Three years ago, Dr. C. Dustin Bechtold and Dr. Bryan Wellman sued Sanford neurosurgeon Wilson Asfora and Sanford Health in the U.S. District Court of South Dakota for defrauding the federal government and us, the taxpayers. The court almost immediately sealed the case to keep individual health information confidential.
On Thursday, after United States Department of Justice notified the court that the feds are intervening and going after Dr. Asfora and Sanford as well, the court unsealed a redacted version of the original 2016 complaint.
The complaint is big—111 pages. Here’s my summary of the main points of concern.
Drs. Bechtold and Wellman allege that Dr. Asfora, Sanford Health, Sanford Clinic, and Asfora’s medical device company Medical Designs, LLC committed “violations of the Federal False Claims Act, 31 U.S.C. §§3729–3733 et. seq. and the Federal Anti-Kickback Statute related to causing improper payments from Medicare, Medicaid, and other federally and state-funded government healthcare programs. The 2016 complaint says Dr. Asfora committed a variety of naughties:
- submitting false claims for services;
- implanting his devices in patients who didn’t need them, just to make a buck;
- fraudulently and improperly billing and coding;
- telling lies (the formal term is “misrepresentations”) to the FDA and others;
- falsifying medical records;
- systematically violating the Federal Anti-Kickback Statute; and
- defrauding Uncle Sam;
…and Sanford Health and Sanford Clinic management “were aware of, permitted, actively encouraged, and financially benefitted from” all of Asfora’s fraud.
The plaintiffs allege that Sanford has made millions of dollars by encouraging the unnecessary use of two of the medial devices Asfora as designed and now sells: Bullet Cages used for spinal fusion procedures and Samba Screws used to fuse the sacroiliac joint in the pelvis.
Asfora’s devices are “physician preference devices,” meaning “there are comparable devices on the market that are similarly indicated and can perform just as well or better….” The complaint alleges that Dr. Asfora, the sole owner of Medical Designs, is the only spine surgeon in America who uses Bullet Cages and Samba Screws. No one else at Sanford or elsewhere uses the Bullet Cages, claim the plaintiffs, because “technology has advanced” and “in large part, has rendered the Bullet Cage obsolete.”
The complaint alleges Asfora has offered other doctors “under the table” fees to use his Samba Screws and uses middle-man Orthofix sales rep Jesse Talcott as a “façade” for his self-interested over-prescription of his devices. Bechtold noted that many patients on whom Asfora performed spinal and sacroiliac surgery subsequently came to him reporting hip pain. The complaint says Asfora performed surgery against conservative guidelines followed by almost all other surgeons and appears to have caused patients’ chronic hip pain. In 2015, Asfora performed “medically unnecessary, not indicated and very dangerous” spinal surgery on a patient who subsequently developed paralysis.
The complaint alleges that Asfora stated that “he makes $3.5 million a year off his various implants.”
The plaintiffs note that they aren’t the first to blow this whistle. In 2013, defendants Sanford, Asfora, and Wellman (!) paid $625,000 to settle a suit over “consulting fees” paid to physicians from May 2010 through April 2011 as kickbacks to induce use of Asfora’s Bullet Cages. That case prompted then U.S. Attorney Brendan Johnson to restructure his office to spend more time pursuing medical fraud cases. Wellman and Bechtold allege that, rather than learning his lesson from that settlement, Dr. Asfora and his company “have expanded their fraudulent conduct greatly and become more brazen, now risking patient injury on a routine basis for their own financial gain.”
The current plaintiffs say they “and others” reported fraud over two years to six top Sanford officers: the presidents of Sanford Clinic and Sanford Medical Center, the executive VP of Sanford Clinic, and Sanford’s chief of staff, chief medical officer, and chief compliance officer. They met “intimidation and threatened discipline” and a “culture of tolerance and encouragement of the fraud.” Plaintiffs thus blew the whistle to the U.S. Attorney on May 2, 2016, and August 4, 2016.
The plaintiffs allege that Sanford has fostered the kind of corruption of which they accuse Asfora with profit-focused changes to its compensation system, creating incentives to “maximize reimbursement” and “pushing its surgeons to bill for their PAs in surgery regardless of whether or not they were present and actively assisted,” in violation of Medicare regs.
