Sanford Health to pay $20M to settle False Claims Act allegations

Sanford Health will pay the federal government $20.3 million to settle allegations that one of its neurosurgeons received kickbacks for using implantable devices from his physician-owned distributorship, the U.S. Justice Department announced last week.

Colleagues of Dr. Wilson Asfora allegedly warned the Sioux Falls, S.D.based not-for-profit health system that he was performing medically unnecessary procedures involving the devices in which he had a substantial financial interest. Despite these repeated warnings, the Justice Department alleged, Sanford continued to employ him, allowed him to profit from the devices he used in surgeries and continued to submit fraudulent claims.

“More than six years ago the (HHS’ Office of Inspector General) warned in a fraud alert that (physician-owned distributorships) were inherently suspect under the Anti-kickback Statute. Unfortunately, these distributors remain questionable,” Curt Muller, special agent in charge of HHS’ Office of Inspector General, said in prepared remarks. “Patients in government healthcare programs rightly expect that surgeries are medically indicated, not performed to increase provider profits.”

Sanford said in a statement that it denies any liability or wrongdoing, and that it chose to settle because the amount is far less than the unnecessary costs and operational disruption that would have persisted for multiple years.

Along with the civil settlement, Sanford agreed to maintain a compliance program, implement a risk-assessment program and hire an independent review organization to oversee Medicare and Medicaid claims at Sanford Medical Center. The agreement also requires compliance-related certifications from the medical center’s board and key executives.