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POD’s Fight Back: Spinal Device Manufacturer Challenges OIG

Hat tip to attorney author Elizabeth Carder-Thompson, Esq., Life Sciences Legal Update Blog of Reed Smith law firm:

On October 8, 2013, Reliance Medical Systems, LLC, filed a complaint in the U.S. District Court for the Central District of California, seeking a declaration that an Office of Inspector General (OIG) Special Fraud Alert on physician-owned distributors (PODs) unfairly and unconstitutionally burdens First Amendment rights of free speech and due process.

Reliance describes itself as “a design company that collaborates with spine surgeons to design highly customized spinal implant devices and surgical tools.”  It states it had physician owners from its beginning in 2006, characterizing this as a business model that “maximizes and optimizes physician design input.”

However, in 2012, before issuance of the Fraud Alert, it “moved away from the physician-owned entity business model, after careful consideration and out of an abundance of caution.”  Interestingly, in a separate part of the complaint, Reliance allows that “the OIG is currently investigating Reliance, and its physicians with whom Reliance previously communicated.”

The Complaint goes on to explain that it now wishes to return to a physician-owned business model, but that the Fraud Alert’s characterization of PODs as “inherently suspect” under the federal anti-kickback statute is chilling its ability to speak with prospective physician owners.  It also expresses concern about future OIG investigations, and about reluctance by hospitals and ambulatory surgical centers to enter contracts with it, for fear that they themselves may be “at risk” under the Fraud Alert for doing business with physician-owned entities.

The complaint provides a colorful chronology of events leading up to the OIG’s issuance of the POD Fraud Alert.

For the rest of the article, visit the link below.

Link

Device Manufacturer Files Federal Challenge to OIG Special Fraud Alert on Physician-Owned Distributors, Reed Smith Life Sciences Legal Update, October 10, 2013

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