- The government said Thursday it is suing a South Dakota neurosurgeon and two distributorships he owned, for allegedly participating in an illegal kickback scheme in which the distributorships paid the surgeon hundreds of thousands of dollars for using spinal devices in medically unnecessary surgeries.
- The complaint, filed Wednesday in the U.S. District Court for the District of South Dakota contends all three violated the federal False Claims Act by knowingly submitting false claims to federal healthcare programs including Medicare, Medicaid and Tricare in violation of the False Claims Act.
- In October, Sioux Falls, South Dakota-based hospital entities Sanford Health, Sanford Medical Center and Sanford Clinic (collectively, Sanford), agreed to pay $20.25 million to resolve related civil claims over the docctor performing medically unecessary spinal surgeries at the hospitals.
The government's case against the surgeon Wilson Asfora and the distributorships Medical Designs and Sicage illustrates the often problematic financial relationships between physicians and entities providing medical products to those doctors. The government wants to address perceived problems with physician-owned distributorships (PODs), which it has flagged as an area of potential fraud under the Anti-Kickback statute.
PODs sell implantable devices for use in surgeries. But they raise potential conflict of interest issues because physicians own stakes in the organizations and also use the products they sell.
Earlier this year, Senate Finance Committee members urged CMS and its Office of Inspector General to share details of their attempts to monitor PODs to ensure physicians comply with reporting requirements. Some senators have called PODs "inherently suspect."
In a recent case involving similar claims, medtech Life Spine agreed earlier this month to pay the government $5.5 million to settle allegations it used consulting fees and other payments to induce surgeons to use its spinal implant devices. Life Spine admitted it entered into agreements between 2012 and 2018 with dozens of surgeons and paid these surgeons, and entities owned in whole or in part by the surgeons, millions in consulting fees, royalties and intellectual property acquisition payments.
In the latest case, the government claims Asfora, Medical Designs, and Sicage engaged in multiple kickback schemes designed to pay Asfora hundreds of thousands of dollars in return for Asfora using spinal devices distributed by Medical Designs and Sicage in his spine surgeries. Asfora continued to perform unneeded medical procedures while personally profiting from his use of devices sold by Medical Designs and Sicage, the government said in the complaint.
The Anti‑Kickback Statute bars offering or paying anything of value to induce the referral of items or services covered by Medicare, Medicaid and other federal healthcare programs.
"The Department of Justice will seek to hold accountable physicians and medical device companies that receive or pay illegal kickbacks in any form," Assistant Attorney General Jody Hunt of the Department of Justice's Civil Division said in a statement announcing the complaint against Asfora, Medical Designs and Sicage.