Whistleblowing to the Tune of $6 Million


In early July 2013, Baxano Surgical Inc., formerly known as TranS1 Inc., agreed to pay $6 million to settle charges that it encouraged doctors to overcharge Medicare and other federal health programs and paid kickbacks to doctors. Baxano did not admit to wrongdoing as part of the settlement.

The charges

Facing three charges, Baxano agreed to pay the large fine to settle before trial. The U.S. Department of Justice (DOJ) claimed that Baxano coaxed healthcare providers to submit false claims with incorrect diagnosis or procedure codes for minimally invasive spine fusion surgeries using Baxano's AxiaLIF System. From the false claims, the healthcare providers received greater reimbursement than they were rightfully due for performing the AxiaLIF procedures. The DOJ also alleged that Baxano gave kickbacks to doctors for participating in consultant meetings and speaking programs to induce them to use Baxano's products. This violated the Federal Anti-Kickback Statute, which makes it illegal to offer or give money to induce referrals for items or services. Lastly, the DOJ argued that Baxano promoted AxiaLIF for uses outside the U.S. Food and Drug Administration’s approval.

The settlement

To avoid trial, Baxano agreed to pay $6 million to the United States. In addition, Baxano agreed to participate in a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. Baxano plans to implement procedures and reviews to avoid and quickly detect illegal conduct similar to what was charged by the DOJ.

One million reasons to blow the whistle

The $6 million civil settlement resolved a lawsuit filed under the False Claims Act's whistleblower provision. Kevin Ryan filed a qui tam claim under the False Claims Act, which authorizes individuals to initiate a legal action on behalf of the United States for false claims. As part of the settlement, Ryan received $1,020,000.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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