HUESTON HENNIGAN LLP

Transcription

Case 8:13-cv-00956-AG-CW Document 593-2 Filed 05/16/15 Page 1 of 221 Page ID
#:10749
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John C. Hueston (164921; jhueston@hueston.com)
Alison Plessman (250631; aplessman@hueston.com)
Jeff Wilkerson (284044; jwilkerson@hueston.com)
620 Newport Center Drive, Suite 1300
Newport Beach, California 92660-6324
Telephone: (949) 229-8640
Facsimile: (949) 775-0898
STATE COMPENSATION INSURANCE FUND
Linda S. Platisha (195281;
lsplatisha@scif.com)
1750 E. Fourth St., 5th Floor
Santa Ana, CA 92705
Telephone: (714) 347-6130
Fax:
(714) 347-6145
Attorneys for Plaintiff STATE COMPENSATION
INSURANCE FUND, a Public Enterprise Fund
and Independent Agency of the State of California
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UNITED STATES DISTRICT COURT
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CENTRAL DISTRICT OF CALIFORNIA
14
SOUTHERN DIVISION
15 STATE COMPENSATION INSURANCE
FUND,
16
Plaintiff,
v.
17
MICHAEL D. DROBOT, SR., an individual;
18 MICHAEL R. DROBOT, JR., an individual;
FAUSTINO BERNADETT, an individual;
19 HEALTHSMART PACIFIC INC., a
California corporation; HEALTHSMART
20 PACIFIC INC. d/b/a PACIFIC HOSPITAL
OF LONG BEACH, a California corporation;
21 LONG BEACH PAIN CENTER MEDICAL
CLINIC, INC., a California corporation;
22 INTERNATIONAL IMPLANTS, LLC, a
California limited liability company;
23 PACIFIC SPECIALTY PHYSICIAN
MANAGEMENT, INC., a California
24 corporation; INDUSTRIAL PHARMACY
MANAGEMENT LLC, a California limited
25 liability company; CALIFORNIA
PHARMACY MANAGEMENT LLC, a
26 California limited liability company;
COASTAL EXPRESS PHARMACY, INC., a
27 California corporation; LONG BEACH
PRESCRIPTION PHARMACY, a California
28 corporation; MEDS MANAGEMENT
GROUP, LLC, a California limited liability
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Case No. 13-00956 AG (CWx)
THIRD AMENDED
COMPLAINT OF PLAINTIFF
STATE COMPENSATION
INSURANCE FUND FOR:
(1)
18 U.S.C. § 1962(c) (CIVIL
RICO);
(2)
18 U.S.C. § 1962(d) (CIVIL
RICO CONSPIRACY);
(3)
FRAUD; AND
(4)
UNFAIR COMPETITION
(Bus. & Prof. Code
§ 17200)
[JURY TRIAL DEMANDED]
Third Amended Complaint, Case No. 13-00956 AG (CWx)
#:10750
1 company; DANIEL CAPEN, and individual; )
SOUTHWESTERN ORTHOPEDIC
)
)
2 MEDICAL CORP. D/B/A/ DOWNEY
ORTHOPEDIC MEDICAL GROUP, a
)
3 California corporation; SOUTHWESTERN )
ORTHOPEDIC MEDICAL CORP, D/B/A
)
)
4 CHANNEL ISLANDS ORTHOPEDIC, a
California corporation; DANIEL CAPEN
)
5 MD, A PROFESSIONAL CORPORATION, )
a California corporation; WESTLAKE
)
)
6 SURGICAL MEDICAL ASSOCIATES,
INC., a California Corporation; JOHN
)
)
7 LARSEN, an individual; JOHN LARSEN,
MD, A PROFESSIONAL CORPORATION, )
)
8 a California Corporation; ANDREW
JARMINSKI, an individual; INLAND
)
9 INCARE MEDICAL ASSOCIATES, INC., a )
California corporation; INLAND INCARE )
)
10 OF SAN BERNARDINO MEDICAL
GROUP, INC., a California corporation; ARJ )
11 MEDICAL, INC., a California corporation; )
JEFFREY CATANZARITE, an individual; )
)
12 CENTER FOR BETTER HEALTH, A
MEDICAL GROUP, INC., D/B/A
)
)
13 SOUTHLAND SPINE AND
REHABILITATION, a California
)
)
14 corporation; KHALID B. AHMED, an
individual; KHALID BASHIR AHMED,
)
15 M.D., A PROFESSIONAL CORPORATION, )
a California corporation; AHMED POMONA )
)
16 MEDICAL GROUP, INC., a California
corporation; JACK H. AKMAKJIAN, an
)
)
17 individual; JACK H. AKMAKJIAN, M.D.
