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Analysis

DOJ Files Anti-Kickback Lawsuit Against Life Spine Inc.

By John Commins  
   July 24, 2019

Suit alleges half of the company's sales were for procedures performed by surgeons who got kickbacks.   

Medical device maker Life Spine Inc., its founder and a senior executive are the subject of a federal lawsuit alleging that the company paid millions of dollars in kickbacks to surgeons who used their implants, the Department of Justice said.

The federal government is intervening in a whistleblower lawsuit alleging that the surgeons who took the kickbacks generated half of Huntley, Illinois-based Life Spine's total domestic sales of spinal products from 2012 through 2018.

Life Spine CEO and founder Michael Butler and Vice President for Business Development Richard Greiber were also named as defendants in the suit.

Life Spine said in a media release that it had "recently become aware of a series of allegations made in a civil complaint" and that "the parties are engaged in discussions and look forward to resolving the matter."

The federal complaint alleges that the payments violated the Anti-Kickback Statute that ultimately resulted in false claims for payment from Medicare and Medicaid.  

"Cases like this are why patients sometimes distrust the care they receive because they don’t know if it’s what the doctor actually thinks, or if there is a company pushing a new drug or new device," FBI Assistant Director William F. Sweeney Jr. said in a media release.

"People seeking medical treatment are dependent on the advice they get, they don't have the expertise to question the doctors," Sweeney said. "The FBI does all it can to stop those companies who overlook the patient who is just hoping to get better, and only sees the dollar signs."

According to a complaint unsealed this week in a Manhattan federal court, from 2012 through 2015 Geiber and Butler allegedly "aggressively recruited" dozens of surgeons with the potential to use a high volume of the company's products and hired them to serve as paid "consultants."

These paid consultants agreed to transfer their patents and patent applications to Life Spine in exchange for payments and promised support to bring the surgeons' new products to market, DOJ said.  

The alleged kickbacks took the form of medical education agreements that paid surgeons to provide training and/or educational services; product development agreements that paid surgeons royalties for their positive input on new products; and intellectual property agreements that paid surgeons large up-front acquisition fees for their patents/patent applications.

"Life Spine paid surgeons millions of dollars in consulting fees, royalties, and intellectual property acquisitions pursuant to these agreements," DOJ said.

Butler allegedly tracked surgeons' use of Life Spine Products to ensure that surgeons were generating sales revenues for the company and were fulfilling their "commitment" to use Life Spine Products, DOJ said.

The company allegedly generated a report that compared surgeon consulting, royalty, and intellectual property payments to surgeon product usage levels, and then calculated an return on investment for each surgeon based on those figures.  If a surgeon’s usage was too low, Life Spine managers, including Butler, pressured the surgeon to use more Life Spine Products, DOJ said.

“Cases like this are why patients sometimes distrust the care they receive because they don’t know if it’s what the doctor actually thinks, or if there is a company pushing a new drug or new device.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

Photo credit: Mark Van Scyoc / Shutterstock.com


KEY TAKEAWAYS

From 2012 through 2015 Life Spine executives allegedly 'aggressively recruited' dozens of surgeons and hired them to serve as paid 'consultants.'

These paid consultants agreed to transfer their patents and patent applications to Life Spine in exchange for payments and promised support to bring the surgeons' new products to market.


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