Physician-owned distributors of implantable medical devices - PODs - have changed the health care landscape—creating new sets of legal and ethical risks.
- But wait! DOJ and Reliance appear to have agreed to settle the False Claims Act lawsuit mid-trial. Though the agreement seems not yet entered into the court’s records, it appears that in exchange for a payment of $1m, the Reliance principals will receive a full release of liability. Looks like industry stakeholders will not get the benefit of a jury verdict or an opinion to advance the jurisprudence in this area of law. But this affirms that despite OIG’s greenlight to the physician-owned medical device innovator addressed in A0 22-07, DOJ still takes “real” PODs seriously as potential AKS violations.
(May 6, 2022)
- As if determined to show that OIG’s recent Advisory opinion 22-07, greenlighting a physician-owned manufacturer of innovative medical devices, does NOT represent a green light for the traditional physician-owned distributorship (“POD”) that was the subject of OIG’s 2013 Special Fraud Alert, trial in the case of US v. Reliance Medical Systems has begun in the Central District of California. We have previously reported on the earlier stages of this case, which was filed in 2014 and has been a long time in coming to trial. Opening arguments indicate that the government will seek to prove that Reliance and its owners offered ownership interests in their device seller to referring physicians as an inducement for them to choose those products in treatment of their patients. It appears the defense will rely on technical arguments about Medicare payment being made to the purchasing hospitals, not the physicians, and to describe the arrangement as a legitimate investment. We will continue to monitor the results.
(May 5, 2022)
Our archived analyses and other related documents trace the history of the relevant government regulations and guidance.