The complaint states that numerous internal complaints prompted the peer review committee to ask Wellman and Dr. Geoff Haft to review some of Asfora’s cases. Those two doctors determined that “Dr. Asfora was not correctly performing surgeries as he was performing medically unnecessary procedures and unnecessary multi-level procedures.” The peer review committee recommended an external peer review. Then-Chief Medical Officer Kenneth Aspaas “took charge of collecting the cases and informed the committee that he would send them out for outside peer review” but then never reported any results. In 2013, new Chief Medical Officer Michael Wilde informed Drs. Wellman, Haft, and Gust that the cases Dr. Aspaas had collected “had never been sent out for peer review and could not be sent out now without a formal complaint.”
The complaint alleges numerous subsequent instances of Sanford covering for Asfora in repeated surgical errors. The complaint also reports a September 2015 conversation with Wilde about CEO Kelby Krabbenhoft’s opposition to firing Asfora:
Dr. Wilde stated at this meeting that he thought Dr. Asfora would get fired. However, he also discussed how difficult it might be to terminate him. First, he warned that CEO “Kelby hates firing doctors—hates it,” so the CEO was an initial obstacle according to Dr. Wilde. Second, Dr. Wilde stated to the group, “from what I’ve heard from Farritor and Ken Aspaas, is that Asfora was right in the crosshairs, they were going to pull the trigger [to fire him], and Kelby said no,” Dr. Wilde in this meeting called this a “get out of jail free card” for Dr. Asfora [complaint, United States of America et al. v. Asfora et al., originally filed 2016.08.12, filed redacted 2019.06.27].
In October 2015, the complainants say they were informed that Sanford had moved to fire Asfora, but by the end of the month, Asfora was reinstated and claimed in a phone call to Wellman that “he had personally spoken to Kelby [Krabbenhoft] (CEO) and to massive and very influential Sanford donor, Denny Sanford, and that they helped get him resintated.”
It is worth noting that compliance with the Anti-Kickback Statute is a condition for participating in Medicare, Medicaid, and other federally and state-funded healthcare programs. If Sanford has been violating the Anti-Kickback Statute, it could lose the ability to treat patients covered by Medicare and Medicaid… which could have crushing implications for healthcare access around South Dakota.
This lawsuit is much more than a Medicare/Medicaid fraud allegation against one profiteering doctor. This lawsuit challenges the Sanford behemoth, all the way to top executives and namesake billionaire Denny Sanford himself, saying that one of South Dakota’s two dominant providers has actively encouraged and profited from unnecessary surgical implants that have hurt patients and cost taxpayers millions of dollars.
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By the way, paragraph 59 of the complaint explains that the Patient Protection and Affordable Care Act “amended the Medicare Anti-Kickback Statute… to specifically allow violations of its “anti-kickback” provisions to be enforced under the False Claims Act.” So Our Congressional delegation, in its frequent but as yet futile calls to repeal the PPACA have actually been arguing to make it harder to prosecute Medicare fraud.
No wonder the congressional delegation fights to continue to allow Medicare fraud, it’s all about the Benjamin’s that get donated to their campaign war chests. For these Sanford guys to kick the crooks out and then to allow them back in again, clearly shows why healthcare is a racket that needs to be nationalized. Wonder how much the poor patient got for the paralyzing situation. Probably not to much because lawyers don’t want to handle medical cases and with the tort game in place, make it a losers game.
What a terrible story. It’s not just the fraud but unnecessary medical procedures. Difficult to understand why this was only against Medicare and Medicaid. Their claims are processed in a similar manner as for-profit companies by Medicare Administrative Contractors who should review for medical necessity. The checks and balances clearly aren’t working. Since it’s not the contracted company’s money that might be the cause. What a mess. This is a concern as Sanford now has their own insurance policies and won’t accept Avera’s coverage and vice versa (unless that’s changed) and the cost of their Obamacare policies went through the roof. Who’s watching the hen house???
He shoulda marketed some of that stuff to the bike parts industry. Everyone would want to own a drillium seatpost bolt.
Cory writes:
Great summary, Cory.
Here’s my attempt at a libertarian recap. The federal government forcibly confiscated millions of dollars of our money from the private-sector economy and violated the Constitution by giving it to them for doing that.
Great coverage!
Kurt – FYI – Sanford and the healthcare industry in this country is almost exclusively in the ” private-sector economy” you are so adamantly claiming is being defrauded by the gov’t. Reality check buddy – it’s actually the other way around. Take your starred and striped glasses off and you’ll see much more clearly.
Kurt, I don’t think we need to turn this complaint into a partisan or ideological issue… but if you’re going to go there, I’ll rebut with this version: “We the People agreed to work together to provide health coverage to people whom the free market fails to protect. The complaint alleges that one greedy doctor decided to cheat all of us and make money by hurting our vulnerable neighbors. The complaint also alleges that leaders of one hospital not only overlooked but encouraged that cheating and harm. We the People are now working together to investigate and prosecute these cheaters.”
