THE HIGH ROAD
It is imperative that we uphold the integrity and trust within the orthopedic industry. Recent allegations against Innovasis Inc., where $12 million will be paid to settle claims of improper payments to physicians, highlight a disturbing trend that must be addressed. Payments intended to influence medical decisions undermine the foundation of patient care and violate the trust placed in medical professionals. These practices are not only illegal but jeopardize patient health and erode public confidence in our industry. We must commit to transparent and ethical practices, ensuring that every medical device is chosen based on quality and patient need, free from any improper financial influence. Let’s work together to maintain the highest standards of integrity and patient care.
THE LOW ROAD
This is not a serious deterrent to our industry that will sell $35B this year in the US. Most companies are still getting away with “improper remuneration” as stated in the article below. Innovasis, Arthrex, NuVasive, Biomet and LifeSpine were called out by the DOJ and paid, but they are just the tip of the iceberg. And the government really doesn’t care either or we would see more prosecutions.
Ok, here we go with the facts!
Meet the company, Innovasis – https://www.innovasis.com/
Meet the Whistleblower, Bob Richardson, a former Regional Sales Director for Innovasis. – https://www.linkedin.com/in/rjrrichardson1/
Medical Device Manufacturer Innovasis Inc. and Two Top Executives Agree to Pay $12M to Settle Allegations of Improper Payments to Physicians (DOJ)
Spinal device manufacturer Innovasis Inc. and senior executives Brent Felix and Garth Felix agreed to pay a total of $12 million to resolve allegations that they violated the False Claims Act by paying kickbacks to spine surgeons to induce their use of Innovasis’s spinal devices. Brent Felix is the founder, President and Chairman of the Board of Innovasis, which is headquartered in Utah. Garth Felix served in various leadership roles for Innovasis, including as the company’s 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 of items or services covered by Medicare and other federally funded programs. The statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives.
The settlement announced today 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, devices and other equipment in medical procedures the physicians performed on Medicare beneficiaries, in violation of the Anti-Kickback Statute. The improper remuneration was allegedly provided in the form of consulting fees, intellectual property acquisition and licensing fees, registry payments and performance shares in Innovasis, as well as travel to a luxury ski resort, lavish dinners and holiday parties for surgeons, their office staff and family members. For example, Innovasis allegedly paid physicians for consulting services at rates far in excess of fair market value or, in some cases, for work that was never actually performed. Similarly, the company allegedly paid physicians far in excess of fair market value to acquire or license purported intellectual property for which Innovasis never obtained any valuation prior to purchase and thereafter never used for meaningful product development. Innovasis also paid physicians to attend a company-sponsored conference held at a luxury resort in Deer Valley, Utah, which included the cost of travel, lodging and high-end meals, among other things. During the relevant period, Brent Felix, along with his brother Garth Felix, allegedly controlled or otherwise directed Innovasis’s operations, strategic decisions, and the agreements with surgeons who allegedly received improper remuneration from Innovasis.
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Robert Richardson, a former Regional Sales Director for Innovasis. Under those provisions, a private party can file an action for false claims on behalf of the United States and receive a portion of any recovery. Richardson will receive approximately $2.2 million as his share of the recovery in this case. The qui tam case is captioned United States ex rel. Richardson v. Innovasis Inc., et al., No. 3:19-CV-02440-X (N.D. Tex.).
The resolution obtained in this matter was the result of a coordinated effort 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 and Adam J. DiClemente of the Justice Department’s Civil Division and Assistant U.S. Attorneys Andrew S. Robbins and George M. Padis for the Northern District of Texas handled the matter.
The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the HHS at 800-HHS-TIPS (800-447-8477).
The claims resolved by the settlement are only allegations. There has been no determination of liability.
Statement from Innovasis
May 28, 2024 – OrthoSpineNews – Innovasis, Inc. announces resolution of a five-year investigation by the U.S. government. In April of 2019, in conjunction with a business acquisition, Innovasis’ Board of Directors commenced an internal compliance audit. The audit revealed certain compliance issues including that a high level employee of the company had placed himself over the Compliance Committee and was also negotiating and executing physician agreements using his own discretion and incentives. At various Compliance Committee meetings, other members of the Compliance Committee were excluded from attending the meeting and only the high level employee and his assistant were present.
Following review of the internal audit findings, Innovasis’ Board of Directors determined that Innovasis would engage Hooper Lundy & Bookman, P.C., a healthcare law firm, and made the decision to fully self-disclose the noncompliance, uncovered as a result of the internal audit, to the U.S. government in May of 2019. Also, with the help of external counsel, the company revamped its entire compliance program and procedures.
During the time of the internal audit, the high level employee resigned.
While the company was already in the process of resolving the identified compliance issues with the OIG through its reporting program, in October 2019, a former employee filed a whistleblower lawsuit in federal court. The filing of the suit came after the company had already fully self-disclosed, been accepted into the self-reporting program, and was seeking to remedy any outstanding compliance issues completely. Of note, the company’s former high level employee was not named as a defendant in the whistleblower lawsuit, even though he executed most of the agreements which had been deemed to have compliance issues and were included in the company’s self-disclosure.
Since October of 2019, the company has worked cooperatively with the government to resolve any compliance concerns. ”Even though Innovasis self-reported in May 2019 and does not understand why a whistleblower should be rewarded after a company self-reports, it is in the company’s best interest to resolve this matter. As per the company’s mission, it is time to put full focus on advancing spine care.”
Innovasis has contracted with a third-party to collect outcome data on over 3,800 patients. This data shows excellent outcomes with their bioactive implants made of PEEK, infused with hydroxyapatite. “Innovasis is excited with these results. In continuing to advance the technology, Innovasis has launched HA Cancellous PEEK implants. These implants are chemically bioactive through the addition of HA in the material, and structurally bioactive by the addition of bimodal pores in the implant.” Innovasis is the only company to offer products of this kind backed by clinical data. Innovasis has been and remains fully committed to advancing spine care. For further information, see innovasis.com.