September 12, 2014

DOJ Catch of the Week — Reliance Medical Systems

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “catch of the week” goes to spinal implant company Reliance Medical Systems. On Monday, the government announced its filing of two False Claims Act lawsuits against the company, two of its distributorships — Apex Medical Technologies and Kronos Spinal Technologies — and Michigan neurosurgeon Dr. Aria Sabit.  The complaints allege Apex and Kronos paid physicians, including Sabit, to induce them to use Reliance spinal implants in the surgeries they performed. See DOJ Press Release

According to the government, Reliance Medical used the Apex distributorship to funnel almost half a million dollars in improper payments to Sabit for using Reliance spinal implants in his surgeries.  The government claims that Sabit, who also has an ownership interest in Apex, used Reliance implants in approximately 90 percent of his spinal fusion surgeries.  The payments Sabit received for these implants also allegedly caused him to perform medically unnecessary or excessive surgeries on certain patients who did not need the spinal implants.

The government further alleges that Reliance Medical similarly used its Kronos distributorship to make improper payments to two other physicians, Drs. Ali Mesiwala and Gowriharan Thaiyananthan.  Allegedly, Reliance Medical’s owners were recorded telling a potential Kronos investor that Reliance Medical was formed as part of a plan to “get around” the federal Anti-Kickback Statute, which prohibits such improper payments, and that Reliance Medical pays its physician-investors enough in the first month or two to “put their kids through college.”

The allegations that Sabit performed medically unnecessary or excessive surgeries were first raised in a whistleblower lawsuit filed by Dr. Cary Savitch and Dr. Gary Proffett under the qui tam provisions of the False Claims Act.  The government has intervened in the whistleblower suit and filed a separate lawsuit containing kickback claims against both Sabit and the Reliance defendants.

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