Damian Williams, the United States Attorney for the Southern District of New York, announced that LAURA PERRYMAN was sentenced to six years in prison in connection with a health care fraud scheme whereby PERRYMAN created and sold a fake medical device component and told doctors that they could claim approximately $18,000 for implanting the fake component into patients. The device was sold by Stimwave, a medical device company of which the defendant was the founder, and, at the time of the offense, Chief Executive Officer. Stimwave previously entered into a Non-Prosecution Agreement with the U.S. Attorney’s Office for the Southern District of New York. PERRYMAN was found guilty of heath care fraud and conspiracy to commit health care fraud and wire fraud following a two-week trial before U.S. District Judge Denise L. Cote, who imposed this sentence.
U.S. Attorney Damian Williams said: “Laura Perryman callously created a dummy medical device component and told doctors to implant it into patients. She did this out of greed, so doctors could bill Medicare and private insurance companies approximately $18,000 for each implantation of that dummy component and so she could entice doctors to buy her device for many thousands of dollars. Perryman breached the trust of the doctors who bought her medical device, and more importantly, the patients who were implanted with that piece of plastic. This prosecution and today’s sentence are part of this Office’s ongoing work in combating fraud in the health care system and protecting patients from being exploited for money.”
According to the allegations in the Indictment and the evidence at trial:
Stimwave was a medical device company that manufactured and distributed implantable neurostimulation devices. As the founder and CEO of Stimwave, PERRYMAN oversaw the design of the StimQ PNS System (the “Device”), a neurostimulator system designed to treat chronic pain by providing electrical currents to peripheral nerves. The Device included a component containing electrodes (the “Lead”) and a receiver component that acted as an antenna, transmitting energy from an external power source to the Lead (the “Pink Stylet”). From at least in or about 2017 up to and including 2020, PERRYMAN, as Stimwave’s CEO, engaged in a multi-year scheme (the “Scheme”) to design, create, manufacture, and market an inert, non-functioning component of the Device — called the “White Stylet.” The White Stylet was marketed as a receiver of radiofrequency energy, but it was made of plastic and could not function as a receiver.
Stimwave sold the Device to doctors and medical providers for approximately $16,000. PERRYMAN instructed health care providers to bill medical insurance providers, including Medicare, for implanting the Device into patients through two separate reimbursement codes. One code was for implantation of the stimulator portion of the Lead, and a second was for implantation of a receiver. The billing code for implanting the Lead provided for reimbursement at a rate of between approximately $4,000 and $6,000, while the billing code for implanting a receiver provided for reimbursement at a rate of between approximately $16,000 and $18,000.
Soon after the Device was released, physicians informed Stimwave that they were having trouble implanting the Pink Stylet in certain patients because the Pink Stylet was too long. PERRYMAN knew that the Pink Stylet could not be cut or trimmed to shorten it without interfering with the functionality of the Pink Stylet as a receiver. And, without a receiver component for doctors to implant and seek reimbursement for, doctors would incur a substantial financial loss with every purchase of the Device, thereby making it more difficult for PERRYMAN to sell the Device to doctors and medical providers at the approximately $16,000 price.
However, Stimwave — at the direction of PERRYMAN — did not lower the price of the Device so that its cost to doctors and medical providers could be covered by reimbursement for the implantation of only the Lead. Nor did PERRYMAN recommend that doctors not implant the Device or its receiver component in cases where the Pink Stylet could not fit comfortably. Instead, PERRYMAN directed that Stimwave create the White Stylet — a dummy component made entirely of plastic, but which PERRYMAN misrepresented to doctors as a receiver alternative to the Pink Stylet. The White Stylet could be cut to size by the doctor for use in smaller anatomical spaces and was created solely so that doctors and medical providers would continue to purchase the Device for use in those scenarios and continue to bill for the implantation of a receiver component. To perpetuate the lie that the White Stylet was functional, PERRYMAN oversaw trainings for doctors that indicated the White Stylet was a “receiver,” when in fact it was made entirely of plastic, contained no copper, and therefore had no conductivity. In addition, PERRYMAN directed other Stimwave employees to vouch for the efficacy of the White Stylet as a receiver, when she knew that the White Stylet could not function as a receiver.
As a result of these misrepresentations regarding the functionality of the White Stylet, PERRYMAN caused doctors and medical providers to implant the White Stylet into patients and submit reimbursement claims for implantation of the White Stylet to health insurance providers, including Medicare.
In addition to the prison term, PERRYMAN, 55, of Delray Beach, Florida, was sentenced to three years of supervised release.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation for its assistance in this matter.
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