Neurosurgeon Agrees To $2.35 Million Settlement After Employee Reports Kickback Scheme

(CBS4) -- A Colorado neurosurgeon has agreed to pay the federal government $2.35 million to resolve allegations from a former employee who accused the doctor of manipulating medical payments back to himself.

The Denver office of the U.S. Attorney General alleges Dr. William Choi, from 2011 to 2015, performed spinal surgeries at three hospitals -- Sky Ridge Medical Center, Castle Rock Adventist and Porter Adventist. Money from federal healthcare programs, including Medicaid, Medicare, and TRICARE, was paid to two distributorships, Nexus Spine, LLC and 4D Spine, LLC for spinal implant equipment such as rods, screws, and cages.

Those devices were sold to the hospitals where Choi performed the spinal procedures during those years.

The two equipment distributorships were not registered in Choi's name. But the federal investigators discovered the companies were in fact secretly controlled by Choi.

Choi's actions violated the federal Anti-Kickback Statute as well as the federal False Claims Act.

Mark Rahe, at one time an employee of Choi, filed a civil action, under seal, with the federal court in 2017. Under federal policy, Rahe is eligible for an undetermined portion of the government's settlement. No amount was announced in the attorney general's press release.

"In 2013, we issued a Fraud Alert warning of physician owned distributorship schemes," said Curt L. Muller, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. "The concern then, as now, is that surgeons would choose the most profitable products from distributorships they controlled and pass the bills to taxpayers."

United States Attorney Jason Dunn said, "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."

By agreeing to the civil settlement, Choi did not admit to any liability.

An analysis by Dexur Health said Choi treated almost 100 more inpatient cases than the next highest-performing spine surgeon in Colorado between January 2013 and December 2016.