This week, the U.S. Attorney’s Office for the District of Colorado (“USAO”) announced that it entered into a series of interrelated settlement agreements with companies that provide intraoperative neuromonitoring (“IONM”) services, the companies’ founder, a neurosurgeon, and a businessman affiliated with the companies.  IONM services involve the use of electrodes to monitor a patient’s nervous system during surgery.  The typical IONM service workflow involves an IONM technologist being physically present in the surgical suite during the surgical procedure, with an oversight professional (usually a physician) remotely interpreting the IONM data.

In the settlement agreement, the USAO alleged that the companies paid illegal remuneration to surgeons through joint venture companies to induce such surgeons to order IONM services from the companies, in violation of the Federal anti-kickback statute (“AKS”).  With respect to the neurosurgeon, specifically, the USAO alleged that a portion of the proceeds that the companies received from Federal health care programs (“FHCPs”), including through Medicare Advantage organizations and from the Colorado Medicaid program, were routed to the neurosurgeon, in violation of the AKS.  To resolve the allegations against them, the companies and individuals agreed to pay more than $2 million.

This recent resolution is consistent with the Federal government’s historical and ongoing concerns relating to joint ventures.  Indeed, one need not look further than last year to find an unfavorable advisory opinion issued by the Office of Inspector General for the U.S. Department of Health and Human Services (“OIG”) regarding joint ventures involving IONM services.  The OIG specifically opined that the proposed arrangement to pay surgeons, under various methodologies, in exchange for referring patients for IONM services did not satisfy any statutory exception or regulatory safe harbor and was not sufficiently low risk for OIG to provide a favorable advisory opinion.  In fact, OIG reasoned that the proposed arrangement “present[ed] a host of risks of fraud and abuse … including patient steering, unfair competition, inappropriate utilization, and increased costs to [FHCPs].”  In light of OIG’s concerns reflected in the unfavorable advisory opinion,  this particular USAO settlement agreement is not surprising.

Health care providers and other participants in FHCPs should remain vigilant when structuring arrangements involving not only IONM services specifically but also joint ventures generally.  Proskauer’s Health Care Group will continue to monitor developments in this area and can assist with structuring such arrangements for regulatory compliance purposes.