San Diego, California - National Spine & Pain Center, LLC (“NSPC”), a physician management services organization headquartered in Rockville, Maryland, agreed this week to pay $5.1 million in restitution to Medicare as part of a criminal settlement for receiving payments in violation the Anti-Kickback Statute.

As part of a non-prosecution agreement resolving criminal liability, NSPC admitted that the company and its affiliate Physical Medicine Associates, Ltd. (“PMA”) entered into an arrangement with Proove Biosciences, a defunct genetics testing company formerly based in Irvine, California, in which Proove unlawfully compensated physicians under the guise of a clinical research program.

The federal Anti-Kickback Statute provides for criminal penalties for whoever knowingly and willfully offers, pays, solicits, or receives remuneration to induce or reward the referral of business that is  reimbursable under any of the Federal health care programs, including Medicare. The statute covers the payers of kickbacks - those who offer or pay remuneration - as well as the recipients of kickbacks - those who solicit or receive remuneration.

NSPC admitted that certain NSPC and PMA physicians referred to the clinical research payments offered by Proove as being payments “per test” or “per patient,” and that as a part of the scheme physicians completed timesheets used by Proove to pay the physicians which overstated the time that the physicians spent conducting related clinical research. In some cases, the timesheets indicated that the physicians had performed certain tasks, which had, in fact, been performed by Proove’s own employees, resulting in payments from Proove to the physicians for tasks that they did not perform.

NSPC admitted that certain NSPC personnel communicated to Proove that the company would not offer Proove’s genetic tests at additional NSPC sites unless Proove was current on its payments to NSPC and PMA physicians. Conversely, Proove communicated to NSPC that Proove expected NSPC and PMA physicians to order a certain volume of tests from Proove. Proove’s genetic tests purportedly could determine a patient’s risk of abusing certain prescription opioids and how patients metabolized certain drugs.

PMA received a total of $1.1 million in payments from Proove. Medicare paid Proove approximately $4 million for claims submitted by Proove from referrals from NSPC and PMA physicians. 

“Referring patients based on expectation of personal profit corrupts the health care system by encouraging medical providers to make decisions based on their own financial gain rather than a patient’s best interests,” said David Leshner, Attorney for the United States. “Kickback payments also unfairly generate business for dishonest providers at the expense of those who do not engage in illegal conduct. This office is committed to holding perpetrators accountable for these fraudulent schemes.”  Leshner commended AUSA Joseph Green, the FBI and HHS-OIG for the diligent investigation and prosecution of this matter.

“The defendants bilked millions of dollars intended to fund services that promote and improve the health of Medicare beneficiaries, some of whom were their own patients,” stated Timothy DeFrancesca, Special Agent in Charge of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “They prioritized their own enrichment above their duties as health care providers. HHS-OIG is dedicated to protecting Federal health care beneficiaries and programs, so our work includes the pursuit of providers who cheat both.”

“This week's restitution order sends a strong message to healthcare providers that choose to put personal gain over professional responsibility,” said FBI Special Agent in Charge Suzanne Turner. “The FBI is proud to work with our federal partners at HHS-OIG to root out these schemes which further diminish trust in the health care system.”

The non-prosecution agreement cited NSPC’s new ownership group, its voluntary termination of its relationship with Proove prior to the company’s knowledge of the criminal investigation, its continuing cooperation with investigators, and the adoption of a robust compliance program, as factors that supported the resolution of the criminal investigation with a non-prosecution agreement.

On June 9, 2021, nine individuals were charged in connection with the scheme in United States v. Brian Meshkin, et al., 21CR0112-JLS, United States District Court, Central District of California. The case is presently pending.

AGENCIES

Federal Bureau of Investigation

Department of Health and Human Services, Office of Inspector General