A medical device manufacturer and two top executives agreed to pay a total of $12 million to settle allegations originally brought by a whistleblower that they paid kickbacks to physicians.

Innovasis; Brent Felix, president and founder of the company; and Garth Felix, chief financial officer, violated the False Claims Act by paying kickbacks to spine surgeons to induce them to use Innovasis’s spinal devices, the Department of Justice (DOJ) alleged in a settlement agreement published Wednesday.

The details: From January 2014 through December 2022, Innovasis provided payments, such as consulting fees, intellectual property acquisition, licensing fees, performance shares, and other examples, to 17 orthopedic surgeons and neurosurgeons as an inducement for them to use Innovasis spinal implants and other devices, the DOJ said. The alleged payments were suspicious because they were higher than what would be expected. Some payments were made but services were never performed and intellectual property never provided.

The Felix brothers controlled or directed the agreements concerning the improper remuneration, the DOJ said.

The doctors also received travel to a luxury ski resort, dinners, and holiday parties for colleagues and family, the DOJ alleged.

Compliance considerations: A former regional sales director for Innovasis, Robert Richardson, originally filed a complaint against the company regarding the alleged wrongdoing. Under the qui tam provisions of the False Claims Act, Richardson will receive about $2.2 million as his share of the settlement.

Of the settlement total, $6 million is restitution.

“Payments from medical device manufacturers intended to influence a physician’s judgment about which medical devices or supplies to select are illegal,” Brian Boynton, head of the DOJ’s Civil Division, said in a press release. “When medical devices are used in surgical procedures, patients deserve to know that their device was selected based on quality-of-care considerations and not on improper payments from manufacturers.”

Innovasis did not respond to a request for comment.