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DOJ: Sanford to pay $20M to settle kickback allegations

SIOUX FALLS, S.D. — Sanford Health, one of the nation’s largest health systems, has agreed to pay more than $20 million to resolve kickback allegations stemming from a whistleblower lawsuit filed by two Sanford doctors, the U.S. Department of Justice said Monday.

The lawsuit alleged that the health system based in Sioux Falls, South Dakota, knowingly submitted false claims to federal health care programs for medically unnecessary spinal surgeries, the DOJ said.

“Kickbacks can compromise a physician’s medical judgment, result in unnecessary procedures, and increase health care costs for everyone,” Assistant Attorney General Jody Hunt of the Justice Department’s Civil Division said in a news release.

In a statement, Sanford chief operating officer Matt Hocks said the health system denies any liability or wrongdoing. Hocks said Sanford settled because the $20.25 million amount is “far less than the unnecessary costs and operational disruption that would have persisted for multiple years.”

South Dakota U.S. Attorney Ron Parsons said kickback schemes “create inherent conflicts of interest and warp the medical decision-making process.”

The settlement resolves allegations that Sanford knew one of its top neurosurgeons was receiving kickbacks for his use of implantable devices distributed by his physician-owned distributorship.

Sanford received warnings from the neurosurgeon’s colleagues and others about the alleged kickback scheme, the DOJ said. They repeatedly warned that the neurosurgeon was performing medically unnecessary procedures involving devices “in which he had a substantial financial interest,” the department said.

Despite those warnings, Sanford continued to employ the neurosurgeon, Dr. Wilson Asfora, allowed him to profit from the devices he used in surgeries performed at Sanford, and submitted claims to federal health care programs for those surgeries, including procedures that were medically unnecessary, the DOJ said.

Sanford stands behind the medical treatment that Asfora provided, Hocks said.

“We remain committed to our providers doing what is best for their patients and supporting them in bringing innovative interventions and treatments to patients and communities,” Hocks said.

Asfora worked for Sanford from 2007 until he was fired in August 2019, a month after Hocks and two other Sanford executives told employees in an email that the allegations were “bogus.”

In a statement issued through his attorney, Asfora said he didn’t perform any unnecessary surgeries and that he didn’t do any surgeries to profit from using medical devices he invented.

“I stand by my work as a physician and made every single medical decision based solely on my judgment as to what was the best for my patient, not myself,” Asfora said.

Drs. Carl Dustin Bechtold and Bryan Wellman, who filed the 2016 whistleblower lawsuit, will receive $3.4 million of the settlement money under the False Claims Act, which allows whistleblowers to bring lawsuits on behalf of the government and share in any recovery.

Sanford includes 44 hospitals, 1,400 physicians and more than 200 Good Samaritan Society senior care locations in 26 states and nine countries.

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