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Monday, September 8, 2014

United States Pursues Claims Against Neurosurgeon, Spinal Implant Company, Physician-Owned Distributorships and Their Non-Physician Owners for Alleged Kickbacks and Medically Unnecessary Surgeries

The United States has filed two complaints under the False Claims Act against Michigan neurosurgeon Dr. Aria Sabit, spinal implant company Reliance Medical Systems, two Reliance distributorships—Apex Medical Technologies and Kronos Spinal Technologies—and the companies’ owners,  Brett Berry, John Hoffman and Adam Pike, the Justice Department announced today.  The complaints allege that Apex Medical and Kronos Spinal paid physicians, including Sabit, to induce them to use Reliance spinal implants in the surgeries they performed.


“Improper payments to physicians can alter a physician’s judgment about patients’ true health care needs and drive up health care costs for everyone,” said Assistant Attorney General Stuart F. Delery for the Justice Department’s Civil Division.  “The Justice Department is committed to enforcing the laws that prohibit such payments.”


Berry and Pike founded Reliance in 2006, and subsequently created more than 12 physician-owned distributorships that sold Reliance devices.  Each of Reliance’s distributorships sold spinal implants ordered by their physician-owners for use in procedures the physician-owners performed on their own patients.  The complaints allege that Reliance used one of its distributorships, Apex Medical, to funnel improper payments to Sabit for using Reliance spinal implants in his surgeries.  According to the complaints, Sabit began using Reliance implants on his patients only after he acquired an ownership interest in Apex and started receiving payments from the sale of Reliance’s spinal implants.  Apex allegedly paid Sabit $438,570 between May 2010 and July 2012, during which time Sabit used Reliance implants in approximately 90 percent of his spinal fusion surgeries.  The government also alleges that these payments caused Sabit to perform medically unnecessary or excessive surgeries on certain patients who did not need the spinal implants. 


The government further alleges that Reliance operated a second distributor, Kronos, in southern California, which made improper payments to two other physicians, Drs. Ali Mesiwala and Gowriharan Thaiyananthan.  Allegedly, Reliance’s owners were recorded telling a potential Kronos investor that Reliance was formed as part of a plan to “get around” the federal Anti-Kickback Statute, which prohibits such improper payments, and that Reliance pays its physician-investors enough in the first month or two to “put their kids through college.”


The allegations that Sabit performed medically unnecessary or excessive surgeries were raised in a separate lawsuit filed by Dr. Cary Savitch and Dr. Gary Proffett under the qui tam, or whistleblower, provisions of the False Claims Act.  The act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery.  The act also permits the government to intervene in the whistleblowers’ lawsuit.  In this case, the government has both intervened in the whistleblowers’ medical necessity claims and filed a separate lawsuit containing kickback claims against both Sabit and the Reliance defendants.


These lawsuits illustrate illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $22.4 billion through False Claims Act cases, with more than $14.2 billion of that amount recovered in cases involving fraud against federal health care programs.


This investigation was a coordinated effort among the Commercial Litigation Branch of the department’s Civil Division and the U.S. Department of Health and Human Services-Office of the Inspector General.  The lawsuits were filed in the Central District of California (Los Angeles), and are captioned United States ex rel. Carey Savitch, M.D., and Gary Proffett, M.D. v. Aria Sabit, M.D., Moustapha Abou-Samra, M.D., and Community Memorial Health System, Case No. 13-3363, and United States v. Reliance Medical Systems, Apex Medical Technologies, Kronos Spinal Technologies, Bret Berry, John Hoffman, Adam Pike, and Aria Sabit, M.D.


The claims asserted by the government are allegations only, and there has been no determination of liability. 

Updated September 15, 2014