Chuck Bates and Craig Patrick together filed a qui tam lawsuit alleging that their former employer, Kyphon Inc. – now Medtronic Spine LLC – had defrauded Medicare through a sales and pricing strategy to sell equipment and medical devices for a minimally invasive spinal procedure known as “kyphoplasty.”

Kyphon persuaded doctors and hospitals to keep patients overnight following the procedure and charge Medicare for inpatient treatment, even though it can be performed on an outpatient basis as patients typically recover within a few hours. Because hospitals billed Medicare up to $10,000 per patient for inpatient treatment, Kyphon was able to price the products it sold for the procedure at a profit margin that exceeded 80 percent and fueled phenomenal sales growth.

Medtronic Spine LLC paid $75 million to settle the whistleblower lawsuit. The whistleblower lawsuit spurred an extensive government investigation into kyphoplasty billing by hospitals nationwide. More than 130 hospitals paid the federal government $105 million to settle related charges.

The Kyphon (Medtronic Spine) whistleblowers’ story was featured on CBS Evening News.  Here is a transcript of the introduction to the story, “Medicare Fraud Whistleblowers.”

For people with osteoporosis, a painful bone disease, this simple medical device can help. Doctors use it to bone filler and repair tiny bone fractures. The procedure, called kyphoplasty, could be done in about an hour without putting the patient to sleep. But Kyphon, the company that made the device, stood to make a lot more money if patients were admitted to the hospital for expensive overnight stays.

Watch the entire story, “Medicare Fraud Whistleblowers,” that ran on the “CBS Evening News.”  

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