Neurosurgeon and Two Medical Device Distributorships Settle False Claims Act Allegations for $4.4 Million

Earlier this year, a neurosurgeon and two of his medical device distributorships reached a $4.4 million settlement to resolve False Claims Act allegations relating to illegal payments made to the neurosurgeon to induce the use of certain medical devices.

Wilson Asfora, MD, owned the medical device distributorships, Medical Designs LLC and Sicage, LLC. According to the Department of Justice (DOJ), Asfora, Medical Designs, and Sicage knowingly and willfully engaged in three kickback schemes that allowed Asfora to profit from his use of more than a dozen medical devices in his medical procedures.

Under the first scheme, Medical Designs and Sicage allegedly paid Asfora profit distributions in exchange for Asfora using their devices in his spine surgeries. Under the second alleged scheme, Medical Designs acted as a distributor, reselling other manufacturers’ spinal devices and splitting the profits with Asfora when he used those devices in surgeries.

Third, the United States alleged that Asfora solicited and received kickbacks from medical device manufacturer Medtronic USA Inc., in exchange for using its SynchroMed II infusion pumps. Medtronic allegedly paid the kickbacks to Asfora (at his request) through a restaurant he owned with his wife, Carnaval Brazilian Grill, via lavish meals and alcohol for his friends, colleagues, and business partners. Medtronic paid a separate $9.2 million settlement to resolve allegations that it made those improper payments ($8.1 million to resolve allegations that it violated the False Claims Act by paying Asfora kickbacks and 411 million to settle allegations that it violated the Open Payments Program by failing to accurately report payments made to CMS).

The settlement also covers and resolves allegations that Asfora knowingly submitted false claims to federal healthcare programs for performing medically unnecessary procedures using devices that he had a financial interest in. Additionally, Asfora supposedly received warnings from his own physician colleagues that he was performing medically unnecessary procedures, but continued to do so, all the while personally profiting from his use of devices sold by Medical Designs, Sicage, and Medtronic.

Open Payments Liability

The $4.4 million settlement also resolves liability of Medical Designs and Sicage under the Open Payments Program, which requires medical device companies to disclose to the Centers for Medicare and Medicaid Services (CMS) physician ownership interests and certain payments or other transfers of value to a physician. The two companies agreed to pay an additional $100,000 in penalties to settle those allegations.

Under the terms of the settlement agreement, all three parties (Asfora, Medical Designs, and Sicage) will be excluded from participation in federal healthcare programs for six years.

Government Statements

“Fraud in the healthcare arena is taken very seriously by the Department of Justice,” said Acting U.S. Attorney Dennis R. Holmes for the District of South Dakota. “South Dakota is fortunate to have many honest and dedicated healthcare providers who strive daily to provide high quality services. Dr. Asfora and his companies violated the trust that so many others have worked hard to earn.”

“Kickback dollars can corrupt the high quality medical care patients deserve and taxpayers fund,” said Special Agent in Charge Curt L. Muller of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We have excluded Dr. Asfora and his two medical distributorships from receiving Medicare, Medicaid, and other federal health program dollars.”

Sanford Health Settlement

In addition to the Medtronic Settlement, another DOJ settlement was reached surrounding these allegations – this time, with Sanford Health, Asfora’s former employer. Sanford Health agreed to pay more than $20 million to resolve allegations that the system knowingly submitted false claims to federal health care programs for medically unnecessary spinal surgeries.

In that settlement, it was alleged that Sanford continued to employ Asfora despite warnings from his colleagues and others about the alleged kickback schemes outlined above.