Bad actors will always be around to cheat us. When we work together through government, they’ll try to cheat us through government. The solution is not to go anarcho-libertarian and leave everyone to fend for herself. The solution is to keep our hand on the tiller to ensure smart government and keep our U.S. Attorneys on the lookout for scammers.
Will this stop the Unity Health Merger?
The problem with government run anything it doesn’t feel like real money to those involved and the incentives are gone. I laughed out loud reading Jerry’s comment this shows healthcare should be nationalized. More likely it shows if the company approving those claims had been the actual payor and the money coming out of their pocket, they would have been scrutinizing every dollar that left the building. But if the government has a loose contract with someone to administer Medicare/Medicaid and doesn’t benefit them to make sure everything is medically necessary, the checks and balances fail as they too often do with anything government because it’s not their money. The best and brightest are not attracted to government work. Last time we met the feds out in the country they all left their vehicles running for a long period, the rest of us turned our cars off. After they left we all commented on that why would they care it wasn’t their gas but I bet they would turn off their own car. Jerry wants to hand the keys to these people. No thanks!!! I’ll trust competitive forces more so than a government-run monopoly.
Well, well, well. Isn’t this an interesting development? Sanford, co-owner of SD with Koch and a couple others, is getting in trouble on a federal level. Tsk, tsk. I’ll be keeping an eye out for more info as this develops.
In the meantime, those greedy bastards sentenced innocent people to years or a lifetime of pain to pad their own pockets. What heartlessness. (They’ll probably be offered jobs in Wilted Weenie’s deministration.) Such cruelty is beyond the pale. (Unless you are in Wilted Weenie’s deministration. Then it’s simply SOP.)
I might be professing my ignorance on this issue, but did this whole thing come to light because of due diligence with the planned big merger?
There are many on DFP who’ve made bad choices in their lives and won’t admit it. Instead, they blame government. I suppose that’s easier than facing up to the misery they’ve created for themselves.
Some of those commenting just don’t get it….Kelby, Sanford CEO IS ObamaCare….Obama had little to do with it besides give it his name. Kelby said at the 2012 Sanford Promise Lab conference and I quote ns I sat right in front when he said, “No matter what you politics are, we cannot repeal PPACA, commonly called “ObamaCare” or Sanford will have to go back to the drawing board”…!!!
Tom Daschle and Mike Rounds BOTH worked together a the Bipartisan policy center FOR the government takeover of healthcare …why? they were promised and promising kickbacks!!! Daschle even says so in this books. Sanford is an ObamaCare ACO (Accoutable Care Organization) that controls the ObamacAre funds. Rounds and Daugaard had 2 bills in 2007 (predating “ObamaCare” but still planning a government takeover of Healthcare)…one for the “individual mandate” and the other one for a “Healthcare Exchange”…terms we did not even know were part of what came to be called “ObamaCare. Sanford LOVES ObamaCare…because of the promised kickbacks
Lora, are you saying Sanford got paid for these patients more like an HMO? Not a fee for service model? It makes it a bit more confusing to understand the nuts and bolts of how this fraud took place if they only get a set amount for each enrolled person.
“Capitation is a payment arrangement for health care service providers. It pays a set amount for each enrolled person assigned to them, per period of time, whether or not that person seeks care. The amount of remuneration is based on the average expected health care utilization of that patient, with payment for patients generally varying by age and health status.”
https://en.wikipedia.org/wiki/Accountable_care_organization#Payment_models
Lora, there in no factual information in your assertion. Absolutely none. There is no link between the ACA and an unethical surgeon. I hate stories like this and I hate seeing people struggling to afford health insurance and healthcare. Healthcare shouldn’t be a for-profit service and it doesn’t have to be.
Meanwhile, Denny the billionaire should’ve done something as he seemed to be privy to.
When will be figure out that the game is against us? When will we figure out that getting any kind of service is now something of a crap shoot to see who is going to dig the deepest into our pockets. But, South Dakota has our trusts that shield these vampires from taxes and from paying their fair share. Lovely.
“The three wealthiest people in the United States—Bill Gates, Jeff Bezos, and Warren Buffett—now own more wealth than the entire bottom half of the American population combined, a total of 160 million people or 63 million households.
America’s top 25 billionaires—a group the size of a major league baseball team’s active roster—together hold $1 trillion in wealth. These 25 have as much wealth as 56 percent of the population, a total 178 million people or 70 million households.
