Lawsuit Highlights Payments to Doctors in Medical Device Industry
September 8th, 2008 laurie
The Star Tribune reports that when medical device salesman John Thomas heard in late 2000 that there was a new doctor in Arkansas specializing in patients with ailing backs, he stopped by his office to see if the two could do a little business. The would-be customer, Dr. Patrick Chan, said he was partial to a metal plate made by Medtronic Inc. — just the kind of item Thomas sold working for a distributor of devices, including those from the Fridley-based medical technology company. But what Chan said he really wanted was $1,500 in cash for a party he was planning at his new home northeast of Little Rock, according to a lawsuit filed and later settled in U.S. District Court in Arkansas.
Ultimately, it was Thomas who blew the whistle on the Arkansas neurosurgeon’s illegal behavior. Thomas, a 12-year med-tech sales veteran, claimed in the legal complaint that he began to believe something was awry when a competitor bought a new computer system for Chan’s office. Another competitor allegedly paid for the honeymoon of one of Chan’s nurses, the complaint states.
Thomas also alleges in the lawsuit that between 2001 and 2003, Chan operated on patients who didn’t need surgery. In one case, Chan performed spine fusion surgery on an 80-year-old patient who had only a few weeks to live, according to Thomas’ complaint. At the time, an anesthesiologist allegedly questioned why Chan was operating on such a vulnerable patient — an exchange that led to a shouting match between the two in the operating room, the complaint recounts.
Chan was ultimately arrested after another sales rep for a distributor selling Osteotech, Orthofix, Alphatec Spine and Signus Medical devices admitted in 2006 she was paying half of her commissions to him, according to Whatley, the assistant U.S. attorney. Later that year, the rep was videotaped by the FBI handing Chan envelopes of cash on three occasions.
In the end, Chan, then 43, pleaded guilty in January to one count of soliciting and receiving kickbacks in exchange for recommending the purchase of certain brands of medical devices. Three of the criminal charges were dropped, and Chan agreed to pay $1.5 million to settle Thomas’ whistle-blower lawsuit.
