Kickbacks to Fix Backs: Spinal implant company Innovasis pays $12 million to settle Anti-Kickback claims
Kickbacks compromise patient health.
Kickbacks or bribes in healthcare undermine the integrity of medical decision-making, compromise patient care, and erode trust in healthcare providers. Treatment choices influenced by financial incentives rather than patient needs leads to unnecessary procedures or the use of suboptimal products. Ultimately, bribes distort the primary goal of healthcare: providing the best possible care for patients.
Kickback scheme
Innovasis is a medical devices company that develops spinal implant devices and related products. To sell its spinal implant devices or get doctors to use them, Innovasis paid doctors to use them. It couldn’t just give them cash, that’s too obvious. Instead, it induced them to use its devices by paying consulting fees, paying to acquire intellectual property, performance shares in Innovasis, flying them first class to luxury ski resorts, and throwing lavish dinners and holiday parties for surgeons, their office staff, and family members.
Now, companies can pay consulting fees and acquire intellectual property. Here, however, according to the Settlement Agreement, Innovasis paid consulting fees “far in excess of fair market value” and sometimes “for work that was never actually performed.” It also paid above market value to acquire or license “intellectual property” which it never used and for which it never obtained any valuation prior to purchase. To simulate a legitimate business transaction, it helps to actually get something in return for the consulting fees and have an estimate of what the intellectual property is worth.
The penalty
$12 million. Innovasis will pay $11,625,000, Brent Felix, Innovasis’s founder, President and Chairman of the Board, will pay $250,000, and Grant Felix, who served in various leadership roles for Innovasis, including as the company’s Chief Financial Officer, will pay $125,000.
The whistleblower
Robert Richardson who was a former Regional Sales Director for Innovasis. Leveraging his insider knowledge, Richardson uncovered a disturbing pattern of kickback payments to spine surgeons. These kickbacks were designed to influence medical decisions in favor of Innovasis’s spinal devices. This unethical practice violated federal laws and compromised patient care by prioritizing financial gain over medical necessity.
Motivated by a commitment to patient well-being and ethical standards, Richardson exposed Innovasis’s misconduct. He filed a lawsuit under the qui tam provision of the False Claims Act, initiating legal action to recover funds on behalf of the government. His courageous actions led to a DOJ investigation into the matter.
The whistleblower reward
As the relator, Richardson will get $2.2 million for reporting Innovasis’s misconduct and fraudulent profits. Under the qui tam provision of the False Claims Act, a private party may file an action on behalf of the United States and receive a portion of the recovery, typically between 15-30%.
If you think you’ve observed fraud or misconduct, we can evaluate your options. Vivek Kothari is a former federal prosecutor who represents whistleblowers. For a free consultation, contact Vivek by email, Signal, or fill out the contact form.