As an ethics keynote speaker with a particular interest in medical device sales and healthcare in general, I have been a witness to the consequences of the old “wine and dine” culture. Unfortunately, some sales representatives have not gotten the message about the consequences of making bad choices.
When was the last time?
If I were to ask “When was the last time an unethical device manufacturer was caught by the government for bribery?” many of you might answer that it was years ago.
Unfortunately, you would be wrong. Among many recent cases of illegal kickbacks, I can point out a spinal device manufacturer that was charged in September 2021. Both the CEO and the CFO were caught – and arrested in violation of the “Anti-Kickback Statute.”
The company, Spine Frontier, Inc., was hit with six counts including money laundering.
The company bribed surgeons anywhere from a low of $32,000 to almost $1 million. They used one of the oldest scams in the books: sham consulting fees. The so-called consulting fees were arranged to be anywhere between $250 and $1,000 per hour.
It was a set-up
The consulting fees were ostensibly for the detailed collection of medical feedback. There was no expectation of consulting, and no expectation of reports or formalized feedback. The company did use a feedback program for “cosmetic purposes,” but it was faked. The bribes that were paid, were paid out through Medicare, Medicaid, TRICARE and VHA.
If there was any actual consulting of any kind, the surgeons admitted it was but a fraction of what was billed. How did they determine the size of the bribes? They were based on the number of procedures and obviously, the amount of money it generated for the company.
According to Acting United States Attorney Nathaniel R. Mendell who prosecuted the case:
“Kickback arrangements pollute federal health care programs and take advantage of patient needs for financial gains…Medical device manufacturers must play by the rules and we will keep pursuing those who fail to do so, regardless of how their corruption is disguised.”
As part of this setup, I am well aware that it could not have existed without the consent of the surgeons who were also unethical and greedy. Despite the exposure to medical ethics throughout their training and beyond, to assume that some surgeons cannot be corrupted is myth. As an ethics speaker and ethics consultant, it deeply troubles me. The outcome of this case could result in as much five-year’s imprisonment and huge fines, upwards of $250,000 per charge.
However, the greatest act of unethical behavior was that both the medical device company and the surgeons placed personal gain above patient care.
Because they could
The elements of fraud, whether we review medical device sales, complex financial transactions or an aluminum siding scam, start with a lack of oversite. In this case, the medical device manufacturer, their sales reps and the surgeons assumed that “no one was watching” and worse, that no one cared. Obviously, the government cared, the patients cared and the medical device organization should have cared. As I previously stated, the fact that the surgical practices didn’t care is more than worrisome.
Why did they devise this scheme? As incomprehensible as it may sound, they had a need for more money. They took whatever they could get – and the healthcare system be damned. They might have momentarily “won,” but the patients and the insurers lost.
Finally, there is the element of rationalization. Somewhere along the line, someone told the surgeons, “Well, everyone does this.” Wrong. Everyone doesn’t do this. Unethical organizations and unethical providers do this and it gives the entire industry a bad reputation. The more this occurs, the more we can expect more stringent regulations.
When the management of the device company face federal prison sentences for this fraud, I guarantee they will not be smug. I know from personal experience. I can only hope that no patient suffers due to their greed and poor ethics.
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