Reliance loses bid to dismiss allegations of spine surgeon kickbacks

Laura Dyrda -  

A federal judge in California has denied spinal device company Reliance Medical's attempt to dismiss a lawsuit accusing the company of paying kickbacks to surgeons.


The lawsuit alleges Reliance Medical paid physician investors to use its products based on the volume of units sold. The company was founded in 2006 and distributed implants through physician-owned subsidiaries.

The company allegedly enticed physicians who used their products to buy in, sometimes at low rates, and physician investors who were frequent users allegedly received higher returns, according to a 2014 government lawsuit.

Reliance argued the lawsuit should be dismissed because Congress delegated lawmaking power by relying on an Office of Inspector General advisory about the legality of physician-owned distributorships in the lawsuit. Congress is forbidden from delegating its lawmaking power.

But U.S. District Judge Dean Pregerson, of California's Central District,did not agree, and stated Congress was within its right to take the inspector general's fraud notices into consideration as advisory opinions.

The judge denied Reliance's motion to dismiss Aug. 6.

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