Life Spine and its two top executives agreed to collectively pay nearly $6 million to settle charges that they ran an illegal kickbacks scheme to promote the use of its orthopedic implants.
The case dates back to February 2018, when a quartet of anonymous whistleblowers filed a False Claims Act suit alleging that the Huntley, Ill.-based company, president & CEO Michael Butler and business development VP Richard Greiber doled out more than $7 million in illicit payments to bribe doctors to use Life Spine products, was joined by federal prosecutors in April. In July federal prosecutors accused the company and the executives of funneling millions in kickbacks to surgeons — enough to account for half of the company’s total domestic sales from 2012 through 2018.
The suit, filed in the U.S. District Court for Southern New York, alleged that the company, Butler and Greiber made the payments, to surgeons and entities owned by them, in the form of consulting fees, royalties and intellectual property acquisition payments.
“Most of the surgeons who received these payments substantially increased their usage of Life Spine products after entering into agreements with Life Spine,” according to court documents. Part of the scheme also involved warrants for shares in the company, according to the filings. “Many of the surgeons who received consulting fees, royalties and intellectual property acquisition payments were high-volume users of Life Spine products. Approximately 21 of the top 30 users of Life Spine products during the covered period received consulting fees, royalties and/or intellectual property acquisition payments. In addition, approximately half of Life Spine’s domestic sales of spinal products during the covered period were attributable to surgeries performed by surgeons who received consulting fees, royalties, and intellectual property acquisition payments from Life Spine.”
Life Spine agreed to pay $5.5 million in restitution to the U.S. government, in nine installments through 2024. Butler agreed to pay $375,000 within 90 days; and Greiber agreed to pay $115,000 in six installments through 2024, according to the proposed settlement agreements, which must still be ratified by Judge Jed Rakoff. The whistleblowers, who formed a limited liability company to bring the suit, are slated to receive 20% of the settlement, according to the agreements.
The company must also forfeit any insurance payments related to the kickbacks case, which don’t count toward the settlement amount.