Legal Magazine

Medical Device ‘Prosthetic Mafia’ Faces Fraud Lawsuits

Posted on the 03 January 2017 by Angelicolaw @AngelicoLaw

Though the vast majority of Brazilians receive their health care free through the national health system, the market for private insurance continues to grow. As the number of people purchasing private insurance coverage grows, so too have fraudulent insurance claims. Some private insurers are now taking legal action against the medical device companies they say are behind insurance claims for unnecessary implant procedures. The allegations have spawned a derisive name for this group of companies: the “Prosthetic Mafia.”

The fraud claims are crossing international borders. The Associação Brasileira de Medicina de Grupo, the Brazilian medical industry nonprofit more commonly referred to as Abramge, filed a lawsuit in the U.S. state of Delaware in December, according to Courthouse News. The complaint, which names Boston Scientific, Arthrex, and Zimmer Biomet, claims that since 2006, the companies used Brazil-based subsidiaries and distributors to make payments and kickbacks to doctors. The alleged goal was to sway surgeons to use the devices made by the companies, even if the devices were not medically necessary.

According to another lawsuit filed in the U.S. state of Michigan, the insurance companies claim medical device company Stryker used a Brazilian subsidiary and a team of distributors to bribe physicians to use its medical devices. They also allege Stryker inflated the price of the products that were billed to the insurance companies and doctors received kickbacks amounting to as much as 40 percent of the inflated sales prices.

Abramge says the medical device companies are benefiting from a law that requires insurance companies to cover medical device implants based on the decision of a physician, Courthouse News reported. That means insurance companies must pay the bill, regardless of whether the device was needed or not.

The medical device companies have not commented publicly on the fraud allegations, but it seems they are well aware of the claims made against them. While the lawsuits continue to play out, revelation of the discrepancies has led to changes. Both the price of the medical equipment and the number of procedures to install the medical devices has apparently dropped dramatically since the lawsuits were filed.

As Brazil goes from one legal scandal to the next, it seems now the medical device industry is taking its turn in the eye of the storm.

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