital said that the plan seeks to provide an equitable return to all creditors, including the holders of trade claims, the Pension Benefit Guaranty Corporation, and pre-petition medical malpractice claimants, while providing for its long-term operation.

"Saint Vincent's restructuring is a visible example of the challenging healthcare environment that faces all healthcare systems in New York, and we are proud to emerge from this process with a capital structure that allows us to re-invest wisely in our healthcare mission," said Guy Sansone, president/CEO and chief restructuring officer of Saint Vincent's. "With this plan, we anticipate emerging from bankruptcy by the middle of 2007 as a financially sustainable healthcare organization . . . ."

The plan provides all Saint Vincent's creditors who filed claims in the Chapter 11 case with a "realistic chance that their claims will be paid in full over time," St. Vincent's said.

It said the reorganization is focused on a core healthcare mission, anchored by St. Vincent's Hospital Manhattan (Brooklyn) and St. Vincent's Hospital Westchester (Staten Island), behavioral health and home care services throughout the metropolitan area, and sponsorship of the US Family Health Plan under contract with the Department of Defense.

Saint Vincent's also continues to discuss its desire to meet modern-day healthcare needs by constructing a new, state-of-the-art facility after emergence from bankruptcy to serve patients at St. Vincent's Hospital Manhattan.

The next step in the bankruptcy process is for the Disclosure Statement to be approved by the Bankruptcy Court as containing "adequate information." Saint Vincent's will solicit creditors' votes on the proposed plan and then ask the Bankruptcy Court to enter an order "confirming" the plan. After the plan is confirmed, Saint Vincent's can exit bankruptcy once all the conditions in the plan are met.