Appeals Court Reverses Verdict in Spinal Implant Kickback Case

The United States Court of Appeals for the Eighth Circuit has reversed and remanded for a new trial a spinal implant kickback case against Missouri-based neurosurgeon Sonjay Fonn, DO, distributor Deborah Seeger, and other defendants.

The federal appellate court overturned a nearly $5.5 million verdict against Dr. Fonn of Midwest Neurosurgeons, LLC. In the lawsuit, Dr. Fonn and his fiancée Seeger, owner of DS Medical, LLC, were accused of taking illegal kickbacks from medical device manufacturers. The verdict represented treble damages and statutory penalties.

According to the ruling by the three-judge panel, the district court erred in its jury instructions. The panel explained that the jury should have been instructed on but-for causation. Namely, that the plaintiff “must prove that a defendant would not have included particular ‘items or services’ but for the illegal kickbacks.” Here, that would mean the government would have to prove that Dr. Fonn would not have included the spinal implants but for the illegal kickbacks.

According to the court’s ruling, “There are several ways to prove that a claim is ‘false or fraudulent’ under the False Claims Act. One of them is to show that it ‘includes-items or services resulting from a violation’ of the anti-kickback statute. This case requires us to determine what the words ‘resulting from’ mean. We conclude that it creates a but-for causal requirement between an anti-kickback violation and the ‘items or services’ included in the claim. The district court did not instruct the jury along these lines, so we reverse and remand for a new trial.”

This is good news for Dr. Fonn. According to court documents, Dr. Fonn used spinal implants to treat degenerative-disc disease and other spinal disorders. Additionally, Dr. Fonn, according to court documents, chose to use DS Medical as his spinal implant distributor. He was Seeger’s “only large customer” and in just one year, Seeger “made $1.3 million in commissions from one manufacturer alone.” The same manufacturer offered Dr. Fonn the option to purchase company stock. After the sale was completed, Dr. Fonn “ordered more implants.”