INC., a California corporation; GERALD
)
18 ALEXANDER, an individual, GERALD J. )
ALEXANDER, ORTHOPAEDIC
)
)
19 SURGERY, INC., A MEDICAL
CORPORATION, a California corporation; )
)
20 NEWPORT COAST SPINE, INC., a
California corporation; IAN ARMSTRONG, )
)
21 an individual; IAN I.T. ARMSTRONG,
M.D., INC., a California corporation;
)
)
22 MICHAEL E. BARRI, an individual;
JOJASO MANAGEMENT, INC. a California )
23 corporation; TRISTAR MEDICAL GROUP, )
PROFESSIONAL CORP., a California
)
)
24 corporation; MITCHELL G. COHEN, an
individual; MITCHELL G. COHEN, M.D., )
)
25 INC., a California corporation; THOMAS
HAIDER, an individual; HAIDER SPINE
)
)
26 CENTER MEDICAL GROUP, INC., a
California corporation; SALMA JASON
)
)
27 MONICA, LP, a California limited
partnership; CATALINO DUREZA, an
)
28 individual; CATALINO D. DUREZA, M.D., )
INC., a California corporation;
)
-1Third Amended Complaint, Case No. 13-00956 AG (CWx)
#:10751
)
1 CALIFORNIA NEUROSURGICAL AND
SPINE ASSOCIATES, A MEDICAL
)
2 CORPORATION, a California corporation; )
MAXIMUS MEDICAL GROUP, A
)
)
3 MEDICAL CORPORATION, a California
corporation; TIMOTHY HUNT, an
)
)
4 individual; ALLIED MEDICAL GROUP,
INC., a California corporation; ALAN C.
)
5 IVAR, an individual; GRIFFIN MEDICAL )
GROUP, INC., a California corporation;
)
)
6 SOUTH COAST REHABILITATION
CENTER, INC., a California corporation;
)
7 EDWARD KOMBERG, an individual; TRI- )
COUNTY MEDICAL GROUP, INC., a
)
8 California corporation; TRI-CITY HEALTH )
GROUP, INC., a California corporation;
)
9 PHILIP A. SOBOL, an individual; SOBOL )
ORTHOPEDIC MEDICAL GROUP, INC., a )
)
10 California corporation; RICHARD
MULVANIA, an individual; RICHARD L. )
)
11 MULVANIA, MD, INC., a California
corporation; SERGE OBUKHOFF, an
)
)
12 individual; SERGE OBUKHOFF, MD,
PROFESSIONAL CORPORATION, a
)
13 California corporation; DAVID PAYNE, an )
individual; DAVID H. PAYNE, M.D., INC., )
14 a California corporation; HAMID RAHMAN, )
an individual; RANDY ROSEN, an
)
)
15 individual; MOSAIC MEDICAL
MANAGEMENT, a California corporation; )
16 ISMAEL SILVA, an individual; STARBASE, )
INC., a California corporation;
)
)
17 HEALTHPOINTE MEDICAL GROUP,
INC., a California corporation; ISRAEL
)
)
18 CHAMBI, an individual; RUSSELL
NELSON, an individual; NELSON SPINE
)
19 INSTITUTE, INC., a California corporation )
LOKESH S. TANTUWAYA, an individual; )
)
20 DR. LOKESH S. TANTUWAYA, M.D.,
INC., a California corporation; JACOB
)
)
21 TAUBER, an individual; JACOB E.
TAUBER, M.D., A PROFESSIONAL
)
22 CORPORATION, a California corporation; )
ASSAD MICHAEL MOHEIMANI, an
)
23 individual; COAST SPINE AND SPORTS )
MEDICAL CORPORATION, a California
)
)
24 corporation; JASON BERNARD, an
individual; PROGRESSIVE ORTHOPEDIC )
25 SOLUTIONS, LLC, a California corporation; )
)
Defendants.
