Special Fraud Alert" Issued for Doctor Owned Device Suppliers

Online, May 6, 2013 (Newswire.com) - The inspector general for the Health and Human Services Department has issued a "special fraud alert" notice regarding physician-owned distributorships of medical devices that profit from selling their implantable medical devices for use in procedures performed by their physician-owners on their own patients.

These physician-owned distributorships are commonly referred to as "PODs," and specialize in medical devices such as spine, knee, and hip implants. A report issued by the staff of Senator Orrin Hatch of Utah claims that there has been a "rapid proliferation" of PODs since 2009, with PODs appearing in at least 20 states.

Daniel Levinson, the inspector general issuing the notice, expressed concerns that PODs may violate certain U.S. anti-kickback laws. Although PODs are not illegal per se, the notice highlights several characteristics of PODs that are "inherently suspect," which may be signs of fraud and abuse by the PODs and their physician-owners. A copy of the "Special Fraud Alert: Physician-Owned Entities" notice, issued by the Department of Health and Human Services on March 26, 2013, may be found here: https://oig.hhs.gov/fraud/docs/alertsandbulletins/2013/POD_Special_Fraud_Alert.pdf

The major concern over fraud and abuse arises from the financial incentives available to physician-owners of PODs that may cause them to alter their practices in order to increase profits. Unfortunately, these financial incentives may cause a physician to make choices about device implant surgery that are not in a patient's best interest.

Examples of these choices may include:

1) A physician performing surgeries, using certain medical implants from his or her POD, when less invasive options were available,

2) A physician performing more extensive surgeries than otherwise may be necessary in order to use certain medical implants from his or her POD, or

3) A physician selecting his or her POD's devices in situations where better or more appropriate medical devices may be available from another medical device supplier.

Since the anti-kickback statutes ascribe criminal liability to parties on both sides of an illegal transaction, hospitals that enter into arrangements with PODs also may be liable for fraudulent and abusive practices.

Keefe Bartels, LLC, handles complex medical device implant litigation throughout the nation. The firm's offices are headquartered in New Jersey. For more information, please visit the firm's website at www.defectivejoints.com