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Spinal Device Distributor, Owners and PODs Settle Kickback Claims for $1 Million


The U.S. Department of Justice (DOJ) recently announced that Reliance Medical Systems LLC, a Utah-based distributor of spinal implant devices, two of its individual owners, and two of its physician-owned distributorships (PODs) agreed to pay $1 million to resolve a lawsuit brought under the False Claims Act. Reliance allegedly operated the PODs as a vehicle to pay kickbacks to physicians for using Reliance’s medical devices in their surgeries. The federal Anti-Kickback Statute prohibits offering or paying anything of value to encourage the referral of items or services reimbursable by federal healthcare programs.

The FCA lawsuit, originally filed in 2014, alleged that the PODs paid physicians based on their referrals, made false statements to healthcare providers, and terminated physicians who did not refer enough patients. DOJ previously recovered more than $9.25 million from the owners of the PODs. The $1 million settlement was reached after the first day of trial and there has been no determination of liability.

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