)
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#:10752
TABLE OF CONTENTS
1
Page
2
3 I.
SUMMARY OF ACTION .............................................................................. 1
4
A.
Initial Pleadings and Drobot Sr.'s Plea Agreement ............................... 3
5
B.
Overview of the Surgical Defendant Enterprise ................................... 8
6
C.
Overview of the Pharmacy Defendant Enterprise .............................. 10
7
D.
Connections Between the Surgical and Pharmacy
Enterprises ...........................................................................................12
E.
Provider Defendants' and Marketer Defendants' Knowing
Agreement to and Participation in the Enterprises ............................. 19
8
9
10 II.
THE PARTIES ..............................................................................................21
11
A.
Plaintiff ................................................................................................21
12
B.
Individual Defendants ......................................................................... 21
13
C.
Surgical, Pharmacy, and Administrative Defendants and
Control Allegations ............................................................................. 22
D.
Provider Defendants ............................................................................ 29
E.
Marketer Defendants ........................................................................... 58
F.
DOE Defendants ................................................................................. 60
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15
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17
III.
JURISDICTION AND VENUE.................................................................... 61
IV.
STATE FUND AND ITS CLAIMS PROCESS ........................................... 61
V.
20
FRAUDULENT SCHEMES BY THE SURGICAL
DEFENDANT ENTERPRISE ...................................................................... 64
21
A.
Fraudulent Scheme re: Spinal Implants/Surgeries (All
Defendants) .........................................................................................64
B.
Billing State Fund for Treatments and Services That Were
the Product of Illegal Kickbacks and Referral Fees (All
Defendants) .........................................................................................77
C.
Fraudulent Scheme to Overbill Services By
Unbundling/Upcoding, Including Unbundling and
Overbilling re: Toxicology Screening (Pacific Hospital,
Long Beach Pain, and Drobot Sr.) ...................................................... 80
D.
Fraudulent Scheme re: Nurse Billing (Pacific Hospital and
Drobot Sr.)...........................................................................................84
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-iThird Amended Complaint, Case No. 13-00956 AG (CWx)
#:10753
Page
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E.
Fraudulent Scheme re: Autologous Transfusion Billing
(Pacific Hospital and Drobot Sr.)........................................................ 86
F.
Fraudulent Scheme re: Duplicate Radiology Billing (Long
Beach Pain and Drobot Sr.) ................................................................ 87
5
6 VI.
7
FRAUDULENT SCHEMES BY THE PHARMACY
DEFENDANT ENTERPRISE ...................................................................... 89
A.
8
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10
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Lack of Licenses, Corporate Practice of Medicine, and
Payment of Illegal Referral Fees (CPM, IPM, MMG,
Administrative Defendants, Individual Defendants, All
Provider Defendants except Drs. Akmakjian, Chambi,
Tantuwaya, and Moheimani) .............................................................. 89
1.
Lack of Licenses ....................................................................... 89
2.
Corporate Practice of Medicine ................................................ 94
3.
Payment of Referral Fees and Fee-Splitting
Agreements ............................................................................... 98
13
14
B.
15
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18
19
20
23
24
1.
Background on Drug Pricing .................................................. 101
2.
Defendants' Schemes .............................................................. 103
3.
2001-2007 Overbilling Through AWP Manipulation ............ 105
4.
Specific Examples .................................................................. 108
C.
Double-Billing of Prescriptions (CPM, IPM, LBPP,
Coastal, Drobot Sr., and Drobot Jr.) ................................................. 111
D.
Double-Billing of Prescriptions after Global Settlements
(CPM, IPM, LBPP, and Drobot Jr.) .................................................. 113
E.
