TranS1: Less Invasive Surgery, Allegedly Billed as More

In the TranS1 settlement, the medical device manufacturer agreed to pay $6 million to resolve allegations that its coding advice, promotion and physician payments caused false claims for minimally invasive spine surgery. The Justice Department announced a $1.02 million share of that settlement for the whistleblower who brought the case.

The Justice Department announced the resolution on July 3, 2013, naming the company as TranS1 Inc., by then renamed Baxano Surgical Inc. The allegations concerned claims to Medicare and other federal health care programs. AxiaLIF, the company’s spine fusion system, had been developed as an alternative to more invasive surgery. The government alleged that providers nevertheless billed using codes intended for more invasive procedures.

The device was developed for the smaller operation. The claims, the government alleged, described the bigger one.

AxiaLIF Coding Advice and the Provider’s Claim

TranS1 allegedly counseled physicians and hospitals to use incorrect diagnosis or procedure codes for minimally invasive AxiaLIF spine fusion surgeries. The Justice Department said the recommended codes described more invasive spine fusion procedures and produced greater reimbursement than providers were entitled to receive.

A physician or hospital submitted the claim, but the government alleged that TranS1 knowingly caused the incorrect description to appear on it.

For an insider, knowing what customers were told about billing is as important as knowing what they were told about the device. A reimbursement instruction can explain why a provider’s claim describes something different from the procedure the manufacturer helped sell. That is the connection we examine with someone who knows the product and the instructions that accompanied it.

How Does Reimbursement Work for Medical Devices?

Medicare usually includes an implanted device’s cost within payment for the procedure or hospital stay. The hospital or surgery center buys the implant, while the surgeon may make or strongly influence the choice of product. The company selling the device can therefore influence a purchasing decision and a procedure claim without sending Medicare a separate bill for the implant.

The alleged TranS1 overpayment came through how the surgery was billed.

Alleged Promotion Beyond AxiaLIF’s Authorized Uses

The government also alleged that TranS1 promoted AxiaLIF for uses that the Food and Drug Administration had neither approved nor cleared. Its announcement specifically identified certain procedures to treat complex spine deformity and said those uses were not covered by federal health care programs.

Here, the alleged problem reached the decision to use the device for the procedure in the first place. The coding allegation concerned how providers described an operation. The promotion allegation concerned the procedures for which TranS1 encouraged them to use AxiaLIF, and the resulting request for government payment.

Speaker Programs, Consultant Meetings and Product Choice

TranS1 allegedly paid certain physicians to participate in speaker programs and consultant meetings intended to induce them to use its products. The government said those payments violated the Anti-Kickback Statute and caused false claims to federal healthcare programs.

The arrangement targeted someone with influence over the sale.

The Justice Department’s account identifies the concern with those incentives: a physician’s medical judgment can be compromised by the payment. In the alleged TranS1 arrangement, the company paid to influence product choice and providers sent the resulting claims to federal programs. Taxpayers were asked to fund care shaped by a financial incentive the manufacturer allegedly placed in front of the physician.

What the TranS1 Settlement Included

The civil settlement resolved a whistleblower’s qui tam case filed under the False Claims Act in the District of Maryland.

TranS1 also agreed to enter into a corporate integrity agreement with the Health and Human Services Office of Inspector General. The announcement describes procedures and reviews designed to prevent and promptly detect conduct similar to the conduct behind the case.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In a manufacturer-caused claims case, the valuable inside knowledge may concern the advice or payments that set the provider’s billing in motion.

The Same Disconnect in Other Spine Cases

In the Paradigm Spine case, the whistleblower complaint described what reimbursement consultant MCRA said about a proposed billing code:

The NuVasive page covers a separate spine case involving alleged off-label promotion and kickbacks.

The TranS1 settlement brought coding advice, promotion and physician payments together around AxiaLIF. A reimbursement employee might recognize the billing instruction. A sales employee might recognize the promoted use or the purpose of a physician meeting. Each sees a different part of how the device reaches the provider’s claim.

What Evidence Is Needed to Prove Fraud?

For the TranS1 allegations, the evidence connects what the manufacturer told or paid physicians with the procedure performed, the description billed and the government payment. We work with insiders to establish those connections, including who knew what the instruction or payment was intended to accomplish.

The 2020 Journal of Forensic and Investigative Accounting paper A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud describes whistleblowers as a source of inside information that supplements the government’s investigative resources.

That point fits the separation in this case: a claim shows the description sent for payment, while someone inside the manufacturer may know why that description was recommended. The instruction behind the code can explain a claim that otherwise looks like a decision made entirely within the hospital.

You Know Where the Billing Advice Came From

If you saw AxiaLIF coding instructions, promotion beyond the authorized use or physician payments meant to drive device sales, speak with our whistleblower experts. We build your strongest medical device whistleblower case with you around the manufacturer’s decisions and the provider claims they generated, and bring in medical device whistleblower lawyers who understand reimbursement and physician payment cases. We stay beside you from the first account of what happened through the pursuit of a recovery.