DOJ Intervenes in FCA Lawsuit Filed Against Medical Device Maker

The U.S. Department of Justice has intervened in a whistleblower lawsuit filed against medical device maker Life Spine Inc., along with the company’s founder and its VP for Business Development.

The lawsuit alleges that the company paid millions of dollars in kickbacks to surgeons in exchange for using its spinal implants, equipment and other devices. It’s alleged the surgeons who received these payments accounted for approximately half of Life Spine’s total domestic sales of spinal products from 2012 through 2018.

The original qui tam lawsuit was filed under seal in 2018 by BNHT LLC under the False Claims Act. The Relators were identified as four former Life Spine employees. The False Claims Act allows those who discover fraud to sue on behalf of the government. The government can choose to intervene, as it did in this case, or allow the case to move forward privately. The Relators, in turn, can receive a percentage of what is recovered.

The government alleges that the company’s founder, Michael Butler and his VP for Business Development Richard Greiber, “aggressively recruited surgeons” to serve as paid consultants or to transfer their patents/patent applications to Life Spine in exchange for payments and promised support to bring the surgeons’ new products to market.

The lawsuit alleges that Life Spine “went so far as to generate a report” to ensure that the surgeons were using enough of their products. If their usage was too low, the surgeons were pressured into using more.

The suit alleges that while Life Spine entered into written agreements with surgeons to use their products, those agreements “did not disclose the collateral understandings that Life Spine had with those surgeons as to their expected usage of Life Spine Products.”

It’s alleged that Butler and Greiber recruited the surgeons and negotiated the terms of the agreements and that the terms of the agreements were also discussed in private meetings.

As a result of these agreements, Life Spine is alleged to have paid out more than $7 million in consulting fees, royalties and intellectual property acquisition payments to physicians.

In addition to the outright payments, it is alleged that surgeons were often offered various perks, including tickets to Chicago Cubs games, complimentary Cubs jerseys and gift baskets and dinners at expensive restaurants.

The lawsuit lays out several scenarios in which physicians were paid. For example, an Indiana-based doctor, identified as the company’s “largest revenue-generating surgeon,” accounted for more than $22.9 million in sales in 2016 and 2017, during which he received nearly $300,000 in consulting and royalty fees.

A Colorado-based physician, who is alleged to have been responsible for more than $3.7 million in sales, was paid more than $125,000 in consulting and royalty fees, while a Texas-based surgeon, who previously had never used Life Spine products was responsible for more than $1.7 million in sales, after he signed an agreement for the company to purchase his intellectual property.

The Health Law Offices of Anthony C. Vitale is known for its representation of whistleblowers, as well as our ability to defend those who are the target of a whistleblower action. Contact us for additional information at 305-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.

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