Posted in Drug & Medical Devices, Medical Malpractice on November 4, 2013

Nearly 30 patients in California have sued neurosurgeon Dr. Aria Sabit for medical malpractice; alleging he subjected them to needless spinal surgeries using implants supplied by a company from which he profited.

Dr. Sabit has already settled six of the cases out of court for undisclosed amounts. In the latest suit, an elderly patient named Vicenta Aguirre sued Sabit for medical malpractice, alleging fraud, deceit, concealment and negligence.

Among her claims, Aguirre accuses the surgeon of performing excessive surgeries on the elderly, profiting from the hardware he implanted, and failing to meet the standard of care for sterile techniques, resulting in high infection rates, longer recovery times, and the need for additional surgical procedures. The lawsuit also states that Sabit owned an interest in Reliance Medical and Apex Medical Technologies, medical products distributors.

Conflict of interest

These cases bring to light a growing problem in the medical community: Physician-owned Distributors (PODs), also known as physician owned companies or intermediaries. A 2011 congressional report titled “Physician Owned Distributors (PODs): An Overview of Key Issues and Potential Areas for Congressional Oversight,” by the Senate Finance Committee reveals:

The basic arrangement involves medical device companies formed to give physicians a share in the profits generated by the sale of implants and other medical devices… In effect, these entities act as a middleman entity that exists to give its physician investors the opportunity to profit from the sale and utilization of the medical devices they provide to hospitals.

Proponents of PODs maintain that such arrangements decrease costs by eliminating the profits of traditional distributors. However, in March of 2013, the Office of the Inspector General (OIG) issued a Special Fraud Alert, which found that PODs have substantial fraud and abuse risk and pose dangers to patient safety.

This month, the Office of the Inspector General released a 27-page report entitled, “Spinal Devices Supplied By Physician-Owned Distributors: Overview of Prevalence and Use.” The OIG concluded:

• In 2011, POD-supplied medical devices were used in nearly 20 percent of spinal fusion surgeries billed to Medicare.
• Spinal fusion surgeries that used PODs devices used fewer devices but did not have lower device costs
• When hospitals began purchasing devices from PODs, their rates of spinal surgery grew faster than average and they performed more spinal surgeries than those that did not.

These results appear to confirm the OIG’s concerns that PODs are associated with corruption of medical judgment, overutilization, increased costs to the Federal health care programs and beneficiaries, and unfair competition.

Disclosure requirements

Some hope that new reporting required by the Physician Payments Sunshine Act (also known as “Open Payments”) will increase disclosure of such relationships. Designed to decrease the potential for conflicts of interest in health care, the Sunshine Act requires drug, biological and medical device manufacturers and group purchasing organizations to annually disclose direct and indirect ownership and investment interests held by physicians and their immediate family members. However, as the OIG explains,

…disclosure in and of itself does not provide sufficient assurance against fraud and abuse…[because] disclosure of financial interest is often part of a testimonial, i.e., a reason why the patient should patronize that facility. Thus, often patients are not put on guard against the potential conflict of interest, i.e., the possible effect of financial considerations on the physician’s medical judgment.

Furthermore, not all PODs will be required to report under the Act. Although the rule is written to include most entities that purchase medical devices for resale to others, the language of the statute does not encompass all POD models.

When told an operation is necessary, many patients check the credentials of their surgeon. Websites allow the public to check a doctor’s board certification, hospital or ambulatory center accreditation, membership in prestigious fellowships or other organizations, and even online patient reviews. Now it seems we will also need to find out if our doctor is in the business of selling medical devices.

Bottom line: Always get a second opinion.

Sources:

“Alarming Allegations Against Spinal Surgeon” by Matt Reynolds, Courthouse News Service, November 1, 2013.

“California Board Moves to Discipline Surgeon in Federal Probe” by John Carreyrou, The Wall Street Journal, September 17, 2013

“Final Sunshine Rule Requires Reporting of Physician Ownership in GPOs and Health Products Manufacturers” by Hall, Render, Killian, Heath & Lyman, P.C., Health Law News, March 13, 2013.