The billionaires who make up the full Forbes 400 list now own more wealth than the bottom 64 percent of the U.S. population, an estimated 80 million households or 204 million people—more people than the populations of Canada and Mexico combined.
The median American family has a net worth of $80,000, excluding the family car. The Forbes 400 own more wealth than 33 million of these typical American families.
One in five U.S households, over 19 percent, have zero or negative net worth. “Underwater households” make up an even higher share of households of color. Over 30 percent of black households and 27 percent of Latino households have zero or negative net worth to fall back on.
These figures underestimate our current levels of wealth concentration. The growing use of offshore tax havens and legal trusts has made the concealing of assets more widespread than ever before.”
I’d written:
Porter Lansing writes:
I lost the prime of my life, the opportunity to raise a family, and dozens of personal friends because “justices” on David Gilbertson’s supreme court and employees of Larry Long’s attorney general’s office were winking at each other in the halls of the state capitol:
https://groups.google.com/forum/m/#!topic/rec.music.christian/0fuc26fMYUE
If Porter is waiting for me to say what they did to me was just, he’ll probably still be waiting when he dies.
Wow.. I had a consultation with him through the VA for my back about 5-6 years ago.. I passed on another back surgery.. He was very gung ho about his spinal cages, too much so and it set off some bells and whistles for me. Which opens up another area of concern that isn’t even mentioned..
“I lost the prime of my life, the opportunity to raise a family, and dozens of personal friends because “justices” on David Gilbertson’s supreme court and employees of Larry Long’s attorney general’s office were winking at each other in the halls of the state capitol:”
And unfortunately, it continues to twist your outlook on life. There is good help available so that your life can be better, you can let go of your apparent bitterness and anger and have a happier, more fulfilling life.
I’m serious about that. It’s not snark. However traumatic that experience was, it doesn’t have to define your life.
Senator Nelson, are you wondering if Dr. Asfora may also have defrauded the VA?
And, if we may ask, Senator, what alternative treatments did you pursue?
Mr. Sol, good question! I’ll keep chugging through the complaint to see if there is any mention about merger investigations. I’d need to check the timelines: when did the Bismarck merger that just got blocked start? The Iowa merger was just announced, so that wouldn’t have been part of any due diligence when the complaint was first filed in 2016.
Kurt … I’m not waiting for you to say anything. Getting free advice from the Lord’s angel Debbo is something you should cherish, though. My advice is more earth bound.
“Don’t be concerned with what people think about you because they rarely do.”
Wow Stace Nelson it was wise of you to listen to your gut. Number 130 and 131 discuss his cage and way overagressive surgeries. Earlier they talked about A&B reimbursement so I don’t think this fraud occurred because of ACO. They used to say back surgeries have such little success (unless that’s changed) and the best thing was not being overweight and exercising just sayin. I’m looking at a picture of you and Cory with machine guns what’s that all about nobody likes a lecture but you’re two Corys.
https://i0.wp.com/staging.dakotafreepress.com/wp-content/uploads/2018/01/Stace-and-Cory-Militia.jpg
Personally, I doubt the lawsuit will affect the UnityPoint merger, as that is almost complete. The real question is what other Sanford mergers in process might the publicity affect?
According to the plaintiffs’ complaint, two of the four alleged counts involve “tens of millions of dollars” in actual harm to the U.S. government that might be recovered, in addition to punitive damages and attorneys’ fees. The other two counts include damages “to be determined” plus punitive damages and attorneys’ fees.
Taken as a whole, these damages, if proven and assessed, could materially affect Sanford Health’s profitability in the year or years when they are assessed. More likely, a negotiated settlement and a payment plan will keep the health system from suffering any real financial damage. In addition, there is the possibility that insurance may cover all or portions of a voluntary settlement (but necessarily not a court judgement). Another reason to go for a settlement.
Finally, T. Denny Sanford’s potential involvement in all this is based on a report of a single conversation between one of the plaintiffs and Dr. Asfora in which *Dr. Asfora* allegedly said that he had Mr. Sanford’s support as well as that of CEO Kelby Krabbenhoft. There is no independent confirmation of this alleged statement from either Dr. Asfora or Mr. Sanford included in the complaint.
Cory:
The Bismarck merger was blocked due to antitrust issues. From the Bismarck Tribune:
A three-judge panel of the 8th U.S. Circuit Court of Appeals on Thursday affirmed a December 2017 decision by U.S. Magistrate Judge Alice Senechal to side with the Federal Trade Commission and the North Dakota Attorney General’s office, whose position is that a merger could result in antitrust law violations because it could lessen competition.
