Skip to main content
Sister Publication Links
  • ESG: THE NEW IMPERATIVE
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • Current News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Digital Health
  • Insights
    • ACA 10 Years After
    • Best Practices
    • Special Reports
    • Innovations
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Custom Media Event: ESG Summit
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Transformation Summit
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Supply Chain Revenue Cycle
    • - Hospital at Home
    • - Workplace of the Future
    • - Virtual Health
    • - Future of Healthcare Staffing
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Providers
September 08, 2014 01:00 AM

Federal probe of doc-owned distributorship yields False Claims suit

Jaimy Lee
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    The Justice Department is moving forward with False Claims Act allegations against a company that sells spine implants to hospitals, alleging that the company and its owners made improper payments to surgeons to use the company's medical devices in the procedures they performed.

    A complaint was filed Monday in U.S. District Court in the Central District of California against Reliance Medical Systems, a marketer and distributor of spine-implant devices; the three owners of Reliance Medical; and Dr. Aria Sabit, a neurosurgeon who invested in Reliance Medical.

    Physician-owned distributors and distributorships, or PODs, sell and distribute medical implants. Under this model, hospitals buy the devices and the surgeons who perform procedures using the implants are often owners or investors in the PODs.

    Related Content

    Justice Department investigating doc-owned device distributorship

    Over the last few years, these kinds of companies have come under scrutiny. That led the HHS' Office of the Inspector General to last year issue a special fraud alert calling PODs “inherently suspect” under the anti-kickback statute and a report that found hospitals that purchased implants from PODs reported increases in volumes of spinal surgeries.

    The lawsuit is considered significant because "it appears to be the first time any of the government's POD investigations have caused the government to file its own (False Claims Act) lawsuit based on the theory" that a physician's return on the investment is a kickback, Thomas Bulleit, a partner for law firm Ropes & Gray, said in an email.

    Court records filed in February indicated that the Justice Department was pursuing a False Claims Act investigation into Dr. Sabit's practices over concerns he hid his financial relationships with a Reliance-affiliated POD.

    The government now alleges that four surgeons, including Sabit, who were investors or owners of Reliance-affiliated companies, received payments to perform surgeries using Reliance implants. It also alleges that some of the spinal fusions performed by the surgeons using Reliance implants were medically unnecessary or more extensive than what was medically necessary.

    Reliance, based in Bountiful, Utah, was founded in 2006. It created at least 14 PODs that sold devices Reliance purchased from Spinevision, a privately held medical-device manufacturer based in France.

    “Most of the allegations are either inaccurate or grossly exaggerated,” said Patric Hooper, a lawyer with Hooper Lundy and Bookman, which represents Reliance Medical.

    The Justice Department also said that in July it joined a whistle-blower lawsuit against Sabit that had been filed in 2013.

    Sabit's lawyer was not immediately available for comment.

    PODs began taking market share from traditional manufacturers a decade ago, in part because they market their products as being less costly than the implants sold by large devicemakers. But the companies have been a cause for concern for the Advanced Medical Technology Association, which represents devicemakers. AdvaMed requested guidance from the government in 2006. By 2011, nearly 20% of the spinal fusion surgeries performed on Medicare beneficiaries used devices sold by PODs.

    But the scrutiny and questions about inappropriate payments have led to a slowdown in purchasing from PODs. Some large hospital systems such as Baylor Scott & White and HCA have said they will no longer buy implants from PODs.

    Follow Jaimy Lee on Twitter: @MHjlee

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    colorful-people_i_i.png
    The Joint Commission to add health equity standards to accreditations
    For top healthcare execs, leadership shapes legacy
    For top healthcare execs, leadership shapes legacy
    Sponsored Content
    Modern Healthcare A.M. Newsletter: Sign up to receive a comprehensive weekday morning newsletter designed for busy healthcare executives who need the latest and most important healthcare news and analysis.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Digital Health
    • Insights
      • ACA 10 Years After
      • Best Practices
      • Special Reports
      • Innovations
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Transformation Summit
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Supply Chain Revenue Cycle
        • - Hospital at Home
        • - Workplace of the Future
        • - Virtual Health
        • - Future of Healthcare Staffing
      • Custom Media Event: ESG Summit
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing