United States v. Reliance Medical Systems, LLC

I. Background

22 The United States’ First Amended Complaint alleges that 23 Defendants used Physician-Owned Distributorships (“PODs”)to present 24 false or fraudulent claims to Medicare. (First Amended Complaint 25 (“FAC”) ¶¶ 76, 310, 315.) As alleged in the FAC, Defendants 26 operated a scheme through which physician-investors in, or 27 28 employees of, spinal implant distribution companies were paid a portion of the distribution companies’ profits from spinal implant device sales. (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 to false or fraudulent claims to Medicare. The FAC also includes allegations regarding the Department of Health and Human Services’ (“HHS”) Office of Inspector General (“OIG”) regulatory authority…