SpineFrontier Executives Arrested in Alleged Kickback Scheme
Two executives at a Massachusetts-based spinal implant company are having a very bad week. SpineFrontier Inc. Founder and CEO Kingsley Chin and CFO Aditya Humad were arrested Tuesday and charged with bribing surgeons to use their products as part of an alleged kickback scheme.
Chin, 57, and Humad, 36, along with the company, were indicted on charges of paying surgeons to use their spinal implants in surgeries while allegedly camouflaging the payments as consulting fees. Prosecutors said that the total sham consulting fees totaled in the millions and were dispersed in individual contracts where surgeons were paid between $250 and $1,100 per hour. Individual surgeons were allegedly given between $32,625 and $978,000. The surgeons in question, prosecutors said, did little, if any, actual consulting work.
The program was allegedly designed by the executives and apparently solicited feedback on SpineFrontier’s products in an attempt to “induce” surgeons to use them in surgery.
Massachusetts Acting U.S. Attorney Nathaniel Mendell was resolute in his statement.
“Kickback arrangements pollute federal health care programs and take advantage of patient needs for financial gains,” Mendell said. “Medical device manufacturers must play by the rules, and we will keep pursuing those who fail to do so, regardless of how their corruption is disguised.”
The alleged bribes constitute a violation of the Anti-Kickback Statute as government health insurance programs, including Medicare and Medicaid, were billed for the use of the company’s products. The charges carry with them a possible sentence of up to 30 years in prison. Charges related to the Anti-Kickback Statute have a maximum prison sentence of 10 years, while each could face up to 20 years for the money laundering conspiracy.
Humad, who was arraigned in a Boston federal court, pleaded not guilty to the charges. His lawyer stated that he “denies all charges, and looks forward to his day in court.”
The case dates back to March 2020, when the U.S. Department of Justice brought civil claims against the company. The lawsuit, in which the DOJ intervened in a whistleblower complaint, accused SpineFrontier of earning more than $100 million based on the alleged kickback scheme. At the time, the department also announced that five doctors had admitted to accepting kickbacks from the company and would pay $1.56 million to resolve related claims against them.
Missouri surgeon Jason Montone pleaded guilty in August 2020 to charges of conspiracy and obstruction, while Kansas distributor John Balzer also entered a guilty plea on criminal charges. Both are scheduled to be sentenced this coming March.
SpinalFrontier joins a growing list of companies in the news with accusations or convictions of criminal activity. On August 26, JHL Biotech co-founders Racho Jordanov and Rose Lin were convicted of conspiring to steal trade secrets related to four Genentech (Roche) blockbuster cancer and cystic fibrosis drugs.
Meanwhile, the saga of disgraced Theranos founder Elizabeth Holmes continues. Holmes, who is accused of misleading investors, patients and doctors about what Theranos’ blood-testing technology was capable of to obtain their money, faces her day in court this week. Opening statements by the prosecution will begin today.