Innovasis lawsuit involves Innovasis Inc., a company engaged in the research, development, manufacturing and selling of spinal implants and related products. The lawsuit against Innovasis alleged that the company paid kickbacks in various forms to multiple doctors in lieu of using its spinal implants and other devices in surgeries performed under the Medicare program of the Federal Government.
The lawsuit was filed by a whistleblower in a federal court. In the whistleblower lawsuit, Innovasis was accused of violating the Federal Anti-Kickback Statute by paying kickbacks to the doctors. Following a five years investigation by the Department of Justice, the lawsuit has been disposed off with Innovasis paying a settlement amount of $12 million.
Allegations against Innovasis Inc.
Allegations leveled against Innovasis Inc. in the whistleblower lawsuit concerns kickbacks and incentives made to seventeen orthopedic surgeons and neurosurgeons by the company in return for using its spinal implants and related devices in surgeries covered under the Medicare program. It was alleged that the kickbacks were in the form of inflated consulting fees, registry payments, performance shares and payments for intellectual property that were not utilized or lacked proper valuation. Furthermore, Innovasis was also accused of sponsoring lavish meals, ski resort trips, holiday events and other such luxury perks for the surgeons, their family members and office staff. The allegations centred on the period between January 1, 2014 and December 31, 2022.
Innovasis Inc. was essentially accused of violating the Federal Anti-Kickback Statute. Federal Anti-Kickback Statute prohibits the offering or paying of anything of value in order to induce referrals of items and services covered under federally-funded health programs like Medicare.
Timeline of events leading to the lawsuit
In April 2019, Innovasis Inc. conducted an internal compliance audit which revealed certain compliance issues, including the independent discretion of a high level employee in negotiating and executing physician agreements without consulting other members of the compliance committee. The compliance audit was carried out by a healthcare law firm, Hooper Lundy & Bookman.
In May 2019, Innovasis makes a voluntary self-disclosure of the noncompliance, revealed by the internal audit, to the Federal Government of USA. The company was accepted into the self-reporting program.
In October 2019, a former employee of Innovasis, Richard Richardson, filed a lawsuit against the company under the whistleblower provisions of the False Claims Act. Whistleblower provisions of the FCA allow private citizens to file lawsuits on behalf of the government against those who defraud the government. Such private citizens are eligible to receive a part of the government’s recovery, in the event of a successful lawsuit. Innovasis was in the process of revamping its compliance programs and procedures when the lawsuit was filed. The high level employee who had executed most of the agreements with compliance issues was not named as a defendant in the lawsuit. However, this high level employee had resigned from the company by the time of filing of the lawsuit.
From October 2019 to May 2024, the allegations against Innovasis were investigated by the Department of Justice in collaboration with Commercial Litigation Branch, US Attorney’s Office for the Northern District of Texas and Fraud Section.
Resolution of the Lawsuit
On May 29, 2024, the US Department of Health and Human Services-Office of Inspector General announced a settlement of $12 million with Innovasis Inc. Brent Felix and Garth Felix agreed to pay a compensation of $12 million to resolve the allegations and dispose off the lawsuit. While Brent Felix is the founder, president and chairman and of the board of Innovasis, Grant Felix holds the position of chief financial officer in the company.
The plaintiff/whistleblower, Richard Richardson, received about $2.2 million from the settlement amount.