One of Quality Systems Inc.’s most strident critics has left its board of directors.
Ahmed Hussein, who owns about 10% of the Irvine healthcare software maker, resigned after 14 years on Quality’s board.
Many of those years were marked by battles between him and Quality’s management over corporate governance.
Hussein said in a resignation email that he concluded Quality “will continue to be severely damaged” under the direction of founder and Chairman Sheldon Razin, current management and the board.
“I am thus resigning from the board of directors,” Hussein said.
Quality responded in a Securities and Exchange Commission filing, saying it disagreed with Hussein’s characterizations.
The healthcare software maker “believes it made a good faith attempt to work with Mr. Hussein constructively” and that it believes its governance practices are strong, mentioning that three leading shareholder advisory firms supported company-nominated directors in last year’s proxy contest.
“[We believe] Mr. Hussein’s resignation will allow the board to more efficiently perform its duties and focus on value creation for all our shareholders,” Quality said.
The company’s filing said that it’s “possible that Mr. Hussein could reinstate himself as a director” at a future date because of his holdings and applicable cumulative voting rules.
Hussein led four proxy fights against Quality management during the past nine years.
They were some colorful affairs, including one encounter between Hussein and former Chief Executive Louis Silverman in 2005, prior to the latter opening the floor for any shareholder who wanted to vote during Quality’s annual meeting.
Hussein mentioned that Quality’s decision to reduce the size of its board earlier that year changed his ability to elect directors.
“That’s out of order,” Silverman said.
“I challenge the company,” Hussein said.
Silverman then said Hussein’s comment was off-topic and asked if ballots had been distributed to shareholders.
The 2005 proxy challenge sparked a fight about corporate governance that led to legal action. Quality and Hussein later settled that matter when the company agreed to nominate three people he’d suggested at its 2006 and 2007 annual meetings in exchange for his refraining from submitting shareholder proposals or nominees at the meeting and dropping litigation against the company.
Hussein’s departure is the second board vacancy in the past few months. Patrick Cline, who served as Quality’s president from 2009 to 2011, resigned from the board in January.
Quality on May 23 appointed Michael Aghajainian, a lecturer at the University of California, Irvine’s Paul Merage School of Business and a former chief executive of management consulting firm Pittiglio Rabin Todd & McGrath (now part of PricewaterhouseCoopers), to fill that vacancy.
Heart Valves Make European Strides
A couple of Orange County-connected makers of less-invasive heart valves are making inroads on the overseas regulatory and performance fronts.
Medtronic Inc., a Minnesota company with about 700 Orange County workers, received European regulatory approval for implanting its Medtronic CoreValve and CoreValve Evolut transcatheter replacement aortic heart valves into degenerated bioprosthetic surgical aortic valves.
Medtronic said in a news release that so-called “valve in-valve” procedures provide minimally invasive treatment options for patients whose previously implanted surgical heart valves have degenerated and who are at extreme or high risk for surgery.
That trial looked at 202 patients at 38 sites in Europe, North America, Australia, New Zealand and the Middle East. 124 of the participants received CoreValves placed inside the degenerated surgical valves via catheters.
Medtronic emphasized that its CoreValve valve-in-valve procedures don’t yet have domestic approval. It got CoreValve back in 2009 when it spent $700 million on Irvine-based startup CoreValve Inc.
Separately, Direct Flow Medical Inc., a Santa Rosa device maker with a manufacturing hub in Lake Forest, reported that it reached its primary endpoint in a trial to receive European regulatory clearance for its transcatheter heart valve.
Direct Flow said the patients enrolled in the trial accounted for a 99% survival rate 30 days after implant. The company said there were two strokes and one patient experiencing a myocardial infarction. It’s still awaiting U.S. approval.
Prime Returns to Aetna Network
Prime Healthcare Inc., an Ontario-based hospital operator with four Orange County facilities, reached a new deal with Hartford, Conn.-based Aetna Inc. in early May.
Garden Grove Hospital and Medical Center; Huntington Beach Hospital; La Palma Intercommunity Hospital; and West Anaheim Medical Center were last part of Aetna’s Southern California network in 2007.
Aetna is “pleased to welcome the Prime Health facilities back to our network in Southern California,” said Shawn Forrester, the insurer’s network head for Southern California, in a news release. Forrester said the return will allow Aetna’s members additional access to healthcare facilities at in-network benefit levels.
Aetna has about 190,000 HMO and PPO members in Orange County, according to the Business Journal’s rankings of HMOs and PPOs.
