Life Spine, a spinal implant company, recently agreed to pay $5.99 million to resolve medical whistleblower claims that they paid illegal kickbacks to surgeons.

According to the U.S. Department of Justice (DOJ), the New York Attorney General recently secured the settlement with Life Spine Inc., the company’s founder/president/CEO Michael Butler, and the company’s vice president of business development Richard Greiber. Life Spine has agreed to pay $5.5 million, Butler has agreed to pay $375,000, and Greiber agreed to pay $115,000.

“The settlement reflects this Office’s commitment to stopping companies like Life Spine, and the individuals who run them, from engaging in unlawful kickback schemes,” Manhattan U.S. Attorney Geoffrey S. Berman said in a press release. “Such conduct seriously undermines the public’s confidence in medical treatment decisions made by doctors whose judgment may be compromised by illegal kickbacks.”

The recently reached settlement resolves claims that Life Spine illegally paid kickbacks to surgeons in exchange for using the company’s spinal implants, devices, and equipment. Sales from surgeons who had been paid kickbacks allegedly accounted for around half of Life Spine’s sales between 2012 and 2018.

All of the settling parties have reportedly admitted to wrongdoing in addition to paying penalties to the government. Claims against Life Spine were brought in a medical whistleblower lawsuit under the False Claims Act. Lawsuits such as these help the authorities take action against healthcare fraud schemes.

“Medical treatment should be based on the patient’s best interest and not on illegal kickbacks.  We will continue working with our law enforcement partners to protect patients and taxpayers from individuals who place profits before the needs of patients,” said HHS-OIG Special Agent in Charge Scott J. Lampert.

Medical Whistleblower Claims

Kickbacks are illegal under several U.S. laws. On principle, receiving kickbacks can cause healthcare professionals to make influenced treatment decisions that may not be in the best interest of patients. For this reason, medical kickbacks are illegal under the Anti-Kickback Statute.

If a business or provider is found to violate the Anti-Kickback Statute, they may be faced with a whistleblower lawsuit under the False Claims Act.

The False Claims Act was passed during the Civil War amidst concerns that suppliers were defrauding the Union Army. Under this law, relators or “whistleblowers” are allowed to file a lawsuit against parties which submit false claims or otherwise defraud the federal government.

Typically medical whistleblower lawsuits are seen in connection to false claims submitted to government programs such as Medicare and Tricare. However, claims regarding kickback schemes may also be included in False Claims Act lawsuits – as seen with the Life Spine lawsuit.

Whistleblower lawsuits do not only benefit the government. If a settlement is reached under the False Claims Act, the whistleblower relator is able to recover a portion of any compensation the government receives. The amount may vary, but whistleblowers may be able to collect up to 30 percent of any recovery. With settlements of millions of dollars, this can mean relators walking away with thousands of dollars in compensation for their services.

This article is not legal advice. It is presented
for informational purposes only.