The Global Settlements (CPM, IPM, LBPP, Drobot Sr.,
Drobot Jr., and All Provider Defendants except Drs.
Akmakjian, Chambi, Tantuwaya, and Moheimani).......................... 114
21
22
Overbilling and Pricing Manipulation (Pharmacy
Defendants, Drobot Sr., Drobot Jr., All Provider
Defendants except Drs. Akmakjian, Chambi, Moheimani,
and Tantuwaya) ................................................................................. 101
25
VII. STATE FUND UNCOVERS DEFENDANTS' WELLCONCEALED FRAUD .............................................................................. 115
26
27 FIRST CAUSE OF ACTION (Civil RICO 18 U.S.C. § 1962(c)) ........................ 117
28
- ii Third Amended Complaint, Case No. 13-00956 AG (CWx)
#:10754
Page
1
2
3
A.
Individual Defendants, Surgical Defendants, and
Administrative Defendants Formed an Association-in-Fact
Enterprise ..........................................................................................118
B.
Individual Defendants, Surgical Defendants, and
Administrative Defendants Each Conducted the
Enterprise's Affairs ............................................................................ 120
C.
The Surgical Defendant Enterprise Engaged in a Pattern of
Racketeering Activity, Consisting of Mail and Wire Fraud
Violations ..........................................................................................121
D.
The Surgical Defendant Enterprise Affected Interstate
Commerce .........................................................................................122
E.
State Fund Relied on the Surgical Defendant Enterprise's
Misrepresentations and Suffered Financial Injury As a
Result.................................................................................................123
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SECOND CAUSE OF ACTION (Civil RICO 18 U.S.C. § 1962(c)) ................... 124
A.
Individual Defendants, Pharmacy Defendants, and
Administrative Defendants Formed an Association-in-Fact
Enterprise ..........................................................................................124
B.
Individual Defendants, Pharmacy Defendants, and
Administrative Defendants Each Conducted the Affairs of
the Enterprise ....................................................................................126
C.
The Pharmacy Defendant Enterprise Engaged in a Pattern
of Racketeering Activity, Consisting of Mail and Wire
Fraud Violations ................................................................................ 127
D.
The Pharmacy Defendant Enterprise Affected Interstate
Commerce .........................................................................................129
E.
State Fund Relied on the Pharmacy Defendant Enterprise's
Misrepresentations and Suffered Financial Injury as a
Result.................................................................................................130
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16
17
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19
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21
22
23 THIRD CAUSE OF ACTION (Civil RICO Conspiracy 18 U.S.C.
§ 1962(d)) ....................................................................................................131
24
A.
Each Defendant Knew of and Agreed to Facilitate the
Surgical Defendant Enterprise's Criminal Purpose........................... 131
25
26
27
28
B.
Each Defendant Committed Predicate Acts In Furtherance
of the Enterprise's Criminal Purpose ................................................ 132
C.
State Fund Suffered Injury From the Predicate Acts
Committed In Furtherance of the Enterprise's Criminal
Purpose ..............................................................................................133
- iii Third Amended Complaint, Case No. 13-00956 AG (CWx)
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Page
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3 FOURTH CAUSE OF ACTION (Civil RICO Conspiracy 18 U.S.C.
§ 1962(d)) ....................................................................................................134
4
A.
Each Defendant Knew of and Agreed to Facilitate the
Pharmacy Defendant Enterprise's Criminal Purpose ........................ 134
5
6
7
8
9
10
11
B.
Each Defendant Committed Predicate Acts In Furtherance
of the Enterprise's Criminal Purpose ................................................ 134
C.
State Fund Suffered Injury From the Predicate Acts
Committed In Furtherance of the Enterprise's Criminal
Purpose ..............................................................................................136
FIFTH CAUSE OF ACTION (Fraud) ................................................................... 136
SIXTH CAUSE OF ACTION (Business & Professions Code § 17200) .............. 139
PRAYER FOR RELIEF ........................................................................................141
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- iv Third Amended Complaint, Case No. 13-00956 AG (CWx)
#:10756
Plaintiff State Compensation Insurance Fund ("State Fund") alleges as
1
2 follows in this federal question action, over which this court has jurisdiction
3 pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1367(a).