“If the companies merge, then Sanford will have the following market shares in the Bismarck-Mandan region: 99.8% of general surgeon services, 98.6% of pediatric services, 85.7% of adult primary care physician services, and 84.6% of OB-GYN physician services,” the appeals panel wrote.
Good summary Cory, it is different than the summaries carried in the media.
I would encourage you to keep on this watchdog investigation. Start with the IRS 990s – there are a reason why those physicians that make enough to be required to be listed earn so much.
Rackets like this happen because of a lack of transparency. We have spent years developing a health care system that we are supposed to trust to do the right thing, but we have no way to make informed decisions, when we have no knowledge of how much the care we will be seeking will cost. Health care systems are able to exploit that lack of transparency for excess gain.
It is unfortunate that we do not have better (or better utilized) mechanisms to identify and police these less than honest actors. We are just seeing our wages decrease as our health care system continues to siphon off more of our money for health insurance.
MD:
I’m afraid the Form 990 returns for Sanford won’t tell you much. The 2016 return only lists the top five Sanford-employed doctors who aren’t also trustees or corporate officers. Dr. Asfora isn’t one of the five.
There are over 2,600 people at Sanford Health who made more than $150,000 in 2016 and whose compensation is *not* required to be itemized on the 2016 Form 990.
Oops – in place of “$150,000,” use “$100,000.” The lower figure is correct. I apologize for the error. If I could edit my reply (like I could on Facebook), I would.
That Sioux Falls paper had an investigation on this back in 2014 and Dr. Blake, SD legislator, was one of the doctors that had a vested interest in this Medical Designs Company.
Follow the Money, SD Doctors must be learning from Pierre.
Dr Blake Curd
A Curd/Asfora nexus? I can’t find that 2014 article on the Googles, Jenny, but Open Secrets says that Asfora gave Curd $500 for his failed 2010 US House bid against Noem and Nelson. He also gave Democrat Corinna Robinson $250 toward the end of 2013.
The 2016 federal lawsuit (complaint) filed by the two doctors mentions Medical Designs as being 100% owned by Dr. Asfora. I went to the SD Secretary of State’s website and reviewed the annual corporate filings for the company and found no reference to Dr. Blake Curd. The only listed corporate managers since the mid-2000s are Wilson and Rose Asfora.
Medical Designs is not owned 100% by Dr Asfora. Cory look up the 2014 investigative piece from the Argus Leader.
MD complains About a lack of transparency but Kelby Krabbenhoft CEO of Sanford repeatedly ignored warnings by Medicare.
Sanford doctors should be on straight salary like Mayo Clinic doctors, there is less temptation for scams like this to happen. Wyland, are you a lawyer for Sanford? You sound desperate to protect them.
It is naive to believe that Krabbenhoft had no inkling this money making scheme was going on after repeated Medicare warnings.
Jenny:
I’m definitely not a lawyer for Sanford. If I were a lawyer and I had Sanford for a client, they would – and should – fire me for engaging in discussing their business in a public blog!
I looked for the 2014 Argus Leader story and found one outlining the results of the qui tam lawsuit covering 2010 and 2011 that was settled for $650,000. Here’s the link: https://www.argusleader.com/story/news/2014/07/26/sd-sharpen-focus-fraud-cases-health-care/13231717/
I did not find an investigative report on the Argus web site. Do you have the link to the story you referenced so I can read it?
Richard Schriever writes:
That’s absurd. Government pays roughly half of the bills in the healthcare industry, micromanages the rest of it, and constantly stifles innovation.
Are you saying the government is being defrauded by the private-sector economy?
What’s that supposed to mean? That I’ll see what’s best for America if I stop caring about it?
I had back fusion by Dr. Asfora in 2012, it was a very bad experience. I can not walk , sit , sleep and have many many problems . I new after my surgery something was wrong, I have never been the same . I have neuropathy, depression , everyday is a battle just to live. I want answers , Dr. Asfora told me only be down 2 weeks . 7 years later and Dr. Asfora is a fraud . So where does this leave me and other patients suffering ?
I am a patient of Dr Asfora to present..I am so proud of him for stepping outside the box..he had limitations that I know some patients cdnt get all the care..had it been up to him I know he would have gone all the way..when I met him.. my life as facing paralysis came together..Im still walking n alls best it can be! For the patients that were a success, we’re lost too.. dont even want to go outside incase I fall..I pray he starts his own hospital cuz he does make miracles come true. His patients will miss him..n again.. I’m so glad he stepped outta the box I wouldn’t have wanted him any other way.
Did the South Dakota Board of Medical and Osteopathic Examiners get involved with Asforia?…