Justice Department Sues Surgeon Over Spinal Operations

The U.S. Justice Department is suing a neurosurgeon and the operators of a network of doctor-owned implant distributorships, claiming they defrauded Medicare of millions of dollars with unnecessary spinal surgeries.

The neurosurgeon, Aria Sabit, M.D., and the distributorship network, Reliance Medical Systems LLC, allegedly profited from implants used in dozens of surgeries at a California hospital, some with tragic outcomes. Sabit’s attorney did not respond to inquiries from The Wall Street Journal but Patric Hooper, an attorney representing Reliance and its founders, said his clients “did absolutely nothing wrong” and promised “to defend this thing aggressively.”

The government built the civil case using cooperating witnesses wearing wires. In one of two complaints filed in a Los Angeles, Calif., federal court, the Justice Department alleged that the Reliance network’s two founders, Adam Pike and Bret Berry, operated 14 spinal-implant distributorships and parceled out ownership stakes in them to 35 surgeons who agreed to use Reliance implants.

Those ownership interests—and the monthly profit distributions that came with them—created incentives for the surgeons to perform “surgeries using Reliance implants that were not medically necessary, or that were more extensive than what was necessary,” the government said in one of the complaints.

Pike, Berry and a third non-surgeon associate together earned about $43 million from the arrangement between June 2007 and December 2012, the government alleged. Hooper disputed that figure, contending the pair earned “much less.”

Pike and Berry paid a group of four surgeons with ownership interests in two of the implant distributorships a total of $5.9 million, according to the government. Sabit, one of those four surgeons, had a 20 percent interest in a distributorship called Apex Medical Technologies and earned $438,570 from it between May 2010 and June 2012, the government alleged.

During the first eight months of that period, Sabit worked at Community Memorial Hospital in Ventura, Calif., and performed 130 spinal-fusion surgeries. The hospital paid Apex $1.4 million for the implants Dr. Sabit used in those surgeries, the government said; Apex, in turn, paid Sabit $264,957.

Community Memorial Hospital received at least $8.4 million from Medicare for the fusion surgeries Sabit performed on Medicare patients there while he was an Apex co-owner, the suit alleged. Sabit himself received $808,876 from Medicare for those surgeries.

Community Memorial Hospital did not respond to inquiries.

One Medicare patient Sabit operated on died from postoperative complications, according to the government complaint. Sabit performed a surgery to fuse a number of the patient’s vertebrae, “even though the indications for fusion were completely absent,” the suit alleged.

Hooper, the Reliance attorney, said the alleged malpractice acts committed by Sabit were separate and had nothing to do with Reliance. “Medical malpractice should not be the subject of an action under the False Claims Act,” he said.

Sabit surrendered his California medical license last month under a settlement with the state’s medical board, after the board alleged he committed gross acts of negligence while treating five patients in Ventura and made false representations in their medical charts. As part of the settlement, Sabit agreed to give up his right to contest those charges.

Sabit retains a medical license in Michigan, where he relocated after California, and still can treat Medicare patients there because the Centers for Medicare and Medicaid Services has not excluded him from the program.

The Justice Department’s complaints against Reliance and Sabit quote from government recordings of conversations involving Pike and Berry. In one of those conversations in July 2011, the government claimed, Pike said he was interested in recruiting surgeons who would appreciate “this nice income” that in “the first month or two” could “buy their [kids’] college education.”

Hooper said Pike and Berry “do not recall” the conversations, adding, “I’m sure [their] words were taken out of context.”