March 13, 2014
For apparently the first time, federal enforcement officials are investigating a medical device firm known as a physician-owned distributorship (POD), according to Modern Healthcare magazine.
The investigation stems from a False Claims Act case against Dr. Aria Sabit, a neurosurgeon who has practiced in California and Michigan. The civil lawsuit alleges Sabit concealed profits he made as an investor of a POD for a spinal implant device and performed unnecessary spinal surgeries to increase sales.
PODs are medical device firms where physicians are the owners or investors.
“The hospital where those doctors have staff privileges buys equipment from the POD and provides it to the doctors to perform procedures,” Modern Healthcare said in the article. “The government’s concern is that this creates a financial incentive for physician owners of PODs to perform more procedures.”
Last year, the Office of the Inspector General for the Department of Health and Human Services issued a “national alert” warning doctors and hospitals about the potential dangers to patient safety and the fraud risks of buying surgical products from PODs.”
PODs accounted for 15 percent of the U.S. spinal device market in 2012. The spinal devices provided by these distributorships are supposed to lower the cost to Medicare. However, the OIG alert said hospitals that bought devices from PODs had increased rates of spinal surgeries compared to hospitals that did not buy from PODs, increasing the cost to Medicare over time.