Bret Berry and Adam Pike, owners of the Bountiful, Utah-based distributor of spinal implant devices Reliance Medical Systems LLC, and two of their physician-owned distributorships have agreed to pay $1 million to settle a lawsuit that claimed they broke the False Claims Act by paying doctors to use Reliance medical devices in spinal operations on their own patients.
According to the case filed by the Justice Department, the defendants used physician-owned distributorships (PODs) that were actually fronts for the payment of kickbacks to persuade doctors to utilise Reliance’s medical devices during their operations. Offering or paying something of value to promote the referral of goods or services covered by federal health care programmes is prohibited by the Anti-Kickback Statute.
The Justice Department asserts that the defendants’ PODs fired doctors who didn’t refer enough patients, compensated doctors according to how many patients they referred, and lied to healthcare professionals. According to the complaint, Berry and Pike were overheard seeking to persuade a spine surgeon to join one of Reliance’s PODs, Kronos Spinal Technologies, by promising to pay him a portion of the profits he earned for Kronos if he shown his “loyalty” to Kronos.
“As today’s settlement demonstrates, we will look to the substance, not just the form, of an arrangement to determine whether the payment of remuneration constitutes an illegal kickback,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to redressing the corrupting influence of kickbacks on federal health care programs, regardless of how companies seek to characterize such payments.”
“When health care companies try to boost their profits through kickbacks arrangements, they compromise the integrity of medical decision-making while increasing health care costs for everyone,” said Special Agent in Charge Timothy B. DeFrancesca of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Working with our law enforcement partners, our agency is committed to thoroughly investigating such schemes.”
The United States filed this lawsuit in 2014, and this settlement was reached after the first day of trial. The case is captioned United States of America v. Reliance Medical Systems, LLC, et al., No. 14-6979 (C.D. Cal.).
The settlement with people connected to Reliance Medical Systems is the most recent in a string of agreements. Prior to this, the Civil Division obtained almost $9.25 million from Reliance POD owners.
The inquiry into this matter and how it was resolved show how important it is to the government to fight health care fraud. The False Claims Act is one of the most effective instruments in this endeavour. The Department of Health and Human Services can be contacted at 800-HHS-TIPS for information and complaints from any source regarding potential fraud, waste, abuse, and mismanagement (800-447-8477).
Robert Chandler and David Finkelstein of the Commercial Litigation Branch’s (Fraud Section) Civil Division handled this case with help from the HHS-OIG.
The claims asserted against defendants are allegations only and there has been no determination of liability.