Sanford Health, Sanford Medical Center and the Sanford Clinic (collectively, Sanford) have agreed to pay $20.25 million to resolve False Claims Act (FCA) allegations that they knowingly submitted false claims to federal health care programs, including Medicare, Medicaid and TRICARE, resulting from violations of the Anti-Kickback Statute and medically unnecessary spinal surgeries. The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs.
The lawsuit, captioned Bechtold v. Asfora, No. 4:16-cv-04115-LLP (D.S.D.), was brought by two Sanford surgeons, Carl Dustin Bechtold and Bryan Wellman, under the whistleblower or qui tam provision of the FCA, which allows private parties to bring suit on behalf of the government. Whistleblowers are entitled to bring lawsuits on behalf of the government and may receive a percentage of any recovery won. In this case, the whistleblower physicians will receive $3.4 million of the settlement proceeds for their efforts in bringing this case to the attention of the government.
The 111-page complaint, which was originally filed under seal in August 2016, alleged that Sanford knew that one of its top neurosurgeons, Wilson Asfora, was improperly receiving kickbacks from his use of implantable devices, including bullet cages used for spinal fusion procedures and Samba Screws used to fuse the sacroiliac joint in the pelvis, provided by his physician owned distributorship (POD), Medical Designs, as well as other medical device companies. The two whistleblowers further alleged that Asfora was selling medical devices to Sanford for surgeries he performed, resulting in an unlawful economic incentive for him to use, and overuse, the devices on unwitting patients.
In July, the government filed a motion to intervene in the case, which was granted and unsealed by a federal judge one day later.
According to the complaint, Sanford and its executive team received numerous warnings from the physician whistleblowers and others about Asfora’s alleged kickback scheme and was aware of the heightened compliance risks associated with PODs. Asfora’s physician colleagues also repeatedly warned Sanford that Asfora was performing medically unnecessary procedures, such as spinal fusions, involving the devices in which he had a substantial financial interest to scores of Medicare and Medicaid patients. As alleged, Sanford repeatedly failed to take corrective measures, and the physicians had no choice but to bring their grave concerns to the federal government “as a last resort” by filing the whistleblower complaint and fully cooperating with the government’s investigation.