Colorado Neurosurgeon And Related Companies Pay $2.35 Million To Resolve Allegations of Illegal Kickbacks

DENVER – United States Attorney Jason R. Dunn announced today that Dr. William Choi and three companies he owned have paid the United States $2.35 million to resolve civil allegations that Dr. Choi received illegal kickbacks from distributors of spinal implant devices that he used in surgeries he performed.

The federal Anti-Kickback Statute makes it generally unlawful for a doctor to solicit or receive money or other remuneration paid to influence the doctor’s health care decisions.  This statute protects patients whose medical expenses are paid from federal health care programs (such as Medicare and Medicaid).  An unlawful kickback may occur if a doctor receives money or other perks intended to influence that doctor’s health care decisions, such as a referral to another practitioner or a choice of supplies for a surgery.  

The United States alleges that Dr. Choi arranged to receive unlawful kickbacks, as follows.  Dr. Choi is a neurosurgeon who, among other services, performs spinal surgeries.  During the time period relevant to this matter, Dr. Choi performed surgeries at Sky Ridge Medical Center, Castle Rock Adventist and Porter Adventist hospitals.  In 2011 and in 2015, Dr. Choi caused the creation of two distributorships of spinal equipment: Nexus Spine, LLC and 4D Spine, LLC.  These two distributorships provided spinal implant equipment, such as rods, screws and cages, to hospitals for use in surgeries that Dr. Choi performed.  Dr. Choi arranged for third parties to serve as the registered owners of both Nexus and 4D, while he secretly maintained control of both distributorships and the money those distributorships made.  Through this arrangement, Dr. Choi solicited and received from Nexus and 4D improper payments and other benefits. 

The United States alleges that this conduct violated the federal Anti-Kickback Statute, as well as the federal False Claims Act because these kickbacks meant that false claims for payments were made to federal health care programs – Medicare, Medicaid, and TRICARE.  These payments were made for more than five years, from November 1, 2012 through June 30, 2017.  

The lawsuit resolved by this settlement was originally filed by Mark Rahe.  Mr. Rahe was an employee of Dr. Choi’s medical practice and, later, of distributorship 4D.  As such, Mr. Rahe had inside knowledge of the kickback relationships.  Mr. Rahe filed a civil action, under seal, in the United States District Court for the District of Colorado, captioned United States ex rel. Mark Rahe v. William Choi et al., No. 17-cv-01208-WJM-NRN (D. Colo.).  Under the False Claims Act, private citizens who know about a fraud against the United States may present those allegations to the government by bringing a lawsuit under seal on behalf of the United States.  If the government’s investigation substantiates those allegations and the United States obtains a monetary recovery under the False Claims Act, the private citizen may share in that monetary recovery.  

“When doctors receive kickbacks, those kickbacks undermine patient trust in our healthcare system, and they also drive up medical costs,” said United States Attorney Jason Dunn. “It is important for patients to know that when a doctor chooses equipment for a surgery, that decision is being made solely on that patient’s best interest, and is not impacted in any way by someone paying a kickback.  And it is important for doctors to know that if they get illegal kickbacks, they face serious penalties.” 

“In 2013, we issued a Fraud Alert warning of physician owned distributorship schemes.  The concern then, as now, is that surgeons would choose the most profitable products from distributorships they controlled and pass the bills to taxpayers,” said Curt L. Muller, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.  “Working closely with our law enforcement partners, we will continue protecting the integrity of federal healthcare programs.”

"This settlement highlights the commitment of the Defense Criminal Investigative Service (DCIS) and its law enforcement partners to protect the integrity of the Department of Defense (DoD) health care program known as TRICARE," said DCIS Special Agent in Charge Michael C. Mentavlos.  "DCIS aggressively investigates health care providers that defraud the DoD, to preserve American taxpayer dollars intended to care for our warfighters, their family members, and military retirees."

The claims settled by this civil agreement are allegations.  In entering into this civil settlement, Dr. Choi did not admit to any liability.    

The United States was represented in this matter by Assistant United States Attorney Andrea Wang.