United States v. Reliance Medical Systems, LLC

I. Background

28 The government’s First Amended Complaint alleges that beginning in 2007, Defendants used Physician-Owned Distributorships (“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, such as 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 to false or fraudulent claims to Medicare. The FAC also alleges that…