Manufacturer of Spinal Devices and Surgeon to Pay United States $2.6 Million to Settle Alleged Kickback Scheme

Omni Surgical L.P., doing business as Spine 360, a manufacturer of devices used in spinal surgery, and Dr. Jamie Gottlieb, an Indiana spinal surgeon, have agreed to pay $2.6 million to the United States to settle allegations that Spine 360 paid illegal kickbacks to Gottlieb to induce him to use the company’s products.  Spine 360 is based in Austin, Texas.

“The Department of Justice has longstanding concerns about improper financial relationships between health care providers and their referral sources, because such relationships can alter a physician’s judgment about the patient's true health care needs and drive up health care costs for everybody,” said Assistant Attorney General Stuart F. Delery for the Justice Department’s Civil Division.   “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

The Anti-Kickback Statute restricts the financial relationships that medical device manufacturers may have with doctors who use or prescribe their products.  It is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based upon the best interests of the patient.

The settlement announced today involved payments that Spine 360 made between 2007 and 2009 to an entity controlled by Gottlieb.  Although the payments were purportedly made pursuant to a series of intellectual property agreements, the United States contended that those agreements were shams, and that the payments were intended to compensate Gottlieb for using Spine 360 products in his surgeries.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $22.4 billion through False Claims Act cases, with more than $14.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The case was handled by the Commercial Litigation Branch of the department’s Civil Division , the U.S. Attorney’s Office for the Northern District of Indiana and the U.S. Department of Health and Human Services-Office of Inspector General.  The claims settled by this agreement are allegations only, and there has been no determination of liability.