U.S. Justice Dept. (DOJ) Archives - Medical Design Sourcing

Former Stimwave CEO convicted of healthcare fraud

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 compo…

Philips discontinues certain CPAP product lines after recall saga, stock sinks on Q4 results

The now-discontinued DreamStation Go portable CPAP system. [Image from Philips]Philips (NYSE: PHG) + has discontinued the U.S. sales of several respiratory device product lines, including one from its much-maligned CPAP portfolio.

The Dutch medtech giant began dealing with troubles within its Respironics business in mid-2021. Philips recalled more than 5 million devices since then due to the dangerous degradation of sound abatement foam. The FDA logged more than 100,000 reports of problems related to the recall. At least 385 related to deaths.

While the company continues to work through its remediation process, more light has been shed on how the recall unfolded as it did. ProPublica and the Pittsburgh Post-Gazette first reported that Philips withheld its CPAP issues from the FDA for years. The reporting later revealed CEO Roy Jakobs’ apparent knowledge of the ongoing issues and alleged approval of the sale of defective d…

Precision Lens, owner hit with $487M judgement in kickbacks case

[Image from Pixabay]A U.S. District Judge entered a judgment against Precision Lens and its owner, Paul Ehlen, for more than $487 million in a kickback case.

Judge Wilhelmina M. Wright’s decision follows a verdict handed down by a federal jury in Minnesota earlier this year. The jury concluded that the defendants violated the False Claims Act and the Anti-Kickback Statute. Precision Lens and Ehlen faced allegations of paying kickbacks to ophthalmic surgeons to induce the use of their products in cataract surgeries reimbursed by Medicare.

The jury found that the defendants submitted 64,575 false claims to Medicare, resulting in $43.7 million in damages to Medicare.

Under the False Claims Act, the minimum civil penalty totals $5,000 per false claim and three times the amount of damages sustained by the government, according to a U.S. Dept. of Justice news release. In this matter, that amounts to more than $358 million in statutory penalties and an addit…

DOJ indicts former Stimwave CEO over alleged non-functioning neuromod implant

The U.S. Justice Dept. (DOJ) announced today that it filed a two-count indictment charging former Stimwave CEO in connection with a scheme around the company’s neuromodulation technology.

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the FBI, and Fernando P. McMillan, the Special Agent in Charge of the New York Field Office of the FDA – Office of Criminal Investigations — announced the charges filed against Laura Perryman.

The charges allege connection with a scheme to create and sell a non-functioning, dummy medical device. DOJ said Stimwave designed the implant for patients suffering from chronic pain. It alleges that the scheme resulted in “millions of dollars in losses to federal healthcare programs.”

Perryman founded and served as CEO of Florida-based Stimwave until her termination in 2019. She was arrested thi…

Medtech executive convicted of COVID-19 tests fraud

A federal jury convicted the president of a medtech company — Arrayit — accused of participating in a scheme to mislead investors over COVID-19 tests.

In June 2020, the U.S. Department of Justice (DOJ) charged Arrayit president March Schena for alleged involvement with fraudulent claims for allergy and COVID-19 testing. The charges alleged a scheme to mislead investors, commit health care fraud, and pay illegal kickbacks in connection with the submission of over $77 million in false and fraudulent claims for COVID-19 and allergy testing.

Schena, 59, engaged in a scheme to defraud Arrayit’s investors, according to court documents and evidence presented at trial. He allegedly claimed he invented revolutionary technology to test for virtually any disease using just a few drops of blood.

In a 2020 affidavit in support of the claim, Schena claimed that Sunnyvale, Calif–-based Arrayit was the only laboratory in the world offering microarray technology th…

Philips, DOJ settle for $24.8M over Respironics kickback allegations

Philips (NYSE:PHG) today agreed to pay more than $24 million to resolve False Claims Act allegations revolving around kickbacks.

The U.S. Department of Justice (DOJ) alleged that Philips RS North America (formerly Respironics) misled federal healthcare programs by paying kickbacks to durable medical equipment (DME) suppliers. Affected programs included Medicare, Medicaid and TRICARE, the healthcare program for active military and their families.

