DFine: User Preference Evaluations Paid Per Device-Treated Patient

In the DFine User Preference Evaluations settlement, DFine Inc. agreed to pay $2.39 million to resolve allegations that it paid physicians to use its spinal-fracture devices. The government’s account puts the problem inside the survey itself: a physician had to use a new DFine device in a patient to participate. For someone who sold the product, administered the evaluations or approved the payments, that requirement is the heart of the case.

The San Jose, California company reached the civil settlement that the Justice Department announced on October 26, 2011. A whistleblower started the case under the False Claims Act.

How the User Preference Evaluations Worked

The United States alleged that DFine used customer surveys called User Preference Evaluations to pay kickbacks for use of its vertebral augmentation devices. Each UPE survey purported to collect product information from physicians. Participation required treating a patient with a new DFine device, and most of those patients were Medicare beneficiaries.

Product feedback was the stated purpose. A patient treated with DFine’s device was the condition. In the government’s account, the evaluation program gave the physician a financial reason to choose the manufacturer’s product.

The Justice Department also alleged that DFine solicited physicians to switch from a competitor’s product or keep using DFine products. The alleged goal was to win or keep the physician’s business. The government said DFine violated the Anti-Kickback Statute, which prohibits payments to induce business covered by federal health care programs.

Why Physician Device Choice Matters

In DFine’s case, the alleged survey condition tied a personal payment to the physician’s choice of a DFine device.

Travel, Dinners, Entertainment and Speaker Fees

The government separately alleged that DFine provided improper travel expenses, lavish dinners, entertainment and promotional speaker fees to physicians in Chicago and Little Rock, Arkansas.

The survey allegation turns on a payment condition. The hospitality and speaker allegations bring in a different view of the same sales relationship: who received the benefit, what the company paid for and what business it sought from that physician. An employee handling evaluations may see a different part of the relationship from one handling speaker arrangements or travel expenses.

When Product Evaluations Pay for Procedures

The government’s complaint against SpineFrontier alleged that consulting payments depended on the volume and value of devices surgeons used rather than their actual consulting work.

What Kind of Proof Is Needed to Be a Whistleblower?

Proof in a device-use payment case turns on how physician payments, product use and billed care connect. We work through that connection with you. DFine’s alleged survey condition makes the first connection unusually clear.

The 2020 Journal of Forensic and Investigative Accounting paper A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud examines payments disguised as service fees to induce more orders and purported speaker events that functioned largely as social outings. Its analysis focuses the False Claims Act inquiry on the request for government payment.

An insider’s knowledge can explain how those records fit together: what qualified a physician for payment, how the amount was calculated and how product use entered the arrangement. We work with that account to build the healthcare fraud case around the actual business decisions. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

The Settlement and Corporate Integrity Agreement

DFine’s resolution included an agreement to enter a corporate integrity agreement with the Department of Health and Human Services’ Office of Inspector General. The Justice Department said the agreement would require procedures and reviews to prevent and promptly detect conduct like that alleged.

The announcement also provided for a reward to the whistleblower who brought the qui tam case.

You Know What Triggered the Payment

If you know how a device evaluation became a payment for product use, speak to one of our Whistleblower Experts. We develop the case with you and bring in medical device fraud whistleblower lawyers who understand physician incentives and the claims they can generate. From the first conversation through the pursuit of a recovery, we stay on your side of the table.