Earlier this month, the Department of Justice (“DOJ”) formally intervened and filed its complaint in two related qui tam False Claims Act lawsuits against Massachusetts-based SpineFrontier, Inc., along with related entities and executives. Whistleblowers who were all former employees of the entities at the heart of the alleged scheme initially filed the two lawsuits under the FCA’s qui tam provisions. The intervention by DOJ in these two cases is a crucial step, and an encouraging sign, in the process of recovering all taxpayer dollars received fraudulently by SpineFrontier and its co-defendants.

The initial qui tam complaints, and the complaint-in-intervention just filed by the Government, allege that SpineFrontier, which was founded by Dr. Kingsley Chin, violated the Anti-Kickback Statute by paying sham consulting fees to surgeons. The Government contends those payments were actually made as a commission for the surgeons’ use of SpineFrontier devices in surgical spinal implants involving Medicare, TRICARE, and Medicare patients. Dr. Chin allegedly set up a third-party consulting entity, whose only employee was his wife, to funnel payments from October 2013 through December 2018 to surgeons and disguise those payments as consulting fees.

However, the complaints allege that Dr. Chin made those payments in exchange for the surgeons using spinal devices manufactured by SpineFrontier. The Government accuses SpineFrontier of making payments in amounts of either $500 or $1,000, for each device used by the surgeons, with no limit. The surgeons allegedly provided little or no consulting feedback on the devices, and even when they did, SpineFrontier and its related entities mostly disregarded any feedback.

Sham consulting fees, as these allegedly are, are commonly used by companies to cover-up paying kickbacks for doctors to use their medical devices. These types of payments constitute clear violations of the Anti-Kickback Statute which, prohibits “offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, TRICARE, and other federally funded programs.” The Anti-Kickback Statute was enacted to dissuade medical professionals from putting profits ahead of patient well-being when deciding on proper medical care. Any reimbursement from federal healthcare programs that have been tainted by Anti-Kickback Statute violations can also serve as the basis for FCA violations.

The intervention by DOJ in these cases signals that the Government believes that the allegations brought by the three qui tam relators have merit and are worth pursuing. The Government’s decision to intervene often indicates that the litigation will ultimately succeed in recovering taxpayer dollars as nearly 95% of all False Claims Act lawsuits with Government intervention end up with a successful recovery. Further, the intervention in these cases follows the pattern of DOJ fully pursuing FCA claims involving kickbacks in the spinal device field, which have become a troubling trend in the healthcare industry.

Read more:

What is Qui Tam? (FAQs)

Medicare and Medicaid whistleblower rewards (FAQs)