A Medical Device Daily

A patient suing the maker of an artificial spinal disk, Spine Solutions (New York), has now alleged that the investment firm which financed its development misled patients and federal regulators about the disk's safety and effectiveness.

Earlier this year the patient, Calvin Timberlake, sued Synthes (Solothum, Switzerland), the disk's current maker, because he said the Prodisc device had come apart in his back and had to be removed surgically, leaving him in severe pain.

Timberlake has now added Spine Solutions and the investment firm Viscogliosi Brothers (VB; New York) to the suit.

The amended lawsuit by Timberlake claims that Viscogliosi and the principals running it were under pressure to sell Spine Solutions and receive FDA approval for the Prodisc because they needed to repay "embezzled funds" and "prevent financial ruin and likely criminal indictment."

Viscogliosi responded in a statement that it would "aggressively defend" itself and "take all remedies to defend" its reputation and "achieve justice."

According to the lawsuit, in September 2002 the Manhattan District Attorney's office became aware of accusations that the firm's principals had embezzled money from its investors and began an investigation. Earlier this month, the New Jersey Attorney General's office reported that it had issued subpoenas to Synthes and VB in connection with an investigation of the clinical development, marketing and promotion of the Prodisc (Medical Device Daily, Feb. 7, 2008).

In other legalities: The FBI reported it has cracked a $10 million Medicare fraud ring operating in the Detroit area in which patients were paid kickbacks so their identities and Medicare numbers could be used to support tens of thousands of dollars in fraudulent billings.

The FBI has executed search warrants and shut down six clinics since April. The most recent raid — and the first to result in criminal charges — involves Livonia Wellness Services (Livonia, Michigan).

Federal agents have charged five people connected with the Livonia clinic — which treats patients with HIV/AIDS — with executing a scheme to defraud Medicare.

The president of Livonia Wellness, Juan Fernandez, was arrested by federal agents in Florida along with his wife, Lourdes.

A Detroit man, Clifford Bee, appeared in U.S. District Court in Detroit and was released on bond. Bee, who could not be reached for comment, allegedly drove a clinic van and distributed cash to patients.

Two other defendants, Tania Valdes, of Hialeah, Florida, and Aida Romos, of Orlando, were being sought by federal authorities. Tania Valdes is Lourdes Fernandez's sister, officials said.

More charges are expected. Federal agents "have identified multiple clinics in the Detroit area involved in this scheme, with a total Medicare reimbursement amount of over $10 million," according to an FBI affidavit cited in The Detroit News.