Two medical device sales representatives have admitted to defrauding New Jersey hospitals and medical facilities out of more than $800,000, U.S. Attorney Paul J. Fishman announced this week.
The two former Integra LifeSciences Corp. (Plainsboro, NJ) employees, Daniel Metz, 34, of Fairfield, NJ, and Charles B. Carey Jr., 35, of Clark, NJ, each pleaded guilty in Trenton federal court to conspiracy to commit wire fraud.
Metz admitted to upping his compensation and improving his employment evaluations by overcharging hospitals and surgery centers through fraudulent methods. This included charging for a larger quantity or a more expensive product than a surgeon actually used.
At the time of the incidents, Metz was a product specialist, who then became a regional manager, and Carey was a product specialist who reported to Metz. Both admitted that Metz taught some of his fraudulent methods to product specialists working under his management. This included Carey, who used those methods.
According to a press release by U.S. Attorney’s Office, District of New Jersey, Integra product specialists were required to call on surgeons to increase sales volume and were often present during surgeries. During such surgeries, product specialists brought along items like pre-packaged Integra products for surgeons and surgery-specific products on consignment trays. Integra billed the hospitals and surgery centers for the products used and product specialists (and their supervisors) received compensation based on salary, sales target-based commission, and bonuses.
Wire fraud carries a penalty of up 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Metz and Carey forfeited $100,000 and $77,000, respectively, for the amounts of money they each made through the scheme; neither are now employed by Integra. Integra has reimbursed the affected hospitals for the fraudulent charges. Sentencing is scheduled for January 20, 2015.
Special agents of the FBI and detectives of the Morris County Prosecutor’s Office led the investigation resulting in the guilty pleas. Jacob T. Elberg, Chief of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit is prosecuting the case.
New Jersey is no stranger to medical fraud cases. Between 2001 and 2004, the University of Medicine and Dentistry of New Jersey was charged with healthcare fraud that included Medicaid double-billing for doctors and outpatient clinics. The medical school’s case ended in a deferred prosecution agreement, which meant a federal monitor oversaw and enforced compliance to reform and resolve illegal practices. The agreement ended in 2008; by 2012, New Jersey state legislature passed a bill to merge UMDNJ (except the School of Osteopathic Medicine) with Rutgers University to form the new Rutgers School of Biomedical and Health Sciences.
Alleged fraud faces more scrutiny now than at the time of the UMDNJ case. Soon after taking the office of U.S. Attorney for the State of New Jersey at the end of 2009, Fishman reorganized the investigation and prosecution of health care fraud and created a standalone Health Care and Government Fraud Office. The office has recovered more than $540 million in settlements, judgments, fines, restitution, and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and more since its inception.
