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Justice News

Department of Justice
U.S. Attorney’s Office
District of Massachusetts

FOR IMMEDIATE RELEASE
Thursday, March 5, 2020

U.S. Attorney Sues Spinal Device Company and Its Executives for Allegations that they Paid Kickbacks to Surgeons

Five doctors admit to taking kickbacks and will pay $1.56 million

BOSTON – The U.S. Attorney’s Office has filed a civil health care fraud complaint against SpineFrontier, Inc. (SpineFrontier); Impartial Medical Experts, LLC (IME); Kingsley Chin, the founder and CEO of SpineFrontier; Aditya Humad, the CFO of SpineFrontier; Vanessa Dudley, Chin’s wife and the Business Administrator of IME; and other entities Chin owns and controls.

The government alleges that SpineFrontier, based in Malden, Mass., and the other defendants paid, and conspired to pay, kickbacks in the form of sham consulting fees via a sham third-party, IME. The lawsuit alleges that the defendants made these payments to surgeons to induce them to use SpineFrontier’s devices in spinal surgeries. The government contends that the defendants violated the Anti-Kickback Statute, and as a result caused federal health care programs to pay millions of dollars in false claims.

In addition, the U.S. Attorney’s Office has settled civil health care fraud claims against five physicians, each of whom admits to seeking and obtaining kickbacks from SpineFrontier, via the sham third-party IME, for consulting work he did not perform. Further, each physician admits that one or more of SpineFrontier, Chin, or Humad specifically instructed him to bill “consulting” hours to SpineFrontier for each and every surgery in which he used a SpineFrontier device, regardless of whether he spent any time actually consulting.

  • Dr. F. Paul DeGenova, an orthopedic spine surgeon in Ohio, admitted to accepting payments from SpineFrontier via IME for consulting hours he did not work, and agreed to settle the government’s claims for $486,985;
  • Dr. Michael Murray, an orthopedic spine surgeon in New York employed by the Department of Veteran Affairs, admitted to accepting payments from SpineFrontier via IME for consulting hours he did not work, and agreed to settle the government’s claims for $330,668;
  • Dr. Joseph Shehadi, a neurosurgeon in Ohio, admitted to accepting payments from SpineFrontier via IME for consulting hours he did not work, and agreed to settle the government’s claims for $323,419;
  • Dr. Agha Khan, a neurosurgeon in Maryland, admitted to accepting payments from SpineFrontier via IME for consulting hours he did not work, and agreed to settle the government’s claims for $310,843; and
  • Dr. John Atwater, an orthopedic surgeon who has worked in in Florida and Illinois, admitted to accepting payments from SpineFrontier via IME for consulting hours he did not work, and agreed to settle the government’s claims for $105,149.

Each of the five settling surgeons cooperated with the government’s investigation into the defendants, and the U.S. Attorney’s Office took that cooperation into account in  these settlements.

“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 United States Attorney Andrew E. Lelling. “We will pursue aggressively any organization or individual who fails to play by the rules.”

“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.”

“Kickbacks 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.”

“Surgeons have a moral imperative to operate in a trustworthy, transparent manner. No less than people’s lives and safety depend on them. Today, five spine doctors from across the country admitted they prioritized payoffs over patients to enrich themselves and a Malden medical supply company, SpineFrontier, by shelving their ethics once hundreds of thousands of dollars in kickbacks were put on the negotiating table,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division. “The FBI aggressively pursues health care fraud because cases like this don’t just impact a few people. The cost of these egregious crimes is ultimately borne by all taxpayers.”

“Veterans and non-Veterans alike put trust in their physicians and that confidence is the cornerstone of our health care system. When physicians choose personal gain over patient care, that trust is broken. The settlement with Dr. Murray demonstrates VA OIG’s strong commitment to combating fraud and corruption in our government health care programs, including the Veterans Health Administration,” said VA OIG Acting Special Agent in Charge Jeffrey Stachowiak. 

According to the government’s complaint, SpineFrontier paid physicians kickbacks through IME, which operates only with a Florida post office box, and whose sole employee is Chin’s wife, Dudley. The government contends that the defendants told surgeons that they could bill SpineFrontier and IME for “consulting” on a per-surgical case basis, regardless of the time, if any, the surgeons spent consulting. SpineFrontier and IME allegedly set no limit on the number of times a surgeon could purportedly evaluate a SpineFrontier device, leading to numerous instances in which SpineFrontier paid the same physician for submitting consulting hours on the same SpineFrontier device over and over again.

According to the complaint, SpineFrontier made no effort to catalogue, review, or assess feedback that surgeon-consultants provided. Often, the defendants paid surgeons ostensibly for consulting time even when surgeons had provided no product feedback whatsoever.

The government alleges that SpineFrontier and IME paid more than $8 million in kickbacks to surgeons, which generated more than $100 million in revenue, with the vast majority of SpineFrontier's total domestic sales revenues coming from kickback-tainted surgeries.

In connection with the filing of its complaint, the government intervened in two private whistleblower lawsuits that had been filed under seal pursuant to the False Claims Act.  The cases are United States ex rel. Birchall v. SpineFrontier, Inc. et al., No. 15-cv-12877 and United States ex rel. Miller & Bennett v. SpineFrontier, Inc. et al., No. 15-cv-12908.

U.S. Attorney Lelling, Assistant Attorney General Hunt, HHS-OIG SAC Coyne, FBI SAC Bonavolonta, and VA OIG Acting SAC Stachowiak made the announcement today. The government’s investigation is being handled by Assistant U.S. Attorneys Abraham R. George, David J. Derusha, Patrick M. Callahan and Steven T. Sharobem of Lelling’s Office and Trial Attorneys Douglas Rosenthal and Chris Terranova of the Department of Justice’s Civil Division.

Updated March 5, 2020