DOJ Files Suit against Spine Device Manufacturer and Executives Alleging Kickbacks to Surgeons through Sham Consulting Payments
The Justice Department announced today that the United States intervened and filed a complaint in two whistleblower cases filed under the False Claims Act against SpineFrontier, Inc. (SpineFrontier) and related entities and executives, alleging that the defendants paid kickbacks to spine surgeons to induce use of SpineFrontier surgical devices, in violation of the Anti-Kickback Statute (AKS). According to the United States’ complaint, the defendants paid spine surgeons over $8 million in sham “consulting” payments ostensibly for product evaluations, when in fact the payments were for use of SpineFrontier devices.
“Kickbacks undermine the integrity of federal health care programs and can result in unnecessary or harmful medical care,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice will pursue unlawful kickback arrangements in whatever form they occur to ensure the integrity of the medical care received by federal program beneficiaries.”
According to the United States’ complaint, Dr. Kingsley Chin is the founder and Chief Executive Officer of SpineFrontier, a spine device manufacturer headquartered in Malden, Massachusetts, which sells spinal implant devices across the United States. Dr. Chin is also the founder and principal owner of KIC Management Group Inc. and KICVentures LLC, which own and operate SpineFrontier and Impartial Medical Experts LLC (IME), a purported consulting company. Vanessa Dudley, Dr. Chin’s wife, was IME’s sole employee. Adiya Humad is the Chief Financial Officer for KICVentures and SpineFrontier, and president of SpineFrontier.
The United States’ complaint alleges that from October 2013 through December 2018, the defendants used IME as an intermediary to funnel kickbacks to spine surgeons. Defendants allegedly created IME to shield themselves and spine surgeons from government scrutiny by creating a false impression that surgeons were consulting through an independent third-party entity. The United States contends that IME in reality has served only one client — SpineFrontier — and its sole purpose was to pay spine surgeons to use SpineFrontier’s medical devices. The Defendants generally paid “consulting” spine surgeons $500 for a cervical procedure, and $1,000 for a lumbar procedure — but only if the surgeon used SpineFrontier devices. The United States alleges that consulting spine surgeons often performed little or no work beyond implanting the devices—for which they were separately paid by insurers — and that the Defendants did not systematically collect or use feedback from consultants and paid them even when they had provided no feedback at all. Surgeons allegedly could “consult” on SpineFrontier devices in this manner an unlimited number of times so long as they continued using the SpineFrontier product in surgery.
The AKS prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, TRICARE, and other federally funded programs. The AKS is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives.
“Medical device companies that pay surgeons kickbacks, directly or indirectly, corrupt the market, damage the health care system, and jeopardize patient health and safety,” said U.S. Attorney Andrew E. Lelling of the District of Massachusetts. “We will pursue aggressively any organization or individual who fails to play by the rules.”
“Bribes paid to surgeons as sham medical consultants, as alleged in this case, cheat patients and taxpayers alike,” said Phillip M. Coyne, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Working with our law enforcement partners, we will continue to investigate kickback schemes that threaten the integrity of our federal health care system, no matter how those schemes are disguised.”
The lawsuits were originally filed under the qui tam or whistleblower provisions of the False Claims Act by Charles Birchall, Jr., a former employee of a KICVentures subsidiary; John Miller, a former sales manager at SpineFrontier; and Walter Bennett, a former sales representative at SpineFrontier. Under the Act, a private party, known as a relator, can file an action on behalf of the United States and receive a portion of the recovery. The Act permits the United States to intervene in and take over the action, as it has done here. If a defendant is found liable for violating the Act, the United States may recover three times the amount of its losses plus applicable penalties.
The lawsuits are being handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Massachusetts. Investigative support is being provided by the Department of Health and Human Services, Office of Inspector General and the Federal Bureau of Investigation.
The cases are captioned United States ex rel. Birchall, Jr. v. SpineFrontier, Inc. et al., No. 15cv12877 (D. Mass.) and United States ex rel. Doe v. SpineFrontier, Inc. et al., No. 15cv12908 (D. Mass.). The claims asserted in the government’s complaint are allegations only.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.