The United States Department of Justice (DOJ) recently announced an $825,000 settlement with a neurosurgeon and his fiancée over their alleged receipt of illegal kickbacks. Dr. Sonjay Fonn and Deborah Seeger – along with their companies Midwest Surgeons, LLC and DS Medical, LLC – were alleged to have solicited and received kickbacks from spinal implant companies in exchange for arranging for the use of the companies’ products in Dr. Fonn’s surgeries.
Midwest Surgeons, LLC was a single-member LLC owned and controlled by Dr. Fonn and has submitted claims to Medicare and Medicaid for professional services. DS Medical, LLC was a medical device distributorship owned and controlled by Ms. Seeger. DS Medical distributed spinal implant devices for Dr. Fonn’s surgeries.
The allegations in this case were brought under the qui tam provisions of the False Claims Act by seven individuals, including five doctors.
Additionally, Dr. Fonn and Midwest Surgeons, LLC were suspended from receiving Medicare payments from the Centers for Medicare and Medicaid Services (CMS) based on a determination by the United States that credible allegations of fraud existed. Dr. Fonn and Midwest Surgeons deny the claims.
However, the United States holds $410,987.78 as a result of the payment suspension as of March 7, 2023, and that amount will be subtracted from the $825,000 settlement and counted as payment toward the amount. The defendants shall pay $39,012.22 to the United States and then the balance of the settlement is spread over the course of three years, broken down into three payments of $125,000 plus interest paid, with interest accruing on the outstanding balance at a rate of 3.625% per year.
Defendants are also required to collateralize the payments by allowing the United States to record a security interest on the parcel of land identified as “36 Doctor’s Park.” Substitute or additional property may serve as Collateral, should the parties agree.
Prior Trial
Dr. Fonn and Ms. Seeger were previously hit with a $5,495,931 judgment in the Eastern District of Missouri. However, they appealed that ruling and the Eighth Circuit Court of Appeals remanded for a new trial, finding that the District Court did not properly instruct the jury on but-for causation, which was a linchpin in the case as the government was seeking to establish falsity or fraud through the 2010 amendment of the False Claims Act and it needed to be proven that the defendants would not have “included particular ‘items or services’ but for illegal kickbacks.”
Fonn and Seeger opted to settle, rather than go through a second trial.
Comments
“The Anti-Kickback Statute plays a critical role in ensuring the integrity of medical care provided to federal health care program beneficiaries,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Treatment decisions should be determined by beneficiaries’ medical needs, not by kickbacks provided to their surgeon.”
Dr. Fonn’s attorney believes that the lawsuit was brought by competitors of Dr. Fonn and that the settlement was agreed to not because Dr. Fonn admits any liability, but to avoid the expense and emotional toll of another trial. “We are very grateful to my many patients and my employees who stood by us through these challenging times,” said Dr. Fonn.
As is often the case, the settlement did not result in any determination of liability.