The U.S. Justice Dept. announced last week that a jury found former Stimwave CEO Laura Perryman guilty of healthcare fraud.
Damian Williams, U.S. Attorney for the Southern District of New York, last week announced the jury’s verdict. It found Perryman guilty on two counts of an indictment charging her with conspiracy to commit healthcare fraud and wire fraud and substantive healthcare fraud.
The jury convicted her of one count of healthcare fraud, which carries a maximum sentence of 10 years in prison. It also found her guilty of one count of conspiracy to commit healthcare fraud and wire fraud. That carries a maximum sentence of 20 years. The actual sentencing remains to be determined by the judge, DOJ said.
This verdict marks the latest development in a long-running case against Perryman. She founded and served as CEO of Florida-based Stimwave until her termination in 2019. The issues stem from the creation and sale of a fake medical device component for spinal cord stimulation technology.
In February 2020, Stimwave ceased all sales of its high-frequency spinal cord stimulation systems in exchange for the dismissal of a patent infringement lawsuit brought by rival Nevro.
Stimwave filed for bankruptcy on June 15, 2022. Perryman was arrested after DOJ filed a two-count indictment against her in March of this year. In December 2023, the SEC charged Perryman with defrauding investors out of approximately $41 million.
Background on Stimwave
Perryman and others founded Stimwave in 2010, headquartering it in Pompano Beach, Florida. The company manufactured and distributed implantable neurostimulation devices designed to treat intractable chronic pain. According to DOJ, its founding centered around the premise that the products would provide non-opioid alternatives to chronic pain management.
As CEO, Perryman oversaw the design of the StimQ PNS system. The device treated chronic pain by producing electrical currents to target peripheral nerves outside the spinal cord.
DOJ alleges that, from “at least in or about” 2017 until her 2019 termination, Perryman engaged in a scheme to design, create, manufacture and market an inert, non-functioning component. This component — called the “white stylet” — served no medical purpose, DOJ said. The alleged scheme aimed to include the stylet to make the product financially viable for doctors to purchase.
Stimwave originally brought the device to market around 2017 with three primary components. It featured an implantable electrode array (lead), an externally worn battery and a separate implantable receiver. The receiver included a distinctive pink handle, called the “pink stylet.” The pink stylet contained copper. Unlike the white stylet, it functioned as a receiver to transmit energy from the battery to the array.
How the case against the former Stimwave CEO unfolded
According to the DOJ, Stimwave sold its device to doctors and medical providers for approximately $16,000. The company instructed healthcare providers to bill medical insurance providers, including Medicare, for implanting the device through two separate reimbursement codes.
One code applied to the implantation of the stimulator portion of the lead, while the other related to a receiver device. The billing code for the lead implant had a reimbursement rate between about $4,000 and $6,000. The billing code for the receiver totaled approximately $16,000 to $18,000.
Soon after Stimwave released the device, physicians informed the company of trouble implanting the pink stylet. DOJ says Stimwave and Perryman knew they couldn’t cut or trim the stylet to shorten it without interfering with its functionality. Without a receiver component for reimbursement, the device would cause a substantial financial loss with each purchase.
DOJ said that Stimwave, at Perryman’s direction, declined to lower the price of the device so reimbursement would cover the costs for the implantation of only the lead. Perryman also declined to recommend that doctors not implant the device or receiver in cases where the pink stylet failed to fit comfortably. Instead, she directed the creation of the white stylet as a dummy component. According to DOJ, Stimwave then misrepresented this stylet to doctors as an alternative to the pink stylet.
As a result of the misrepresentations, DOJ says Perryman caused doctors and providers to implant the stylet into patients and submit reimbursement claims to health insurance providers, including Medicare.