You must have heard that doctors sometimes prescribe certain medicines or medical devices that are not really necessary. Later, you find out that it was because of a commission they were getting. Well, this is what the Innovasis Lawsuit is about.
However, things were not simple.
For years, the medical devices from this company survived in the healthcare industry. But because of a whistleblower, the fraudulent and illegal activities of the company came to light.
And guess what? The crime was so massive that the government had to step in. Additionally, they even imposed a fine in the form of a settlement worth $12 million.
So, what was the whole thing about? If you want to know, keep reading till the end…
What is Innovasis: A Brief Overview of the Company
Before diving into the details of the Innovasis Lawsuit, let me tell you what this company is about.
Innovasis is a company that specializes in creating technologically advanced medical devices. Expert in spinal implant technology, this company is primarily based in Utah, United States.
And in case I have not made it clear yet, Innovasis designs, develops, and sells spinal implants and surgical instruments to hospitals, clinics, and even orthopedic surgeons.
Now, you might think, “when do doctors need these devices?” Doctors and surgeons use these products primarily in certain surgeries like spinal fusion.
These surgeries help patients with extreme neck and back pain that stems from an accident or a past injury. The condition can also occur because of a degenerative condition of the patient.
For years, the company has claimed that they focus on innovation and quality. Which is why their aim is to develop advanced medical solutions to improve the outcomes of a spinal surgery.
However, despite having a great reputation, Innovasis has hit a new low with the ongoing lawsuit. This case has raised massive concerns about ethical violations in the healthcare industry.
So, what is this case all about?
Innovasis Lawsuit: What Is It About?
The Innovasis Lawsuit primarily revolves around allegations that are even beyond the legal lookout. But if I have to mention the legal one, it is related to the False Claims Act.
The company has allegedly violated the clauses of this act with its fraudulent activities where they gave more priority to their profits over the patients and legal compliance.
Innovasis emphasized increasing sales of their spinal implant products through unfair means by paying kickbacks to the surgeons.
On 29th May 2024, the Department of Health and Human Services, U.S., announced officially that the company has to pay a settlement amount of $12 million.
The government has held the company as well as two executives, Brent Felix and Garth Felix, responsible for the damage and the violation of the law.
Brian M. Boynton, Principal Deputy Assistant Attorney General, mentioned that any form of payment from medical device manufacturers that aims to influence a physician’s judgment to select a medical device is illegal.
Think about it. The medical devices used in their surgery are supposed to be selected because of their quality. However, in this case, these spinal implants were selected because of their payments from the manufacturers.
According to Boynton, the recommendations of the physicians and surgeons were corrupt in nature. Therefore, irrespective of whether the products actually work or not, the implications are far-reaching!
But how did ot all come to the spotlight?
Well, it is all thanks to the whistleblower, a former employee of Innovasis who worked as the Regional Sales Director. He came forward to talk about all the improper financial practices that Innovasis indulged in from 1st January 2014 to 31st December 2022.
It was from his claims that we got to know about the company incentivizing several physicians to use their devices.
Major Allegations Against Innovasis
Some of the major allegations that formed the basis of the Innovasis lawsuit include the violation of the False Claims Act as well as of the Anti-kickback policies.
According to the whistleblower, the company financially incentivized surgeons and hospitals illegally. This also included the practice of inflated consulting fee to those healthcare professionals who agreed to use their products.
Basically, these doctors were money by promoting the products fo Innovasis, just like an affiliate marketer would do!
Apart from that, the lawsuit also mentions that these payments bypassed the legal regulations and aimed to increase the sales of the company.
This means that even in cases where there was no medical need to use this product, the company would urge healthcare providers to use it.
In this way, Innovasis was misusing taxpayer money. How? Well, that’s because most of these medical procedures were actually under the government’s healthcare programs.
Here are some of the allegations that you need to know about in detail:
1. Inflated Consulting Fees
First and foremost, one of the key allegations of the Innovasis lawsuit was the fact that they paid excessive consulting fees to the doctors for using these products. In this way, they were trying to encourage the practitioners to use them.
Now, we all know that there are several companies in this field where that hire doctors for product development and medical research.
However, Innovasis used this method to push their spinal products into the hospitals through these doctors.
2. Violation of the False Claims Act
The next major allegation, and I repeat— a really major legal allegation— was that Innovasis violated the False Claims Act. So what is it?
Well, the FCA is a federal law according to which it is illegal for companies of all kinds to submit fraudulent claims to the healthcare programs under the government (like Medicare and Medicaid).
However, Innovasis violated this law by making the surgeons use their devices even when they were not necessary.
In other words, the company tricked the government and misused the taxpayer money with wrong and fraudulent treatments or medical processes.
Additionally, this practice automatically increased the financial burden on the healthcare system of the government. As Innovasis intentionally carried out this act, it was a violation of the FCA, which led to millions of unnecessary and improper payments.
3. Anti-Kickback Statute Violations
Finally, another allegation, according to the Innovasis lawsuit, was the violation of the AKS or Anti-Kickback Statute. And what’s that?
Well, the AKS is a law in the healthcare industry that stops or prohibits healthcare companies from giving money or incentives to doctors in return of a promotion of their products or services.
Considering the fact that the medical device company offered financial benefits and rewards to the surgeons, hospitals, and doctors for using their products, it was a direct violation of the anti-kickback statute.
Additionally, by the violation of this law, the company also failed to comply with its regulatory laws, which damaged the reputation of the overall medical industry.
Settlement: How Innovasis Paid for Its Violations
Now that you are aware of what the Innovasis Lawsuit is about let me tell you more about the settlement of the same.
In order to resolve the lawsuit, the U.S. Department of Justice asked Innovasis to pay a settlement amount of $12 million. Yes, that was quite a hefty blow to the company, right?
Now, I want to highlight something really important here.
You see, while it is true that Innovasis did not officially admit to any wrongdoing, this settlement allowed them to escape a time-consuming and lengthy legal battle in court in the form of a class action!
Therefore, even though you may have noticed that these doctors used devices on multiple people and the number of plaintiffs could have increased significantly, that was no longer a requirement.
Apart from the twelve million dollar settlement amount, there was a $2 million reward for the whistleblower for bringing the case to light!
Does that actually happen? Yes. According to the whistleblower provision under the False Claims Act, people who expose the fraud are bund to legally receive a massive portion of the finds.
This is a great way to ensure that no one keeps shut when they witness any form of wrongdoing.
Your Legal Guide: What Can We Learn From This Case?
There are several things that you can learn from the Innovasis lawsuit. But probably the two most important lessons that I personally learned are:
- Healthcare fraud has serious consequences.
- Whistleblowers play a huge role in bringing justice.
You see, Innovasis had to pay a hefty amount as a penalty for violating certain laws in the healthcare industry. This violation not only impacted them financially. Rather, it was also a huge blow to their reputation.
We should always keep in mind that there are laws like the False Claims Act and the AKS that are in place to protect the consumers as well as the industries as a whole.
Therefore, if you have a business that caters to the healthcare industry, it is best that you stick to the policies and regulations.
Additionally, you must ensure that you are following the right path to avoid any form of legal lawsuits later on!
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