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Justice Department Examining Possible Wrongdoing in Physician-Owned Medical Device Distributorships

Aug 5, 2013

The U.S. Justice Department is examining physician-owned distributorships (PODs) of medical devices, warning that the influence doctors wield over hospital purchasing practices opens the door for serious conflicts of interest.

Michigan spine surgeon Dr. Aria Sabit is at the center of the DOJ's broader investigation of PODs that allow doctors to take a cut of profits on device sales, MassDevice reports. Sabit, a shareholder in Apex Medical Technologies, continued to use the company's implants despite an obvious conflict of interest, according to the Wall Street Journal. The neurosurgery medical director at Michigan's McLaren Lapeer Region hospital also had operation and distribution privileges at Detroit Medical Center and the Doctors' Hospital of Michigan, according to the WSJ.

In Dr. Sabit's case, the Justice Department has been investigating whether his financial interest in the devices spurred him to perform unnecessary surgeries or contributed to a spate of alleged patient complications. Twenty-eight former patients or their families have sued Dr. Sabit in Ventura Superior Court, alleging negligent acts ranging from misplacing implants in their spines to performing unnecessarily extensive surgeries. Dr. Sabit has settled 11 of the suits, one was dismissed, and 16 are still pending.

The Department of Health and Human Services' Office of Inspector General issued a special fraud alert about PODs, warning that they “pose dangers to patient safety” by inducing surgeons to favor devices they profit from and to do more procedures than necessary in order to use more devices, the WSJ reports.

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