Aria Sabit, M.D., the Afghan-born neurosurgeon at the center of the government’s first POD (physician-owned distributor) prosecution case, has been sitting in jail since December awaiting trial. On Friday, May 22, 2015, the U.S. Department of Justice (DOJ) announced that Sabit has entered a guilty plea in a Michigan federal court for false claims.
So the DOJ has nailed its first spine surgeon involved in a POD scheme. He was not prosecuted for participating in the POD or harming patients, but for filing false claims for unnecessary and, sometimes, fake surgeries while in a POD.
The government said Sabit pled guilty to enriching himself by performing “unnecessary, invasive spinal surgeries and implanting costly and unnecessary medical devices, all the at the expense of his patients’ health and welfare.”
POD Connections
Sabit came to light in September 2014 when the DOJ sued Utah-based Reliance Medical Systems, LLC and Sabit, among others, in California federal court over an alleged kickback scheme involving PODs and physician investors. The physicians were allegedly being paid based on the number of Reliance Medical spinal implants they used. Sabit was one of the surgeons named in that complaint through a Reliance Medical POD named Apex Medical Technologies, Inc. (Apex).
Reliance Medical Systems, founded by Adam Pike and Bret Barry established a number of PODs to help sell their products. Apex was incorporated in Florida in 2008. Adam Pike is the registered agent for the limited liability company.
The California case against Sabit was subsequently moved to Michigan.
In his guilty plea, Sabit admitted becoming involved with Apex in February 2010 while serving on the staff of a California hospital. The government says Apex was owned by another neurosurgeon and three non-physicians who operated Apex as a POD and allegedly paid neurosurgeons “lucrative illegal kickbacks tied directly to the volume and complexity of the surgeries that the surgeons performed, and the number of Apex spinal implant devices the surgeons used in their spine surgeries.”
In return for the chance to invest in Apex and share in its profits, Sabit admitted that he agreed to convince his hospital to buy spinal implant devices from Apex and use a “sufficient” number of Apex spinal implant devices in his spine surgeries. He further admitted that he and Apex’s co-owners used Apex to operate an illegal kickback scheme. The group concealed Sabit’s involvement in Apex from outsiders. Sabit required the hospitals and surgical centers where he and his fellow neurosurgeon performed surgeries to purchase spinal implant devices from Apex.
Compromised Medical Judgment
Sabit admitted that his involvement in Apex, and the financial incentives provided to him by Apex and his co-conspirators, “caused him to compromise his medical judgment.” He also admitted that on a few occasions, the money he made from using Apex spinal implant devices “motivated him either to refer patients in for spine surgery who did not medically need surgery or refer his patients for more complex surgeries, such as multi-level spine fusions, that they did not need.”
Finally, Sabit admitted that the financial incentives provided to him by Apex and his co-conspirators caused him to “over instrument” his patients in order to generate more sales revenue for Apex.
California Whistleblowers, FBI Spying
Two physicians, Cary Savitch, M.D. and Gary Proffett, M.D. had filed a False Claims whistleblower suit alleging medically unnecessary or excessive surgeries against Sabit, Moustapha Abou-Samra, M.D., and Community Memorial Health System in Ventura, California, where Sabit’s surgeries took place.
In the summer of 2011, the FBI secretly recorded the principals of Reliance Medical allegedly making a pitch to potential surgeon-investors for one of 14 physician-owned distributors (PODs) they set up to sell their spinal implants.
The government claims that Reliance Medical’s owners, Adam Pike, Bret Barry and John Hoffman, their subsidiary PODs, Apex and Kronos Spinal Technologies, LLC, as well as Sabit, made false claims for Medicare reimbursements because those claims were tainted by illegal kick-backs and some of the surgeries were either excessive or unnecessary.
Before that case went to trial, Sabit high-tailed it to Michigan. Reliance Medical moved to have their case dismissed. Their request was recently denied.
