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Spinal Device Manufacturer Innovasis Inc. Agrees to $12M Settlement to Resolve Kickback Claims Alleging Illegal Payments and Gifts to Surgeons

Posted  June 4, 2024

In a recent legal development, spinal device manufacturer Innovasis Inc. along with two of its top executives, Brent Felix and Garth Felix, have agreed to pay $12 million to resolve allegations that they violated the False Claims Act. A recent United States Department of Justice press release revealed that Innovasis Inc. allegedly provided improper kickback payments to spine surgeons to promote the use of Innovasis’s spinal devices. 

The case against Innovasis involved accusations that the company engaged in illegal kickback schemes from January 1, 2014, to December 31, 2022, during which Innovasis allegedly provided financial incentives to 17 orthopedic surgeons and neurosurgeons to favor their products in surgeries performed on Medicare beneficiaries. The improper payments came in various forms, including consulting fees, intellectual property acquisition and licensing fees, and performance shares in Innovasis. Additionally, the company allegedly organized extravagant trips, dinners, and holiday parties for surgeons, their staff, and family members. 

Specific examples of these improper payments included excessively high fees for consulting services, payments for intellectual property without proper valuation or subsequent use, and expenses-covered trips to luxury resorts. These payments were allegedly orchestrated under the direction of Innovasis’s founder and President Brent Felix and his brother Garth Felix, who held various leadership roles including Chief Financial Officer. 

The Federal Anti-Kickback Statute strictly prohibits offering or paying anything of value to influence referrals of items or services covered by Medicare and other federally funded programs. Such practices are illegal because they can compromise medical judgment and lead to decisions driven by financial incentives rather than patient care considerations. 

Principal Deputy Assistant Attorney General Brian M. Boynton emphasized that patients must trust that their medical devices are chosen “based on quality-of-care considerations and not on improper payments from manufacturers.” U.S. Attorney Leigha Simonton for the Northern District of Texas reiterated the importance of maintaining the integrity of healthcare recommendations, free from financial corruption, and stated emphatically that “Any time we learn that physician recommendations are being corrupted by improper financial inducements, we will seek to hold those involved accountable.” 

As reported in the DOJ’s press release, the case was brought under the whistleblower provisions of the False Claims Act by a former Regional Sales Director for Innovasis. Under these provisions, individuals can file actions on behalf of the United States and potentially receive a portion of the recovery. The whistleblower is reportedly set to receive approximately $2.2 million from the settlement. 

If you think you might have any information relating to possible healthcare fraud or are aware of any healthcare providers paying or receiving kickbacks and would like to speak to an experienced member of the Constantine Cannon whistleblower lawyer team, please contact us for a free and confidential consultation.