4
5
I.
SUMMARY OF ACTION
1.
State Fund provides workers' compensation insurance to California
6 employers, with no financial obligation to the public, and is the largest provider of
7 workers' compensation insurance in California. When a covered employee suffers
8 an on-the-job injury, State Fund's primary goal is to insure that the injured worker
9 receives proper medical treatment by a provider. The provider is then supposed to
10 bill State Fund for the procedures performed or medicine supplied under the
11 appropriate workers' compensation guidelines.
12
2.
Defendants conspired to subvert this process and defraud State Fund in
13 connection with the submission and collection of fraudulent insurance bills for
14 medical services, medical hardware, and medications. Through two connected
15 enterprises, Defendants and their coconspirators engaged in an elaborate kickback
16 scheme designed to game the workers' compensation system and cheat State Fund
17 out of many millions of dollars. The scheme inflicted damage not only on State
18 Fund, but on California's workers, who were used as pawns to maximize ill-gotten
19 profits, and California's employers, forced to pay not only inflated medical costs but
20 higher workers' compensation insurance rates.
21
3.
The illegal kickback scheme was carried out through a complex web of
22 interconnected businesses and individuals, including medical providers, pharmacies,
23 medical management companies, repackagers, distributors, healthcare "marketers,"
24 and others. Defendant Michael D. Drobot, Sr., at various times, owned and/or
25 operated, among other related entities, Defendants Healthsmart Pacific, Inc.
26 ("Healthsmart"), Healthsmart Pacific, Inc. d/b/a Pacific Hospital of Long Beach
27 ("Pacific Hospital"), Long Beach Pain Center Medical Clinic, Inc. ("Long Beach
28 Pain"), and International Implants, LLC ("International Implants") (collectively the,
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1 "Surgical Defendants"), at least until October 2013, when he has indicated that he
2 sold Pacific Hospital's assets to College Health Enterprises ("CHE"). Defendant
3 Michael D. Drobot, Jr. owns and operates, among other related entities, California
4 Pharmacy Management LLC ("CPM"), Industrial Pharmacy Management LLC
5 ("IPM"), Long Beach Prescription Pharmacy ("LBPP"), Coastal Express Pharmacy,
6 Inc. ("Coastal"), and Meds Management Group LLC ("MMG") (the "Pharmacy
7 Defendants"). Defendant Dr. Faustino Bernadett, at various times, owned and/or
8 operated, among other related entities, Healthsmart, Pacific Hospital, and Long
9 Beach Pain. Defendants Drobot Sr., Drobot Jr., and Dr. Bernadett are collectively
10 referred to herein as the "Individual Defendants."
11
4.
As described below, the Surgical and Pharmacy Defendants are
12 connected not only through shared patients and doctors, but through Pacific
13 Specialty Physician Management, Inc. ("PSPM") and First Medical Management,
14 Inc. ("FMM") (collectively the "Administrative Defendants"). The Administrative
15 Defendants coordinated the activities between the Surgical and Pharmacy
16 Defendants, medical providers, and suppliers, among others.
17
5.
Defendants Jason Bernard and Progressive Orthopedic Solutions, LLC
18 are referred to herein as the "Marketer Defendants." The remaining named
19 Defendants are healthcare providers or associated entities, and they are referred to
20 collectively herein as the "Provider Defendants." They are Dr. Daniel Capen;
