Ominous Outlook For Physician-Owned Distributors

Law360, New York (September 22, 2014, 10:11 AM EDT) -- On Sept. 8, 2014, the U.S. Department of Justice filed a False Claims Act case in the Central District of California against Reliance Medical Systems LLC, two related distributors (Apex Medical Technologies Inc. and Kronos Spinal Technologies LLC), and several of their physician owners, based on the theory that investment returns from these physician-owned distributors (PODs) were unlawful kickbacks.

The DOJ has been investigating Reliance and its financial relationships with investor physicians for several months.[1] This new filing is significant, however, in that it represents the first time that POD investigations have led the government to file its own FCA lawsuit...

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