The United States has filed a civil healthcare fraud lawsuit against Life Spine Inc., Michael Butler, the founder, president, and chief executive officer of Life Spine, and Richard Greiber, the vice president of business development of Life Spine. The Government’s complaint seeks damages and civil penalties for paying kickbacks in the form of millions of dollars of consulting fees, royalties, and intellectual property acquisition fees to surgeons to induce them to use Life Spine’s spinal implants, devices, and equipment.
The lawsuit alleges that the surgeons who received these payments accounted for approximately half of Life Spine’s total domestic sales of spinal products from 2012 through 2018. As set forth in the complaint, these payments violated the Anti-Kickback Statute and, as a result of this unlawful conduct, Life Spine, Butler, and Greiber caused hospitals and surgeons to submit false claims for payment to Medicare and Medicaid.
Life Spine is a Delaware corporation with its principal place of business in Huntley, Illinois. Life Spine designs, develops, manufactures, and markets medical devices and equipment primarily used in spinal surgeries performed by orthopedic surgeons and neurosurgeons, including implants and instruments. Butler is the founder, president, and chief executive officer of Life Spine and is its majority shareholder. Butler was closely involved in overseeing the operations of Life Spine. From 2012 to 2015, Greiber was involved in selecting and approving surgeons who served as paid “consultants” for Life Spine.
Life Spine paid surgeons to induce them to use Life Spine Products during their surgeries. Life Spine aggressively recruited surgeons who had the potential to use a high volume of Life Spine Products to enter into agreements to serve as paid consultants and/or to transfer their patents/patent applications to Life Spine in exchange for payments and promised support to bring the surgeons’ new products to market.
Life Spine tied these agreements and the associated payments – as well as the company’s continued commitment to devote resources to the surgeons’ product development projects – to the surgeons’ usage of Life Spine Products. Life Spine and Butler expected surgeons to commit to using Life Spine Products at a certain level in exchange for the consulting fees, royalties, and intellectual property acquisition fees paid to them.
Life Spine, with the knowledge, involvement, and participation of Butler and Greiber, entered into agreements with dozens of surgeons. These agreements included medical education agreements under which the surgeons were paid to provide training and/or educational services; product development agreements under which the surgeons were paid to purportedly provide input on new products and then would receive royalties on future sales of the product; and intellectual property agreements under which the surgeons were paid large up-front acquisition fees for their patents/patent applications and then would receive royalties on sales of any products developed based on the patents. Life Spine paid surgeons millions of dollars in consulting fees, royalties, and intellectual property acquisitions pursuant to these agreements.
The Government intervened in a private whistleblower lawsuit before Judge Jed S. Rakoff that had previously been filed under seal pursuant to the False Claims Act.
The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorneys Jennifer Jude, Jeffrey K. Powell, and Lara K. Eshkenazi are in charge of the case.