Physician Owned Distributors: Reliance Medical Systems Files Suite Contesting OIG Fraud Alert

In April of this year, we reported on a new Special Fraud Alert regarding physician-owned distributorships (PODs) issued by the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services (HHS). The Special Fraud Alert focuses on the specific attributes and practices of PODs that OIG believes produce substantial fraud and abuse risk and pose dangers to patient safety.  OIG reiterated its concern about the proliferation of PODs and OIG's longstanding position that the opportunity for a referring physician to earn a profit, including through an investment in an entity for which he or she generates business, could constitute illegal remuneration under the anti-kickback statute.  Thus, OIG concluded that it will view PODs as inherently suspect under the anti-kickback statute. In response to this Fraud Alert, Reliance Medical Systems, LLC (Reliance), which manufacturers highly customized spinal implant devices and surgical tools, brought a lawsuit against HHS-OIG in the U.S. District Court for the Central District of California challenging OIG's stance. Reliance Medical Systems is a design company that specializes in making customized implants and surgical tools, according to a press release announcing the lawsuit. According to the federal lawsuit, "the key element of Reliance's business model is harnessing the design insights of physicians, whose expertise in spinal surgeries enables Reliance to design implants and surgical tools that le...
Source: Policy and Medicine - Category: Health Medicine and Bioethics Commentators Authors: Source Type: blogs