Ortho Execs Headed to Prison

A United States district judge has sentenced a former executive from Bethesda, Maryland-based Walter Reed National Military Medical Center and the founder and owner of Germantown, Maryland-based Pinnacle Orthopedic Services to serve time in federal prison.

Walter Reed is the largest joint military medical center in the United States. From 2009 until 2019, David Laufer was chief of the prosthetics and orthotics department at Walter Reed. In that role, Laufer was a public official and civilian employee of the Department of Defense. The prosthetics and orthotics department provides its medical services to U.S. service members and their dependents.

Bruce Thomas owns and operates Pinnacle Orthopedic Services. According to its website, the company is an “orthotic and prosthetic reseller and service provider.” It offers the following: prosthetic care; custom back bracing; custom knee bracing; lower extremity bracing; upper extremity bracing; custom foot orthotics; fracture bracing; muscle stimulators; transcutaneous electrical nerve stimulation (TENS) units; and continuous passive motion (CPM) machines.

Per court documents, from 2010 until 2019, the Walter Reed prosthetics and orthotics department used blanket purchase agreements (BPAs) to order and purchase its materials. During that time, Pinnacle Orthopedic Services was awarded multiple BPAs and provided prosthetics and orthotics materials to Walter Reed.

This relationship was tainted by the relationship between Laufer and Thomas. On multiple dates from 2012 to 2016, Thomas and/or Pinnacle Orthopedic Services provided Laufer with direct cash payments as well as “airline travel, lodging, and entertainment tickets.” Laufer also lied to federal agents investigating the cash payments “which Laufer estimated at more than $100,000 over many years.” At one point he claimed the cash payments “came from a moonshine operation.”

According to court documents, in connection with the gratuities, Laufer “restricted the availability of BPAs to some of the manufacturers and distributors” from whom Pinnacle Orthopedic Services purchased products. This inhibited “those companies from doing business directly with Walter Reed.” Laufer also encouraged those companies to sell to Walter Reed through Pinnacle Orthopedic Services, resulting in “a higher price to the government.” Over an eight-year period, Pinnacle Orthopedic Services was paid more than $25 million for prosthetics and orthotics materials.

Laufer pled guilty to acceptance of gratuities by a public official for his actions while serving as chief of the Walter Reed prosthetics and orthotics department. The judge sentenced him to eight months in federal prison and one year of supervised release. He also must pay $7,890.62 in restitution.

Thomas pled guilty to gratuity paid to a public official. He was sentenced to eight months in federal prison and one year of supervised release. The judge also ordered him to pay a $50,000 fine and $27,890.62 in restitution.