Spinal device manufacturer Innovasis Inc. and senior executives Brent Felix and Garth Felix have agreed to pay $12 million to resolve allegations of violating the False Claims Act by paying kickbacks to spine surgeons. Brent Felix is the founder, President, and Chairman of the Board of Innovasis, headquartered in Utah. Garth Felix has held various leadership roles, including Chief Financial Officer.
"Payments from medical device manufacturers intended to influence a physician’s judgment about which medical devices or supplies to select are illegal," said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. "When medical devices are used in surgical procedures, patients deserve to know that their device was selected based on quality of care considerations and not on improper payments from manufacturers."
"The integrity of our healthcare system is dependent upon physicians’ recommendations being motivated by patient health," said U.S. Attorney Leigha Simonton for the Northern District of Texas. "Any time we learn that physician recommendations are being corrupted by improper financial inducements, we will seek to hold those involved accountable."
"Improper financial arrangements can compromise medical judgment and adversely influence the medical decision-making process," said Special Agent in Charge Jason E. Meadows of the Department of Health and Human Services Office of Inspector General (HHS-OIG). "These arrangements have no place in our healthcare system, and we will continue working with our federal partners to pursue such allegations."
The Federal Anti-Kickback Statute prohibits offering or paying anything of value to induce referrals covered by Medicare and other federally funded programs. The statute aims to ensure that medical providers’ judgments remain uncompromised by financial incentives.
The settlement resolves allegations that from Jan. 1, 2014, through Dec. 31, 2022, Innovasis provided improper remuneration to seventeen orthopedic surgeons and neurosurgeons to induce them to use Innovasis spinal implants in procedures performed on Medicare beneficiaries. The remuneration allegedly included consulting fees, intellectual property acquisition fees, registry payments, performance shares in Innovasis, travel to a luxury ski resort, lavish dinners, and holiday parties for surgeons and their families.
Innovasis allegedly paid physicians for consulting services at rates far exceeding fair market value or for work never performed. Similarly, physicians were allegedly overpaid for intellectual property acquisitions without prior valuation or subsequent meaningful product development use. Additionally, physicians were compensated for attending a company-sponsored conference at a luxury resort in Deer Valley, Utah.
During this period, Brent Felix and Garth Felix allegedly controlled Innovasis’s operations and strategic decisions involving agreements with surgeons who received improper remuneration.
The civil settlement includes claims brought under the qui tam provisions of the False Claims Act by Robert Richardson, a former Regional Sales Director for Innovasis. Under these provisions, private parties can file actions on behalf of the United States and receive a portion of any recovery; Richardson will receive approximately $2.2 million as his share.
The resolution resulted from coordinated efforts between the Justice Department’s Civil Division Commercial Litigation Branch Fraud Section and the U.S. Attorney’s Office for the Northern District of Texas with assistance from HHS-OIG.
Trial Attorneys Jessica E. Krieg, Olga Yevtukhova, Adam J. DiClemente from the Justice Department’s Civil Division along with Assistant U.S Attorneys Andrew S Robbins George M Padis handled this matter illustrating government emphasis on combating health care fraud using tools like False Claims Act tips complaints about potential fraud waste abuse mismanagement reported HHS at 800-HHS-TIPS (800-447-8477).
The claims resolved by this settlement are only allegations; there has been no determination of liability.
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