Last month, the Central District of California granted the government’s affirmative motion for partial summary judgment in U.S. v. Reliance Medical Sys., 2022 WL 524062 (C.D. Cal. Feb. 2, 2022). The Reliance Medical case involved an FCA action based on a theory that certain physician-owned distributorships (PODs) violated the Anti-Kickback Statute (AKS). As detailed below, the Central District found – in accordance with the substantial majority of other courts – that violations of the AKS are material under the FCA.
The DOJ contended that several physician-investors in various spinal implant distribution companies (collectively, Reliance Medical Systems) recommended spinal fusion surgeries – even when not medically necessary – which compelled the need for Reliance Medical Systems’ spinal implant devices. Specifically, the government avers that between 2007 and 2013, four physician-investors in Reliance Medical Systems performed 268 surgeries resulting in 838 claims for payment to the United States, of which Medicare paid $9,250,611. The government sought partial summary judgment on the grounds that, as a matter of law, the physician-investors’ alleged AKS violations were material for purposes of the FCA.
It is well-established that compliance with the AKS is a precondition of Medicare payment, and the Affordable Care Act (ACA) explicitly provides that “a claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim...
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