Spinal device manufacturer Innovasis Inc. and senior executives Brent Felix and Garth Felix agreed to pay a total of $12 million to resolve allegations that they violated the False Claims Act by paying kickbacks to spine surgeons to induce their use of Innovasis’s spinal devices. The settlement announced today resolves allegations that from Jan. 1, 2014, through Dec. 31, 2022, Innovasis provided improper remuneration to seventeen orthopedic surgeons and neurosurgeons to induce them to use Innovasis spinal implants, devices, and other equipment in medical procedures the physicians performed on Medicare beneficiaries, in violation of the Anti-Kickback Statute. The improper remuneration was allegedly provided in the form of consulting fees, intellectual property acquisition and licensing fees, registry payments and performance shares in Innovasis, as well as travel to a luxury ski resort, lavish dinners and holiday parties for surgeons, their office staff and family members. For example, Innovasis allegedly paid physicians for consulting services at rates far in excess of fair market value or, in some cases, for work that was never actually performed.
Similarly, the company allegedly paid physicians far in excess of fair market value to acquire or license purported intellectual property for which Innovasis never obtained any valuation prior to purchase and thereafter never used for meaningful product development. Innovasis also paid physicians to attend a company-sponsored conference held at a luxury resort in Deer Valley, Utah, which included the cost of travel, lodging and high-end meals, among other things. During the relevant period, Brent Felix, along with his brother Garth Felix, allegedly controlled or otherwise directed Innovasis’s operations, strategic decisions, and the agreements with surgeons who allegedly received improper remuneration from Innovasis.
