Spinal Implant Company and Two Executives Will Pay $5.99 Million to Settle False Claims Act Allegations

by Andrew Murray | December 2nd, 2019

The Department of Justice announced the settlement on November 7, 2019. The defendants were accused of paying kickbacks to “induce” surgeons to use the company’s products. The Press Release states:

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[T]he United States has settled a civil healthcare fraud lawsuit against LIFE SPINE INC. (“LIFE SPINE”), MICHAEL BUTLER (“BUTLER”), the founder, president, and chief executive officer of LIFE SPINE, and RICHARD GREIBER (“GREIBER”), the vice president of business development of LIFE SPINE, alleging that LIFE SPINE paid kickbacks in the form of millions of dollars of consulting fees, royalties, and intellectual property acquisition fees to surgeons to induce them to use LIFE SPINE’s spinal implants, devices, and equipment.  The surgeons who received these kickbacks accounted for approximately half of Life Spine’s domestic sales of spinal products from 2012 through 2018.  In the settlement, LIFE SPINE agreed to pay $5.5 million, BUTLER agreed to pay $375,000, and GREIBER agreed to pay $115,000.  Each defendant also made admissions and acknowledged and accepted responsibility for conduct alleged in the Government’s complaint as described further below.  The amounts paid by LIFE SPINE and GREIBER under the settlement are based on the Office’s assessment of their ability to pay based on the financial information they provided.

The settlement was approved by U.S. District Judge Jed S. Rakoff.

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According to the Complaint filed in Manhattan federal court: 
LIFE SPINE is a Delaware corporation with its principal place of business in Huntley, Illinois.  LIFE SPINE designs, develops, manufactures, and markets medical devices and equipment primarily used in spinal surgeries performed by orthopedic surgeons and neurosurgeons, including implants and instruments (“Life Spine Products”).

LIFE SPINE paid surgeons to induce them to use Life Spine Products during their surgeries.  LIFE SPINE aggressively recruited surgeons who had the potential to use a high volume of Life Spine Products to enter into agreements to serve as paid consultants and/or to transfer their patents and patent applications to LIFE SPINE in exchange for payments and promised support from LIFE SPINE to bring the surgeons’ new products to market.  These agreements took different forms, including agreements under which the surgeons were purportedly paid to provide training and/or educational services; agreements under which the surgeons were purportedly paid to provide input on new products and then would receive royalties on future sales of the product; and agreements under which the surgeons were paid large up-front acquisition fees for their patents/patent applications and then would receive royalties on the sales of any products developed based on the patents.  LIFE SPINE tied these agreements and the associated payments – as well as the company’s continued commitment to devote resources to the surgeons’ product development projects – to the surgeons’ usage of Life Spine Products. 

The kickback scheme was successful and these surgeons used Life Spine Products during procedures performed on Medicare and Medicaid patients, which resulted in the submission of kickback-tainted false claims to Medicare and Medicaid.

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In connection with the filing of the lawsuit and settlement, the Government intervened in a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act.
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