21 Southwestern Orthopedic Medical Corp. d/b/a Downey Orthopedic Medical Group;
22 Southwestern Orthopedic Medical Corp. d/b/a Channel Islands Orthopedic; Daniel
23 Capen MD, a Professional Corporation; Westlake Surgical Medical Associates, Inc.;
24 Dr. John Larsen; John Larsen MD, a Professional Corporation; Dr. Andrew
25 Jarminski, Inland Incare Medical Associates, Inc.; Inland Incare of San Bernardino
26 Medical Group, Inc.; ARJ Medical, Inc.; Jeffrey Catanzarite, D.C.; Center for Better
27 Health, a Medical Group, Inc. d/b/a Southland Spine and Rehabilitation; Dr. Khalid
28 B. Ahmed; Khalid Bashir Ahmed, M.D., a Professional Corporation; Ahmed
#:10758
1 Pomona Medical Group, Inc.; Dr. Jack H. Akmakjian; Jack H. Akmakjian, M.D.,
2 Inc.; Dr. Gerald Alexander; Gerald J. Alexander, Orthopaedic Surgery, Inc., a
3 Medical Corporation; Newport Coast Spine, Inc.; Dr. Ian Armstrong; Ian I.T.
4 Armstrong, M.D., Inc.; Michael E. Barri, D.C.; Tristar Medical Group, Professional
5 Corp.; Dr. Mitchell G. Cohen; Mitchell G. Cohen, M.D., Inc.; Dr. Thomas Haider;
6 Haider Spine Center Medical Group, Inc.; Salma Jason Monica, LP; Dr. Catalino
7 Dureza; Catalino D. Dureza, M.D., Inc.; California Neurosurgical and Spine
8 Associates, a Medical Corporation; Maximus Medical Group, a Medical
9 Corporation; Dr. Timothy Hunt; Allied Medical Group, Inc; Alan C. Ivar, D.C.;
10 Griffin Medical Group, Inc.; South Coast Rehabilitation Center, Inc.; Edward
11 Komberg, D.C.; Tri-County Medical Group, Inc.; Tri-City Health Group, Inc.;
12 Dr. Philip A. Sobol; Sobol Orthopedic Medical Group, Inc.; Dr. Richard Mulvania,
13 Richard L. Mulvania MD, Inc.; Dr. Serge Obukhoff; Serge Obukhoff, MD,
14 Professional Corporation; Dr. David Payne; David H. Payne, M.D., Inc.; Dr. Hamid
15 Rahman; Dr. Randy Rosen; Mosaic Medical Management, Inc.; Dr. Ismael Silva;
16 Starbase, Inc.; Healthpointe Medical Group, Inc.; Dr. Israel Chambi; Dr. Russell
17 Nelson; Nelson Spine Institute, Inc.; Dr. Lokesh S. Tantuwaya; Dr. Lokesh S.
18 Tantuwaya M.D., Inc.; Dr. Jacob Tauber; Jacob E. Tauber, M.D., a Professional
19 Corporation; Dr. Assad Michael Moheimani; and Coast Spine and Sports Medical
20 Corporation.
21
A.
Initial Pleadings and Drobot Sr.'s Plea Agreement
22
6.
State Fund filed its initial complaint in June 2013 and its First
23 Amended Complaint ("FAC") in August 2013, alleging causes of action pursuant to
24 the Racketeer Influenced and Corrupt Organizations Act ("RICO") for civil
25 violations and conspiracy, common-law fraud, and California's Unfair Competition
26 Law ("UCL," or California Business and Professions code section 17200, et seq.).
27 State Fund alleged that Defendants conspired to defraud State Fund by, among other
28 things, entering into illegal agreements designed to inflate the costs of certain
#:10759
1 medical procedures and medications, paying kickbacks to doctors for referring
2 patients to preferred facilities and for using preferred products or medications,
3 engaging in illegal fee-sharing agreements, and overbilling and double-billing State
4 Fund for medical charges. State Fund further alleged that it had been defrauded into
5 paying illegally inflated costs for spinal surgeries through Defendants' use of
6 fraudulent invoices for medical hardware issued by companies controlled by
7 Defendants.
8
7.
After the filing of the FAC, Drobot Sr. pled guilty to workers'
9 compensation fraud against State Fund and others. On February 20, 2014, Drobot
10 Sr. signed a guilty plea agreement with the U.S. Attorney's Office ("Plea
11 Agreement"), admitting to much of the conduct alleged in State Fund's First
12 Amended Complaint, including the payment of illegal kickbacks through the use of
13 shell entities, "co-schemers," and conspiracy to commit fraud upon insurers,
14 including State Fund. See USA v. Drobot ("Plea Agreement"), 8:14-cr-000034-JLS15 DOC-7, at 8-18 (C.D. Cal. Feb. 21, 2014). This Plea Agreement was entered on
16 April 24, 2014, before the Honorable Josephine L. Staton. USA v. Drobot, 8:14-cr17 000034-JLS-DOC-20 (C.D. Cal. Apr. 24, 2014).
