Man could get 240 yrs for amniotic fluid for knees Medicare scam

A Justice Department press release details how a physician’s assistant (PA) in Texas was convinced of fraud related to amniotic fluid injections. This story tells us some important things about how Medicare handles things versus the FDA approach to such things.

amniotic fluid
Image of amniotic fluid. October 2013 American Journal of Perinatology Reports 3(2):83-6

Amniotic fluid scam

A jury found Ray Anthony Shoulders, a PA at a pain clinic in Fort Worth, TX guilty. He could face 240 years in jail. From the DOJ:

“Not only did this defendant attempt to scam Medicare out of hundreds of thousands of dollars, he did something far worse by potentially endangering his patients’ health in recommending that they be injected with a drug that had not been approved for that purpose,” said U.S. Attorney Simonton.  “In a very real way, he sought to profit off of his patients’ pain for his financial benefit, and I am proud of our federal law enforcement partners and our experienced prosecutors for bringing him to justice.”

We’ve seen many suppliers and hundreds of clinics selling injections of various birth-related products including amniotic fluid. There is no evidence that such injections benefit knees or other joints. Some clinics also market this fluid or related products for dozens of other conditions.

Q codes

Still other firms market birth-related cells including umbilical cord, placenta, or amniotic cell injections. These are often sold as “stem cells” despite the fact that in many cases these supposed cell therapies have no living cells. When they do have viable cells, those cells are often not really stem cells. Further, the products here are often drugs but are used without FDA approval. Even so, the FDA has not been able to stop the widespread use of unapproved birth-related drug products across the U.S.

Money is a big part of this story.

Some of these perinatal biologics firms have been getting Medicare reimbursement via something called Q codes. These Q codes are a way that firms can bill Medicare.

This Texas case in part relates to misuse of Q codes for unapproved amniotic procedures.

How Medicare is tougher than the FDA

Now Medicare wants its money back and can pursue criminal charges.

This all illustrates how different Medicare is from the FDA.

While the FDA sometimes takes years to address dangerous biologics criminal behavior and often nothing even happens, Medicare moves quickly.

Medicare also doesn’t hesitate to go for criminal convictions via DOJ. Why are these agencies so different? I don’t know why their cultures are so distinct but I wish the FDA was more like Medicare in this one way at least.

Amniotic fluid product makers: Cell Genuity, Stratus Biosystems

Getting back to the case at hand, the feds say that PA Anthony Shoulders was convicted in part for use of a product called Cell Genuity from Stratus Biosystem.

Cell Genuity itself received an FDA warning letter last year related to its amniotic fluid products. From my post on that warning I asked an important question that holds today:

“It is further noted that in a reply to the FDA, “Stratus has stopped manufacture of products until such time as the FDA inspector observations can be addressed.” But are clinics still using the products on patients?”

I wouldn’t be surprised if some clinics are still using these or similar products purchased in past years.

Are manufacturers responsible in some cases for product misuse?

In the big picture, do makers of birth-related products have any responsibility if the products are misused or there’s improper billing to Medicare related to them?

It’s a tricky topic.

In some cases, the suppliers may not know what their customers are going to do with the product. Plans can change too. For example, some clinics could suddenly end up misusing cord blood that they bought from a good citizen cord bank. The same is true for amniotic fluid. Once a maker sells it to a customer, they can’t control that customer.

On the other hand, there appear to be some suppliers who are well aware of the misuse of their products but keep selling anyway to the doctors, clinics, etc. that are misusing those products.

What happens next related to Shoulders’ conviction? He’ll be sentenced. I wonder if his case signals that other similar cases may be coming down the legal pipeline. Hundreds of clinics may have used unapproved biologics and inappropriately billed Medicare. Even without other criminal cases, firms may be required to pay back tens or hundreds of millions. Some of the same firms have marketed birth-related cells too.

This could get ugly.

3 thoughts on “Man could get 240 yrs for amniotic fluid for knees Medicare scam”

  1. “I don’t know why their cultures are so distinct but I wish the FDA was more like Medicare in this one way at least.”

    It’s because the government is much more concerned about getting ripped off itself than it is about the public getting ripped off.

  2. Thank you for your work! What a story — particularly pointing out the difference between approaches to this problem by Medicare and the FDA.

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