Sabit reportedly surrendered his California medical license in the summer of 2014 under a settlement with the state’s medical board, after the board alleged that he committed gross acts of negligence while treating five patients. But he still continued practicing in Michigan where he went to work for the Detroit Medical Center, before opening the Michigan Brain and Spine Physicians Group in April 2011.
Hidden Financial Interest
Reliance Medical allegedly made a series of false statements to hospitals that inquired about Reliance’s financial relationships with its particular physicians. In November 2011 and May 2012 Reliance allegedly certified to Detroit Medical Center that no “physicians licensed to practice medicine…own all or part of [Apex].” At the time of certification, Sabit, who was then on the hospital’s surgical staff, owned 20% of Apex.
When asked about his ties to Apex by the hospital, Sabit denied any financial interest. He also did not disclose his ties to his patients.
On November 12, 2012, as part of a federal investigation, Sabit testified that he never had been paid any compensation by a medical device manufacturer and that he didn’t know of any device company in Bountiful, Utah, the headquarters of Reliance Medical.
By January 2014, Sabit decided to shut up and began invoking his Fifth Amendment right to not testify against himself.
Michigan Mayhem
According to the federal indictment in Michigan, Sabit performed lumbar fusion surgery on a number of patients, but didn’t actually install any hardware. Then he allegedly committed the worst sin—billing Medicare for work that wasn’t done.
An unnamed former employee of Sabit’s clinic told the FBI that the surgeon performed surgery on almost everyone who walked through his office. In all, the government said Sabit billed almost $33 million and was paid more than $1.8 million.
The government charged him with false claims. After a detention hearing last December, Sabit was held in jail because the government considered him a flight risk. Prosecutors feared he would return to his native Afghanistan where he had plans to start a hospital and drill for oil. He is a member of a politically prominent family in Afghanistan.
Particularly Egregious Case
“Doctors who sell their medical judgment and ethics for personal profit endanger the lives and safety of vulnerable patients who count on their advice to make life-altering decisions. The Criminal Division of the Department of Justice will continue to prioritize the prosecution of doctors whose criminal behavior puts patients at risk, ” said Assistant Attorney General Leslie Caldwell.
“This case of health care fraud is particularly egregious because Dr. Sabit caused serious bodily injury to his patients by acting out of his own greed instead of the best interests of his patients, ” said U.S. Attorney Barbara McQuade of the Eastern District of Michigan. “Not only did he steal $11 million in insurance proceeds, but he also betrayed his trust to patients by lying to them about the procedures that were medically necessary and that were actually performed.”
Guilty Plea and Admissions
Specifically, Sabit pled guilty to four counts of health care fraud, one count of conspiracy to commit health care fraud and one count of unlawful distribution of a controlled substance, resulting in losses to Medicare, Medicaid and various private insurance companies. A sentencing hearing is scheduled for September 15, 2015.
During his guilty plea, Sabit admitted that he derived “significant profits” by convincing patients to undergo spinal fusion surgeries with instrumentation, which he never implanted, and subsequently billing public and private healthcare benefit programs for those fraudulent services.
He further admitted that he lied when he dictated in operative reports, which he knew would be used for false insurance claims, that he had performed spinal fusion with instrumentation that was never performed.
There’s more, Sabit also admitted that, on occasion, he would implant cortical bone dowels and falsely dictate in his operative reports that he had implanted instrumentation. Sabit, then fraudulently billed public and private health care programs for instrumentation, when in fact the implants were tissue. Sabit admitted he failed to render services in relation to lumbar and thoracic fusion surgeries, including in certain instances, billing for implants that were not provided.
Impact on PODs?
Alex Lukianov, the former head of NuVasive, Inc. told us last September when the feds sued Reliance Medical that surgeons associated with PODs, “will take notice as the potential for personal liability is now more real.”
Continuing government pressure to prosecute POD participants and the increasing reluctance by hospital paymasters to buy from PODs will certainly chill growth of the business model. Reliance Medical is vigorously defending itself in California. The outcome of that case, based on the legal construction of PODs, is more likely to provide an answer to the question of the future of PODs.
