Sanford settled lawsuit alleging kickbacks to doctors

Sanford Health paid the federal government $625,000 earlier this year to settle a whistle-blower lawsuit which claimed two Sioux Falls doctors engaged in a kickback scheme to encourage use of a spinal implant.

The “Anterior Lumbar Interbody Fusion” was developed by Dr. Wilson Asfora. It was hailed by Sanford as a major development in the treatment of spinal conditions when it was approved for use by the FDA in 2009.

The device also is known as the Asfora Bullet Cage. It’s difficult to pinpoint just how many patients have been treated with the bullet cage, but Medicare data obtained and analyzed by Argus Leader Media shows that Asfora and Dr. Bryan Wellman — the second doctor in the case — are among the most aggressive in the state in performing spinal fusion surgeries.

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Asfora, Wellman and other surgeons received money from Medical Designs, a device manufacturer owned by Asfora, to use the bullet cage, according to the lawsuit, initiated by David DuBay, a former employee. That payment practice is a violation of federal laws against kickbacks and physician conflicts of interest. The company paid Wellman up to $10,000 a month to implant bullet cages, according to the lawsuit.

When it came time to settle, Sanford asked that the agreement be confidential. Lawyers for the Justice Department refused. The health system did, however, continue to deny DuBay’s allegations — as did Asfora and Wellman — and denied any wrongdoing.

Sanford agreed to pay $625,000, and a federal judge signed off on the settlement in January.

Although the agreement wasn’t sealed, it wasn’t given any fanfare, either. But the agreement prompted Argus Leader Media to review data about the surgeries performed by spine surgeons in South Dakota, including Asfora and Wellman. The data were obtained with a Freedom of Information Request from Medicare, as well as other publicly available data from Medicare as part of a broader Argus Leader Media investigation into physician conflicts of interest.

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Number of spinal fusions far above the norm

Asfora and Wellman, according to one analysis, exceed the national average for spinal fusions by a wide margin.

There are different ways to look at that.

Cindy Morrison, Sanford’s executive vice president for marketing and public policy, said large numbers don’t “mean that something is going on that is dark.”

“They may be the ones that are the best at it, and they may be getting a lot of referrals,” she said.

But others say high numbers can be a sign a doctor is doing unnecessary surgeries. Dr. Scott Lederhaus, a California neurosurgeon and president of the Association for Medical Ethics, reviewed Medicare data that concluded Asfora and Wellman do fusion surgeries on a higher percentage of their Medicare patients than the national average.

“Wellman and Asfora are the ones that stand out,” he said.

The settlement agreement, completed earlier this year with the federal government, sheds light on another layer of potential conflict: Asfora is majority owner of Medical Designs, which makes money when its devices are implanted into patients. The Office of Inspector General for the Department of Health and Human Services classifies Medical Designs as a physician-owned distributorship. PODs are controversial because they enable physicians who invest in them to profit from the devices they implant in patients. That leads to concerns that surgeons will perform unnecessary surgeries. Legal analysts say they could violate anti-kickback laws.

Unlike another POD started last year by nine physicians at the Orthopedic Institute, Asfora’s company manufactures its own devices. The POD at the Orthopedic Institute resells devices made by other implant makers.

To Morrison, that’s a critical distinction. Asfora, she said, invested money and time into developing devices while other PODs “involve physicians who simply get paid for using a particular device but have not made any such investment.”

Steve Johnson, a Sioux Falls lawyer who represented DuBay in the whistle-blower case against Sanford, said patients should be concerned any time a physician has a financial interest in a device or procedure.

“You create incentives for them to use your medical device when maybe a different medical device would be better suited for patients,” he said. “In my experience, (patients) don’t get that explained to them — that there’s a financial interest is using a particular device.”

Asfora was a well-regarded independent neurosurgeon known in the community for his love of music and soccer when he joined Sanford in 2007. According to Sanford’s most recent public tax filing, the health system pays him more than $2 million a year, making him one of the hospital’s highest-paid surgeons and one of Sanford’s most valuable revenue producers.

In 2009, Sanford made a big deal about Asfora’s latest invention after it received market clearance from the Food and Drug Administration. The Asfora Bullet Cage is a biomechanical device inserted between vertebrae to create space for fusion surgeries in the lumbar region of the spine.

Sanford hailed the FDA approval as a stroke of innovation. But the approval was based on the FDA’s finding that the Asfora Bullet Cage is “substantially equivalent” to products already on the market. Experts say dozens of similar devices already were on the market.

“They’re all basically the same stuff,” Lederhaus said. “Anything about them being special is all garbage.”

And they are expensive.


Josh Sandberg

Josh Sandberg is the President and CEO of Ortho Spine Partners and sits on several company and industry related Boards. He also is the Creator and Editor of OrthoSpineNews.

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