Midwest Neurosurgeons, D.S. Medical ordered to pay more than $5 million in false claims suit

By Elizabeth Alt | Oct 10, 2018

CAPE GIRARDEAU – The U.S. District Court for the Eastern District of Missouri, Southeastern Division entered a judgment of more than $5 million against Midwest Neurosurgeons LLC and D.S. Medical LLC in a suit over allegations the companies received kickbacks resulting in more than 200 false Medicaid and Medicare claims.

Judge Audrey G. Fleissig wrote the court order on Sept. 25, adjusting the jury award and imposing civil penalties to the government for each violation of the False Claims Act (FCA), as well as trebling damages.

“...Trebling damages is appropriate in an implied-false-certification FCA case such as this, in which the lack of medical necessity was not claimed or proven,” the ruling states.

Fleissig assessed $1.2 million in civil penalties against the defendants, awarding the plaintiff $5.4 million.

The United States government filed a suit alleging violations of the FCA against Sonjay Fonn, the sole agent for Midwest Neurosurgeons LLC and Debra Seeger, sole member of D.S. Medical LLC. 

The government claimed the four defendants submitted false claims to Medicare and Medicaid for reimbursement “for Fonn’s services in performing spinal surgeries at St. Francis Medical Center (SFMC) between December 2008 and March 2012, and for the purchase of implant devices through D.S. Medical, a distributor of medical devices, used in those surgeries.”

The suit stated that the violations resulted in more than 200 false claims to Medicaid and Medicare.

The suit cited three counts of violations of the FCA, claiming that Fonn and Midwest purchased spinal implants from several manufacturers for use in surgery in exchange for kickbacks from Seeger and D.S. Medical, violating the Anti-Kickback Statute. The suit also stated that all four defendants solicited and/or received kickbacks from the spinal implant manufacturers in exchange for orchestrating the purchase of the implants for use at St. Francis.

The complaint stated that the defendants all conspired “to violate the FCA by entering into an agreement that involved defendants soliciting or receiving kickbacks from six implant manufacturers,” the ruling states.

The jury awarded damages of $1.6 million against D.S. Medical and $150,000 against Midwest. The jury found that all four defendants were guilty of conspiracy, awarding damages against the two limited liability companies only on that count, awarding damages lower than what Medicare and Medicaid paid for the false claims.

In the government’s motion to enter judgment, it requested treble damages and civil penalties against Fonn and Midwest for the false claims they allegedly were found to have submitted and argued that Fonn and Seeger should have damages entered against them as well as their limited liability companies in accordance with the FCA.

Fleissig rejected the defendant’s argument that the damages could not be trebled because the government never proved that the surgeries were not medically necessary, finding that “the trebling of damages in combination with the total penalty” did not violate the Excessive Fines Clause.

U.S. District Court for the Eastern District of Missouri, Southeastern Division case number 1:12-CV-00004-AGF

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