The DOJ announced that Reliance Medical Systems LLC, along with its owners and two physician-owned distributorships (PODs), have agreed to pay $1 million to settle a False Claims Act (FCA) lawsuit after the first day of trial. It is alleged that the defendants violated the FCA by paying physicians to use their spinal implant devices in the surgeries they performed. This lawsuit was initiated under the qui tam provision of the FCA by Dr. Cary Savitch and Dr. Gary Proffett.

Reliance was founded in 2006 and it established more than 12 PODs to sell its spinal implants to physician-owners. The United States filed its lawsuit in 2014 and alleged that the defendants made false statements to health care providers and used their PODs to funnel kickbacks to various physicians in exchange for using Reliance medical devices during surgeries. According to the complaint, Reliance owners, Bret Berry and Adam Pike, were recorded attempting to bribe a spine surgeon to join one of Reliance’s PODs. The PODs not only paid physicians based on their referrals, but terminated physicians when they did not refer enough patients. 

When the government filed its complaint in 2014 against the above-mentioned defendants, they also filed a complaint against neurosurgeon Dr. Aria Sabit. It was alleged that Reliance used Apex Medical, one of its PODs, to pay Dr. Sabit over $400,000 for using its implants on his patients. Dr. Sabit used Reliance implants on 90% of his patients from May 2010 to July 2012. In fact, Dr. Sabit allegedly referred patients for unnecessary spinal surgeries which resulted in substantial bodily injury. Dr. Sabit pleaded guilty to four counts of health care fraud, one count of conspiracy to commit health care fraud and one count of unlawful distribution of a controlled substance. He was sentenced to nearly 20 years in prison and ordered to pay almost $2 million in restitution. The government has also recovered $9.25 million from other Reliance PODs.

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection to False Claims Act litigation and health care fraud investigations. If you need assistance with such a matter, please contact us today.