False Claims Act Lawsuit Against Michigan Surgeon Alleges Improper Payments By Medical Device Maker

October 15, 2014 — A federal anti-kickback statute makes it a crime to pay doctors to prescribe drugs or medical devices that are reimbursed by federal healthcare programs such as Medicare and Medicaid. Since the Anti-Kickback Statute was amended in 2010, violations of this statute automatically violate the federal False Claims Act. When medical device manufacturers make improper payments to doctors, a physician’s judgment about a patient’s health care can be motivated more by the doctor’s financial gain than the patient’s best interests. The qui tam language of the Act gives health care workers and others who discover illegal kickback scams a way to bring a whistleblower lawsuit on behalf of the government. Informants keep a share of the government’s financial recovery.

Spinal Implant Manufacturer Allegedly Made Improper Payments To Surgeons Through Use Of Distributorships Owned In Part By The Surgeons

The U.S. government has initiated two whistleblower lawsuits alleging False Claims Act violations by Dr. Aria Sabit, a Michigan neurosurgeon and by Reliance Medical Systems, a spinal implant company. Also named was Apex Medical Technologies, a Reliance distributorship. Brett Berry, Adam Pike and John Hoffman, the three owners of Reliance Medical Systems, have also been named. The U.S. Justice Department claims that Apex Medical paid kickbacks to Sabit and other surgeons willing to use Reliance spinal implants in the procedures they performed.
In 2006, Pike and Berry created Reliance and then established over a dozen doctor-owned distributorships to sell Reliance devices. The doctors who owned the distributorships included the same surgeons who used the Reliance spinal implants in the procedures they performed on their patients. The surgeons, in essence, sold themselves the implants they used in their patients.
Reliance reportedly used Apex Medical, one of the distributorships, to pass improper payments to Sabit when he used Reliance spinal implants for his patients. Sabit allegedly did not begin to use Reliance implants until he was given an ownership interest in Apex. From May 2010 through July 2012, Sabit was paid $438,570 by Reliance. During that time the surgeon used Reliance implants in almost all of the spinal fusion surgeries he performed. According to the Justice Department, Sabit allegedly performed surgeries that were excessive or medically unnecessary as a way to receive the improper payments from Reliance.
The original whistleblowers in the case were Dr. Cary Savitch and Dr. Gary Proffett. In a qui tam lawsuit alleging False Claims Act violations, the two physicians claimed that Sabit performed spinal fusion surgeries that were excessive or medically unnecessary. The government has intervened in this lawsuit and filed a separate lawsuit concerning violations of the Anti-Kickback Statute by Sabit and the Reliance defendants.

False Claims Act Lawsuits Redress Abuse

While Waters & Kraus is not handling this particular case involving Medicare fraud, we are representing whistleblowers in similar lawsuits. If you have comparable claims against a different medical device maker or medical provider, contact us or call our qui tam attorneys at 855.784.0268 to learn more about our practice and how we can work together to notify the government about fraud and abuse. Our qui tam lawyers, like Michael Armitage and Louisa Kirakosian in the firm’s Southern California office, are committed to advancing and protecting informants’ interests in whistleblower lawsuits.

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