On May 29, the Department of Justice (DOJ) announced that Innovasis Inc., a spinal device manufacturer in Utah, and its two top executives, Brent Felix, and Garth Felix, agreed to pay a $12 million civil settlement over allegations that they violated the False Claims Act by paying kickbacks to spine surgeons to incentivize their use of Innovasis’s devices.
The civil settlement resolves claims brought under the qui tam or whistleblower provision of the False Claims Act by Rover Richardson, Innovasis’s former Regional Sales Director. In successful qui tam suits, whistleblowers are eligible to receive between 15-30% of the government’s recovery. Richardson is set to receive approximately $2.2 million.
Brent Felix is the founder, President and Chairman of the Board of Innovasis, and his brother Garth Felix held various leadership positions, including as the Chief Financial Officer.
The settlement resolves allegations of Innovasis’s improper remuneration to seventeen orthopedic surgeons and neurosurgeons from January 1, 2014, to December 31, 2022. Innovasis’s improper remuneration was allegedly provided in the form of consulting fees, intellectual property acquisition, and licensing fees, registry payment, performance shares, and luxury travel resort for inducing the use of their equipment performed on Medicare beneficiaries, violating the Anti-Kickback statute. During the relevant period, Brent Felix and Garth Felix allegedly controlled Innovasis’s operations, strategic decisions, and agreements with the surgeon, who allegedly received improper remuneration.
The federal Anti-Kickback Statute intends to ensure that medical provider’s judgment is not influenced by any improper financial incentives and prohibits offering any incentive to influence referrals of items or services covered by Medicare and other federally funded programs.
“Payments from medical device manufacturers intended to influence a physician’s judgment about which medical devices or supplies to select are illegal,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “When medical devices are used in surgical procedures, patients deserve to know that their device was selected based on quality of care considerations and not on improper payments from manufacturers.”
Healthcare fraud remains a major area of False Claims Act enforcement and qui tam whistleblower cases lead to a large percentage of the DOJ’s recoveries in FCA enforcement.
On July 25, a bipartisan group of senators introduced the False Claims Amendments Act of 2023, which address a few technical loopholes undermining the success of the FCA. The bill is widely supported by whistleblower advocates.
National Whistleblower Center (NWC) has issued an Action Alert calling on Congress to pass the bill.
Join NWC in Taking Action:
Demand that Congress strengthen the False Claims Act
Further Reading:
Bipartisan Legislation Unveiled to Strengthen False Claims Act