18
8.
Drobot Sr. admitted in the Plea Agreement that, beginning in or around
19 1998 and continuing through in or around November 2013, he "conspired with
20 dozens of doctors, chiropractors, marketers and others to pay kickbacks in return for
21 those persons to refer thousands of patients to Pacific Hospital for spinal surgeries
22 and other medical services including "other types of surgeries, magnetic resonance
23 imaging, toxicology, durable medical equipment, and other services" paid for
24 primarily through the Federal Employees' Compensation Act ("FECA") and the
25 California Workers' Compensation System ("CWCS"). Plea Agreement at 15.
26
9.
Drobot Sr. further admitted: "To help generate the monies for the
27 kickback payments, defendant used a co-schemers company or his own company
28 International Implants ("I2"), located in Newport Beach, California, to fraudulently
#:10760
1 inflate the price of medical hardware purchased by Pacific Hospital to be used in the
2 spinal surgeries." Id. at 14. "In paying the kickbacks, inflating the medical
3 hardware costs, and submitting the resulting claims for spinal surgeries and medical
4 services, defendant and his co-conspirators acted with the intent to defraud workers'
5 compensation insurance carriers and to deprive the patients of their right to honest
6 services." Id.
7
10.
To conceal the illegal kickbacks from workers' compensation insurance
8 carriers, including State Fund, Drobot Sr. admitted that he and his co-conspirators
9 "entered into bogus contracts under which the kickback recipients purported to
10 provide services to defendant's companies to justify the kickback payments. The
11 services and other items of value discussed in those contracts were, in fact, generally
12 not provided to Pacific Hospital or were provided at highly inflated prices. The
13 compensation to the kickback recipient was actually based on the number and type
14 of surgeries they referred to the hospital. These contracts included, among others,
15 the following: collection agreements, option agreements, research and development
16 agreements, lease and rental agreements, consulting agreements, marketing
17 agreements, and management agreements." Id. at 17.
18
11.
The Plea Agreement also confirms, much as State Fund's FAC had
19 alleged: "As defendant and his co-conspirators knew, federal and California law
20 prohibited paying or receiving the aforementioned kickbacks for the referral of
21 patients for medical services. Defendant and his co-conspirators also knew that the
22 insurance carriers would be unwilling to pay claims for medical services that were
23 obtained through such illegal kickbacks. Moreover, defendant and his co24 conspirators knew that the insurance carriers would be unwilling to pay claims for
25 spinal surgery hardware that were artificially inflated and substantially above the
26 manufacturer's price. However, defendant and his co-conspirators deliberately did
27 not disclose to the insurance carriers the kickbacks, the inflation of the medical
28 hardware, or the fact that I2 was owned and controlled by defendant and was not a
#:10761
1 manufacturer of such hardware. Rather, at some point, defendant and his co2 conspirators included on I2's invoices stamps falsely stating that I2 was an 'FDA
3 registered manufacturer.'" Id. at 16-17.
4
12.
Third-party discovery in this litigation has confirmed the use of the
5 "bogus" contracts described in the Plea Agreement by Defendants in furtherance of
6 their conspiracy. In fact, discovery thus far has revealed the existence of numerous
7 such agreements between the Surgical, Pharmacy, and Administrative Defendants,
8 on the one hand, and the Provider Defendants on the other.
9
13.
