United States v. Reliance Medical Systems, LLC

I. Background

27 The government’s First Amended Complaint alleges that 28 beginning in 2007, Defendants used Physician-Owned Distributorships Case 2:14-cv-06979-DDP-JC Document 350 Filed 02/22/ Page 2 of Page ID #:8540

(“PODs”)to present false or fraudulent claims to Medicare. (First Amended Complaint (“FAC”) ¶¶ 76, 310, 315.) As alleged in the FAC, Defendants operated a scheme through which physician-investors in, or employees of, spinal implant distribution companies, including Defendants Apex Medical Technologies, LLC (“Apex”) and Kronos Spinal Technologies, LLC (“Kronos”), were paid a portion of the distribution companies’ profits from spinal implant device sales.1 (See, e.g., FAC ¶ 96.) In short, the government alleges that spinal fusion surgeries related to this scheme were tainted by kickbacks to the doctors choosing the spinal implant products, and were, in some cases, not medically necessary. (FAC ¶¶ 3-4.) This scheme, the government alleges, violated the Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1320a-7b(b), and, by extension, the False Claims Act, 31 U.S.C. § 3729, insofar as the tainted surgeries led…