According to a DOJ release, the settlement resolves allegations that Respironics caused DME suppliers to submit false claims for ventilators, oxygen concentrators, CPAP and BiPAP machines, and other respiratory-related medical equipment because Respironics provided illegal inducements to the DME suppliers. Respironics allegedly gave the DME suppliers data free of charge that could assist in marketing to physicians.

“Paying illegal remuneration to induce patient referrals undermines the integrity of our nation’s h…

Biotronik reaches $12.95M settlement with DOJ over improper payment allegations

Biotronik today agreed to pay a $12.95 million settlement with the U.S. Justice Dept. (DOJ) to resolve allegations that it violated the False Claims Act.

DOJ alleged that the cardiac device maker violated the False Claims Act by causing the submission of false claims to Medicare and Medicaid by paying kickbacks to physicians to induce their use of Biotronik’s implantable cardiac devices, such as pacemakers and defibrillators.

Allegations included overuse of paid consultants on behalf of itself and highly regarded physician partners, according to a Biotroink news release. The company said that the parties — the company, DOJ, the U.S. Attorney’s Office for the Central District of California, and the U.S. Department of Health and Human Services (HHS) — have agreed that the settlement is not an admission of liability.

“The company is pleased to put this investigation behind us so we can continue in our mission to deliver innovative solutio…

Cardinal Health to pay $13M to settle claims it paid kickbacks to doctors

The U.S. Justice Dept. (DOJ) announced that Cardinal Health (NYSE:CAH) agreed to pay more than $13 million to resolve kickback allegations.

Allegations against Dublin, Ohio-based include a violation of the False Claims Act by paying “upfront discounts” to its physician practice customers in violation of the Anti-Kickback Statute.

Get the full story at our sister site, Pharmaceutical Processing World.

Avanos Medical to pay more than $22M to resolve criminal charges with DOJ

The U.S. Justice Dept. announced that Avanos Medical (NYSE:AVNS) agreed to pay more than $22 million to resolve a criminal charge related to fraudulent misbranding.

Charges levied against the Alpharetta, Ga.-based medical device company relate to alleged fraudulent misbranding of its MicroCool surgical gowns.

According to a DOJ news release, criminal information filed on July 7 in the U.S. District Court for the Northern District of Texas charged Avanos with one count of introducing misbranded surgical gowns into interstate commerce with the intent do defraud and mislead.

Court filings allege that Avanos falsely labeled the gowns as providing “the highest level of protection against fluid and virus penetration.”

The company agreed to pay $22,228,000, comprised of a victim compensation payment of $8,939,000, a criminal monetary penalty of $12.6 million and a disgorgement payment of $689,000.

“Companies that sell medical products …

Spine surgeon settles with DOJ for $4.4M in whistleblower case

The U.S. Department of Justice today announced a $4.4 million settlement with spine surgeon Wilson Asfora in a whistleblower case.

According to a news release from the Joseph Greenwald & Laake law firm, which represented the whistleblowers, Asfora settled for the $4.4 million sum and a six-year exclusion from all federal payer programs, effectively precluding him from practicing medicine over that period.

Asfora, a South Dakota neurosurgeon, was alleged to have violated the False Claims Act by two fellow surgeons who filed the complaint as whistleblowers in 2016. The whistleblowers alleged that Asfora sold his own medical devices for surgeries he performed, creating an unlawful economic incentive for him to use (and overuse) his own devices on unsuspecting patients.

Included in the allegations was the claim that Asfora performed medically unnecessary spinal fusion surgeries on a number of patients, leading to the whistleblowers attempting to persuade…

Feds charge medical testing company with fraud

A federal grand jury has charged the uBiome co-founders with multiple federal crimes, including two fraud charges, money laundering and more.

Now bankrupt, uBiome was founded by Zachary Apte, 36, and Jessica Richman, 46, in 2012 as a medical testing company that performed diagnostic analysis on fecal samples.

The company offered a direct-to-consumer service called “Gut Explorer,” which allowed an individual to submit a fecal sample to be analyzed by uBiome in its laboratory, after which the company would produce a report comparing the customer’s microbiome to the microbiomes of others who submitted samples. All the analysis and reporting was priced at less than $100 for the consumer.

Apte and Richman were charged with conspiracy to commit securities fraud, conspiracy to commit health care fraud, money laundering and related offenses connected to their alleged schemes to defraud health insurance providers and investors to raise capital f…