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Avoiding the Perp Walk, or How to Keep the Justice Department From Knocking on Your Door
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By Walter Eisner
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November 27, 2007
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He was at the North American Spine Society’s recent annual meeting to tell surgeons how to keep the Justice Department from knocking at their door and taking them on the “perp walk.” More than 600 attendees showed up at 7:30 in the morning to learn.
Winn and NASS leaders took their audience through four real-life scenarios of surgeon/industry relationships and asked the 600 or so attendees to vote on whether or not the scenarios where legal or ethical. Then Winn gave them a legal lesson. Joining Winn on the podium was Sohail Mirza, M.D., Director of Spine Trauma Research at the University of Washington in Seattle. That’s also the home of Richard Deyo, M.D., a frequent critic of spine procedures. How Did We Get Here? Dr. Mirza’s job was to ask how orthopedic surgeons could go so far into unethical waters and stay there comfortably for so long. “How did we not see it? What did we as individual surgeons fail to see, and how did our self-policing professional organization fail to point it out? In hindsight, why did it take a criminal fraud investigation to make us realize the obvious?” asked Mirza. “The science of psychology,” began Mirza, “says that we were overconfident, have a self-inflated perception of ourselves and we have a sense of entitlement because we are highly trained and highly educated professionals.” He said physicians think they can play this game with industry and still look out for the best interests of the patients and themselves. He argued that the people putting on the inventor hats, and then doing the research to prove the devices work, are the same people who then promote those devices and invest in the companies to reap the rewards. Going from concept to prototype to investigational device, and then from approved device to a financially successful device is hard work, noted Mirza, and it requires collaboration with industry because public sources will not pay for such development. Restoring Trust But if the profession isn’t careful and doesn’t create greater distance between industry and physicians, “we may end up with what the AAMC [American Academy of Medical Colleges] is proposing. That is a standard where an investigator is basically deemed to be ineligible to do work if there is not enough distance between the researcher and funder…there should be an intermediary,” said Mirza. Peter Winn said that defense attorneys have always asked potential juries, “How many of you have strong feelings for or against your doctor?” He stated that the answers have changed dramatically recently. “It used to be that it was almost impossible to convict doctors of crime.” “Out of a panel of 50 or 60 people, you’ll get 15 hands and all these have a negative opinion or experience with a doctor. Those numbers are going up. With this lost trust, juries are going to start making different calls,” said Winn. Scenario #1 – Payola The Wingnut Company proposes a “bonus” of $1,000 to Dr. Famous for every device he implants in patients. The company hopes that if Dr. Famous becomes a big user of the device, others will follow. Is this legal and/or ethical? Approximately 600 attendees voted:
This was an unscientific sampling. But these 600 attendees were the self-selected group of surgeons who cared enough to attend such a session, and one out of four thought this arrangement was legal. That’s scary, and it is fertile ground for an unscrupulous device manufacturer that can survive its start-up phase with as few as 16 surgeon customers. Winn said the federal anti-kickback statute provides that if there is a relationship or anything of value [given to someone to use a device], that’s a crime and an investigation will probably be instigated by a whistleblower under the False Claims Act. “This happens primarily with the ‘pilot fish’ distributors who tend to be the smaller cowboys of the group,” said Winn. Scenario #2 – Investor A start-up company asks Dr. Famous to invest $50,000 in the company. The surgeon/investors are encouraged to use a certain number of implants over a specific period of time and receive a “dividend” per implant. The company tells Dr. Famous that he is one of 25 surgeons being given this opportunity and that when the company goes public, the investors will likely earn in excess of $100,000, as long as they keep using the implant. The vote:
Winn said that at the end of the day, this scenario is like #1 with some bad window dressing. A question arose as to how this was any different from a doctor who owns a physical therapy business and benefits from each use of the service. “There are relationships where physicians have in-house MRIs or XYZ services, and those are more of a gray area,” said Winn. “[Ultimately] the question in establishing one of these practices is going to be: Is the reason we’re doing this [because we want] to run referrals to the practice and is the ownership structure that’s being created a disguised way to lock in a referral source?” “As a practical matter, under the law, the concerns that arise there tend to be more ones of ethics rather than absolute violation of the anti-kickback statute. The physician-owned subspecialty groups can cause a lot of problems under the Stark Act,” added Winn. Winn was asked if it was legal for physicians to own a distributorship and then sell implants to the surgeon’s ambulatory surgical center (ASC). “I’d go look at the Start Act,” said Winn. The Act deals with the situation where physicians have some sort of ownership interest, direct or indirect, with someone who is actually providing equipment or a designated health service. According to Winn, “If you have such a relationship, you won’t get hit, but the entity that bills Medicare or Medicaid is subject to the Stark Act. Which means every single item that you bill becomes an overpayment. You lose all the overhead and double damages. Even if you do it by accident, you still pay double. You basically just turn into a pumpkin, no questions asked.” The whistleblowers have spotted this one. “I would say run—do not walk—away from that one,” advised Winn. Scenario # 3 – Lump Sum Payments Dr. Famous has a written consulting agreement with a company that delineates specific services he will perform for the company. These services include:
In return, the company will pay the doctor a lump sum of $100,000 per year. During the year the doctor performed all the services he was asked to perform, but they amounted to only a fraction of the services described in the agreement. He was still paid the full amount. Is it legal and ethical? The vote:
Winn asks, “Why is the company paying Dr. Famous all that money for stuff that’s not worth $100,000 per year?” He noted that as indicated by the ethical vote on this scenario, most people would “smell a rat.” Winn would also ask how many devices the doctor is using. “If there’s an unreasonable market value for the services and he uses a bunch of devices, then the next question is: Is this the version the lawyer came up with after they advised their client that scenario #2 was illegal? This is a wink, wink, nod, nod by the company that says we know you’re going to be using the products.” “The anti-kickback statute doesn’t apply if the services you’re providing actually correspond to something they’re worth,” Winn said. “If your work is not related to fair market value, you’re going to have questions. And they will probably result in grand jury questions.” Added Winn, “You’ll want to be real nice to your secretaries and help, because often they’ll know exactly what’s going on.” The other question Winn would ask is, “Boy, how does this work?” If it shows that the surgeon used more implants after the contract, then there is a clear quid pro quo. “Fifteen years ago, juries might have given you the benefit of the doubt. But not anymore.” If you’re a young surgeon thinking about getting into such an arrangement,” Winn said, “I hope you’ve got a good lawyer.” Entering into a consulting contract to conduct “research” is the new window dressing, according to Winn, to “run money to docs and bribe them.” Scenario #4 – The Front Man A device is cleared by the FDA, but Dr. Famous also uses it off-label. The company pays Dr. Famous for lecturing on the off-label use of the device at company-sponsored dinners that are part of the company’s marketing plan. The vote:
Ouch!!! The attendees got this one wrong in a big way. It’s a crime to promote the off-label use of a device [the FDA prohibits the marketing of products off-label], said Winn. But presenting a paper at a society meeting is okay because physicians ought to have a free flow of information about the science. “The problem,” said Winn “is when the manufacturer uses the physician to be their front man to market the product. At that point the physician becomes sort of a co-conspirator with the manufacturer. ‘You just don’t want to be there…you’re going to get dragged into a mess.’” “What we typically see is when the manufacturer will bring the thought leader into a meeting and give them a real nice dinner and pay them $1,000 ‘walking around money’ to listen to the meeting and then listen to Dr. Famous tell how great the device is off-label. At that point, we’re seeing a lot of qui tam lawsuits getting filed. It’s become a real problem,” relayed Winn. Winn said most of the Justice Department inquiries have been going after the industry for paying doctors. But, he said, “A lot of doctors have gotten into the habit of shaking down industry.” “Compensation is important,” said Winn. In his opinion, the reason a lot of these types of arrangements are becoming more tempting for physicians is because of the compensation squeeze on physicians over the years. Physician Reporting and Policing What should you do if you have a question about a relationship? Winn said there is a body charged in the U.S. to write opinions about this. It’s the Department of Health and Human Services’ Office of Inspector General. They’ll give you an opinion. “And,” he said, “if you’re afraid to ask them, you probably shouldn’t do it [enter into the relationship].” When Winn started prosecuting a couple of decades ago, he never saw a doctor as a qui tam whistleblower. But now, he said, “I’m starting to see more and more physicians come in.” According to Winn, the real answer of how this should be reported by doctors is this: “If you see this happening you probably want to walk over and confront the person who is doing it and ask them why in the hell they’re doing it.” The informal social pressure of your colleagues, the culture that you create every day, that’s where this stuff needs to be aired out. “Particularly if you’re an older physician and have been around for a while,” added Winn. “Ask yourself why did you go to medical school in the first place? I have never seen a provider get into trouble when they stayed focused on their reasons for going to medical school—to help patients.” Winn loves getting calls from providers who tell him that they have uncovered illegal or unethical activities in their practices, clinics, or hospitals. If they tell him they’ve acted to correct the situation and that it’s not part of their operating procedures, he’s always declined to participate in a whistleblower action. The Department of Justice and congressional inquiries will eventually come to an end, and additional disclosure and transparency laws will get passed that will change the rules of engagement between industry and physicians. Until then, keep the wise counsel of Peter Winn in mind. |
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Peter Winn has been an Assistant U.S. Attorney for the Justice Department since 1994. He doesn’t like it, but he’s one of the country’s leading prosecutors of medical fraud. His mother was a physician. 
We’ve all seen it: The cameras running as federal marshals arrest a high-profile “perp” for maximum exposure. Will those congressional and Justice Department investigations of surgeon/industry ties, which are still in full swing, result in a high-profile physician taking that “perp walk” in front of the cameras?
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