On October 28, 2019, the Department of Justice announced a $20.25 million settlement of False Claims Act (FCA) allegations. The settlement was reached with Sioux Falls, South Dakota hospital entities Sanford Health, Sanford Medical Center, and Sanford Clinic (“Sanford”) to resolve allegations that Sanford knowingly submitted false claims to federal healthcare programs resulting from violations of the Anti-Kickback Statute (AKS) and medically unnecessary spinal surgeries. The action was brought by Drs. Carl Dustin Bechtold and Bryan Wellman, surgeons at Sanford, under the whistleblower, or qui tam, provision of the FCA, which allows private parties to bring suit on behalf of the government. The government elected to intervene in this action, captioned United States ex rel. Bechtold, et al. v. Asfora, et al., No. 4:16-cv-04115-LLP (D.S.D.).
The whistleblowers alleged that Sanford knew that one of its top neurosurgeons, Dr. Wilson Asfora, was improperly receiving kickbacks from his use of medically implanted devices distributed by his physician-owned distributorship. Further, the United States claimed that, despite repeated warnings from the physician’s colleagues and others about the alleged kickback scheme, Sanford continued to employ the neurosurgeon, allowed him to profit from his distributorship of the medical devices, and submitted claims for payment from federal healthcare programs for these medically unnecessary surgeries.
As part of the settlement, Sanford entered a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General. The CIA requires that Sanford maintain a compliance program, implement a risk management program, and hire an Independent Review Organization to review claims for government payment. And while it does not appear that Sanford’s executives were individually prosecuted, the CIA increased individual accountability by requiring compliance certifications from Sanford’s board of directors and senior executives.
As part of the settlement, Sanford also agreed to cooperate with the Department of Justice in litigation related to co-defendants, which include the physician-owned distributorship and the neurosurgeon in issue, Dr. Asfora.
