In early December 2021, the United States Department of Justice (DOJ) announced settlements with Dr. Jeffrey M. Gallups and Entellus Medical over allegations that they entered into unlawful kickback arrangements, in violation of the False Claims Act. Gallups is the founder, owner, medical director and past-CEO of Milton Hall Surgical Associates (“MHSA”) a/k/a The Ear, Nose & Throat Institute. Entellus Medical is a medical device company that manufactures products used to perform sinus surgeries.
According to the DOJ, from 2014 to 2018, Gallups was a non-practicing physician acting as the CEO and medical director of MHSA. At the time, MHSA employed between 12 and 18 physicians in various locations throughout North Georgia. The government alleges that Gallups controlled the physicians employed by MHSA and directed them to (1) use sinuplasty-related medical devices exclusively made by Entellus and (2) order toxicology and genetic testing from NextHealth, LLC, a Texas-based medical laboratory. These actions were taken in exchange for kickbacks, described in greater detail below.
Entellus Allegations
Entellus allegedly provided Gallups with several forms of remuneration, including cash and all-expense paid trips, in return for his requiring MHSA physicians to use the Entellus sinuplasty medical devices and increase the number of sinuplasty procedures performed on MHSA patients.
In December 2017, Entellus was acquired by Stryker Corporation and Stryker’s compliance personnel flagged the consulting arrangement between Entellus and Gallups, opting not to renew the arrangement. In September 2020, Stryker agreed to pay $1.2 million to resolve the claims arising out of the Gallups/Entellus kickback agreement.
NextHealth Allegations
According to the government, around January 2016, Gallups and NexHealth entered into a kickback arrangement. NextHealth allegedly made payments to Gallups (“commissions”) in exchange for his requiring MHSA physicians to order medical tests from NextHealth, irrespective of medical necessity, and over objections from MHSA physicians that the tests were not medically necessary. The commissions were equal to 50% of the revenue generated from the tests. The scheme allegedly ended around February 2017 as MHSA physicians continued to complain that the tests were not medically necessary.
Additionally, on October 21, 2021, Gallups pled guilty to health care fraud in the U.S. District Court for the Northern District of Georgia.
The case was initially brought under the qui tam provisions of the False Claims Act by a former physician-employee of MHSA. For his reporting, the relator will receive roughly $614,000 from the settlement.