Device Sales Staff Could Face 20 Years for Defrauding Hospitals

If you ever want a salutory lesson in how not to exploit your privileged medical device sales position, this is it. Two former employees of Integra Lifesciences have come clean about a scheme to defraud hospitals of more than $800,000 and could face a stretch in the big house when sentenced next January.

Background

Integra is a household name in medical devices with an offering that includes devices and implants for the spine, foot and ankle, hand and wrist, and shoulder and elbow.

The two, now former employees are Daniel Metz, 34, of Fairfield, New Jersey, and Charles B. Carey Jr., 35, of Clark, New Jersey. Each pleaded guilty before U.S. District Judge Joel A. Pisano in Trenton federal court to separate informations charging them with conspiracy to commit wire fraud.

Metz worked at Integra from July 2005 until his termination in April 2013, first as a product specialist and then as Northeast regional manager, supervising 16 product specialists and assistant sales representatives in Massachusetts, New Jersey, New York, and Pennsylvania. Carey was a product specialist, reporting to Metz, from January 2009 until he resigned in April 2011.

As with pretty much all OR-based device providers, product specialists at Integra were responsible for calling on surgeons to increase sales volume and were routinely present during surgeries. When present during surgeries, product specialists brought with them consignment trays with pre-packaged Integra products. Integra billed the hospitals and surgery centers for the products used and product specialists (and their supervisors) were compensated based on salary, sales target-based commission and bonuses.

Despite the fact that one might have thought it unlikely to be able to fiddle the books, especially under the noses of hospital staff, it seems  that’s exactly what the pair did. Metz admitted he used various fraudulent methods to overcharge hospitals and surgery centers. He would sometimes charge for a greater quantity or a more expensive product than was actually used, increasing his compensation and improving his employment evaluations. He went on to admit that as regional manager he taught at least some of the fraudulent methods to product specialists working for him, including Carey, who sometimes employed those methods.

The estimated sum total of the pair’s fraudulent activity amounted to more than $800,000 in inflated bills. Payback time for conspiracy to commit wire fraud comes in the form of potential jail sentence of up to 20 years in addition to a $250,000 fine, or twice the gross gain or loss from the offense. Metz and Carey also agreed to forfeit $100,000 and $77,000, respectively, representing the amounts of money they personally made through the fraud scheme. The defrauded hospitals have been reimbursed by Integra for the fraudulent charges.

Sentencing is scheduled for Jan. 20, 2015.

Source: US Department of Justice

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