Spinal Implant Developer Innovasis Agrees to $12 Million Kickback Settlement

Sarasota, FL (WorkersCompensation.com) –Innovation in designing medical devices requires close collaboration with physicians to gain feedback in the development of prototypes to achieve the best results in application. While feedback from physicians is critical, given federal regulations, the relationship between developers and physicians is a tricky one to navigate, and it’s not uncommon for both developers and physicians to violate the requirements. 

Innovasis is a developer and manufacturer of spinal implant devices. The company has been in business since 2004, with a home base in Salt Lake City, Utah. Every year, the company hosts the Spine Surgery Symposium, which is a conference that brings together some of the top Orthopedic and Neuro Spine Specialists in the county to discuss the latest developments and techniques in spine surgery. 

In a Department Of Justice announcement earlier this week, Innovasis senior executives Brent and Garth Felix agreed to pay out $12 million to resolve allegations of violating the False Claims Act in their payment of kickbacks to spine surgeons as an incentive to utilize Innovasis spinal implants. 

The resolved allegations are that from 2014 to 2022, Innovasis paid out improper payments to over seventeen neurosurgeons and orthopedic surgeons to use their implants and other medical devices for procedures that were then billed out to federal payers. The improper payments took the form of shares of Innovasis stocks, consulting fees, intellectual property acquisition and licensing fees, and registry fees. 

Additionally, alleged kickbacks occurred when the company paid for the surgeons, as well as their family and staff, to attend the annual Spine Surgery Symposium, which was held at Deer Valley luxury resort. In addition to covering first class airfare, Innovasis paid for high end meals and gift baskets, as well as Innovasis branded ski jackets, all of which were seen as a reward for their use of the implants.

According to the settlement, the consulting fees that were paid out were far above market value and in some cases was paid out for work that never actually occurred. Additionally, monies paid out to acquire or license intellectual property was in some cases paid when there was insufficient supporting details such as patent applications or drawings. The allegations contend that the company never appraised the information prior to purchase, and then never attempted to use it for meaningful product development. 

Former Regional Sales Director for Innovasis, Robert Richardson, is the whistleblower that initiated the civil settlement. Under the qui tam case, Richardson will receive $2.2 million as his share of the recovery of the case. 

“The integrity of our healthcare system is dependent upon physicians’ recommendations being motivated by patient health,” U.S. Attorney Leigha Simonton of the Northern District of Texas stated. “Any time we learn that physician recommendations are being corrupted by improper financial inducements, we will seek to hold those involved accountable.”

The settlement is a result of a coordinated effort between the HHS-OIG, and the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Northern District of Texas.

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