Innovasis Inc. and Executives to Pay $12 Million for Alleged Kickback Scheme

by Anna

Spinal device manufacturer Innovasis Inc., along with senior executives Brent Felix and Garth Felix, have agreed to pay a total of $12 million to resolve allegations of violating the False Claims Act. The allegations center around claims that they paid kickbacks to spine surgeons to induce the use of Innovasis’s spinal devices. Brent Felix, the founder, President, and Chairman of the Board of Innovasis, and Garth Felix, who held various leadership roles including Chief Financial Officer, were implicated in the scheme. Innovasis is headquartered in Utah.

“Payments from medical device manufacturers intended to influence a physician’s judgment about which medical devices or supplies to select are illegal,” stated Principal Deputy Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “When medical devices are used in surgical procedures, patients deserve to know that their device was selected based on quality of care considerations and not on improper payments from manufacturers.”


U.S. Attorney Leigha Simonton for the Northern District of Texas emphasized the importance of integrity in healthcare: “The integrity of our healthcare system is dependent upon physicians’ recommendations being motivated by patient health. Any time we learn that physician recommendations are being corrupted by improper financial inducements, we will seek to hold those involved accountable.”


Special Agent in Charge Jason E. Meadows of the Department of Health and Human Services Office of Inspector General (HHS-OIG) echoed these sentiments, noting, “Improper financial arrangements can compromise medical judgment and adversely influence the medical decision-making process. These arrangements have no place in our healthcare system, and we will continue working with our federal partners to pursue such allegations.”


The Federal Anti-Kickback Statute prohibits offering or paying anything of value to induce referrals of items or services covered by Medicare and other federally funded programs. This statute ensures that medical providers’ judgments remain untainted by improper financial incentives.


The settlement resolves allegations that from January 1, 2014, through December 31, 2022, Innovasis provided improper remuneration to seventeen orthopedic surgeons and neurosurgeons to induce them to use Innovasis spinal implants and other equipment in procedures on Medicare beneficiaries. This alleged conduct violates the Anti-Kickback Statute.

Innovasis’s alleged improper remuneration included consulting fees, intellectual property acquisition and licensing fees, registry payments, and performance shares. Additionally, the company allegedly provided travel to a luxury ski resort, lavish dinners, and holiday parties for surgeons, their office staff, and family members.

Specifically, Innovasis allegedly paid physicians for consulting services at rates far exceeding fair market value or for work that was never performed. They also allegedly paid inflated prices for intellectual property, which was not properly valued and never utilized for product development. Furthermore, Innovasis funded physicians’ attendance at a company-sponsored conference at a luxury resort in Deer Valley, Utah, covering travel, lodging, and high-end meals.

During the period in question, Brent Felix and Garth Felix allegedly controlled Innovasis’s operations, strategic decisions, and agreements with surgeons who received improper remuneration.

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