Warsaw-based Biomet Inc. and several other orthopedic companies are accused of bilking the government of millions of dollars by making false and fraudulent payment claims, according to a recently unsealed whistleblower lawsuit.
Biomet said in a governmental filing this week it received a subpoena from the U.S. Department of Justice through the U.S. Attorney for the District of Massachusetts. The subpoena requests documents "purportedly relating to the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and (Biomet subsidiary) EBI’s osteogenesis and bone growth stimulation devices," the company said.
Biomet said it intends to cooperate with authorities. A company official declined further comment on the lawsuit filed by Jeffrey J. Bierman on behalf of the U.S.; numerous states, including Indiana; the District of Columbia; and Chicago.
Other companies named in the suit, including Orthofix in McKinney, Texas, and Smith & Nephew in Memphis, Tenn., also acknowledged this week receiving subpoenas.
The suit was filed in March 2005 in U.S. District Court in Massachusetts, amended in December 2007 and unsealed last month. It alleges companies that made osteogenesis stimulators – starting in 1993 or earlier – made false and fraudulent claims for payment. The companies billed the devices as purchase items even though, the suit contends, they knew the devices should be billed as rental items.
According to the 2007 amended suit, the claims generated at least $300 million in Medicare payments alone from 1998 on; claims for the devices have increased by up to 537 percent, the suit alleged. The suit, filed by Bierman, a Missouri-based medical billing company owner, said the fraud is ongoing.
Osteogenesis stimulators, which use pulsed electromagnetic fields or ultrasound waves to promote bone growth in non-healing fractures, are usually used for three to six months, according to the suit. Those made by EBI, and some other companies named in the suit, contain a computer chip automatically deactivating the device in nine months – a mechanism the suit says is profit-driven and has no clinical rationale.
The suit said the purchase price for the stimulators is about $3,000 to $3,600, depending on the device – about 10 times more than it would typically cost to rent the devices. The stimulators have been billed almost without exception as purchase items, according to the suit
The companies named in the suit are alleged to have misled physicians and their clerical staff into filing paperwork indicating the devices are medically necessary for a patient’s lifetime or for periods that exceed nine months. The suit said other evidence suggests the companies may even bypass physicians altogether, making some or all of the medical necessity certifications themselves.
At least one of the companies – and likely all – routinely waived the 20 percent coinsurance Medicare patients pay, according to the lawsuit, a violation of the federal anti-kickback statute.
This isn’t the first time Biomet and Smith & Nephew have been alleged to violate anti-kickback law.
In March, the U.S. Department of Justice dropped criminal charges against Biomet, Smith & Nephew and Warsaw-based Zimmer Holdings Inc. and DePuy Orthopaedics Inc. after the companies completed 18 months of mandated changes.
As a result, criminal conspiracy complaints that alleged violations of the federal anti-kickback statute were dismissed. The four companies and Michigan-based Stryker Corp. were accused of paying surgeons exorbitant amounts of money and lavishing them with trips and other gifts to use their products exclusively.
Zimmer, DePuy and Stryker weren’t named in the recently unsealed suit.
mschroeder@jg.net
