The U.S. government has intervened in a whistleblower’s False Claims Act lawsuit against a Michigan neurosurgeon, a spinal implant company, two distributors, and the companies’ owners, alleging that the defendants conspired to perform medically unnecessary and excessive surgeries on patients for profit.
The Justice Department also said that in addition to taking over the whistleblower lawsuit, it has filed a separate complaint against the same defendants for engaging in an illegal kickback scheme that put profits above patients’ needs.
The whistleblower lawsuit was filed under the qui tam provisions of the False Claims Act by Dr. Caty Savitch and Dr. Gary Profett against neurosurgeon Dr. Aria Sabit, spinal implant company Reliance Medical Systems, two Reliance distributorships – Apex Medical Technologies and Kronos Spinal Technologies, and the companies’ owners, Brett Berry, John Hoffman, and Adam Pike.
According to the Justice Department, Mr. Berry and Mr. Pike founded Reliance in 2006 and subsequently created more than 12 physician-owned distributorships to sell Reliance spinal implant devices. Each of the distributors sold spinal implants ordered by their physician-owners for use in surgeries the physician-owners performed on their own patients.
The complaints allege that Reliance funneled improper payments to Dr. Sabit through its Apex Medical distributorship, inducing him to use Reliance devices in surgeries he performed on his patients. The complaints allege that Dr. Sabit began using Reliance implants on his patients only after he acquired an ownership interest in Apex and started receiving payments from the sale of Reliance’s spinal implants.
The U.S. alleges Apex paid Dr. Sabit $438,570 between May 2010 and July 2012, during which time Dr. Sabit used Reliance implants in approximately 90 percent of his spinal fusion surgeries.
The government also alleges that the kickbacks caused Dr. Sabit to perform medically unnecessary or excessive surgeries on patients who did not need the spinal implants.
The government also alleges that Kronos, another distributor operated by Reliance, made improper payments to two other physicians. The U.S. said Reliance’s owners were recorded telling a potential Kronos investor that Reliance was formed as part of a plan to “get around” the federal Anti-Kickback Statute, and that Reliance pays its physician-investors enough in the first month or two to “put their kids through college.”
“Improper payments to physicians can alter a physician’s judgment about patients’ true health care needs and drive up health care costs for everyone,” Assistant U.S. Attorney General Stuart Delery said in a statement. “The Justice Department is committed to enforcing the laws that prohibit such payments.”