For example, Drobot Sr., through PSPM, entered into an "Option
10 Agreement" with Dr. Serge Obukhoff on or around March 15, 2010. The Option
11 Agreement purports to grant PSPM the exclusive right or "option" to purchase the
12 unspecified assets of Dr. Obukhoff's orthopedic medical practice. Pursuant to the
13 agreement, PSPM was to make monthly payments to Dr. Obukhoff of $50,000 in
14 "readily accessible cash" as purported consideration for the grant of the option. It
15 was contemplated that PSPM would make, in the aggregate, payments equal to
16 $10,000,000 for the "Option," "taking into account the Option Payments previously
17 made to [Dr. Obukhoff]." On information and belief, payments contemplated by
18 this agreement were not really "Option Payments" but illegal kickbacks to be paid to
19 Dr. Obukhoff for performing spinal implant surgeries at Pacific Hospital using
20 devices from International Implants or another coschemer's company and/or for the
21 referral of patients to the Surgical or Pharmacy Defendants. Drobot Sr. admitted in
22 the Plea Agreement that he paid a kickback to "S.O." in connection with a spinal
23 surgery performed by "S.O." on at least one occasion. In fact, according to payment
24 records produced by Dr. Obukhoff, PSPM paid such kickbacks to Dr. Obukhoff on
25 numerous occasions, paying Dr. Obukhoff at least $2,307,500 in purported "option
26 payments" between April 10, 2010 and March 18, 2013.
27
14.
Similarly, the Individual Defendants, through the Pharmacy
28 Defendants, entered into "Physician Office Dispensing Management Agreements"
#:10762
1 with physicians pursuant to which the physicians purportedly engaged the Pharmacy
2 Defendants to "implement and maintain a Pharmacy Program in Physician's various
3 offices and places of practice for Physician's patients covered under the California
4 Workers' Compensation Program." In reality, these "Physician Office Dispensing
5 Management Agreements" were fee-splitting agreements through which the
6 Pharmacy Defendants paid kickbacks to physicians for referring patients to the
7 Surgical Defendants and to the pharmacies run by Pharmacy Defendants and for
8 prescribing the most lucrative medications to their patients. While the agreements
9 provided that the physicians were responsible for purchasing the product necessary
10 for the pharmacy programs, financials statements produced in this litigation show
11 that, in practice, the physicians committed almost nothing in the way of financial,
12 capital, or human resources to the pharmacy program. Instead, the Pharmacy
13 Defendants purchased the drugs, provided the pharmacy techs and other employees
14 for the pharmacies, and controlled which drugs would be listed on the formularies.
15 If drugs listed on the formularies were not lucrative enough, they were removed by
16 Drobot Jr. The Pharmacy Defendants' "management fee" was calculated as a
17 percentage of "gross collections after deducting the costs of drugs sold and other
18 direct pharmacy costs, including collections and advances." Thus, the physicians
19 never bore any financial risk and were paid simply for prescribing medications to
20 their patients and referring them to the pharmacies run by the Pharmacy Defendants.
21
15.
For example, under his "management agreement" with Defendant
22 CPM, Defendant Dr. Daniel Capen was paid $2,434,211.06 in 2006 after CPM
23 recovered more than $6 million in cash collections. CPM (not Dr. Capen) incurred
24 drug costs of less than $500,000, but billed over $8 million for those drugs. Dr.
25 Capen purportedly wrote over 30,000 prescriptions in 2006, and averaged 123
26 prescriptions per day in March alone. CPM also "loaned" Dr. Capen another
27 $115,000 for the year to cover his "Air Charter Expenses," $55,463 in
28
#:10763
1 "advancements," and $21,000 in "other reductions." CPM distributed to itself
2 $2,149,988.87 for the year.
3
16.
As detailed below with regard to particular providers, the "Pharmacy
4 Management Agreements" were also used as vehicles to pay kickbacks for medical
5 services performed at or referred to Pacific Hospital. Doctors that performed
6 surgeries at, or referred surgical patients to other doctors to perform surgeries at,
7 Pacific Hospital were often paid "advances" under their purported "management"
8 agreements with Pharmacy Defendants in exchange for such referrals. These
9 advances were often "written off" later—they were never reasonably expected to be
10 repaid.
11
17.
As detailed below, many medical providers, including the Provider
12 Defendants, have (or had) contracts with both Pacific Hospital and CPM/IPM, as
13 well as with PSPM, International Implants, and other coconspirator entities.1
14
B.
Overview of the Surgical Defendant Enterprise
15
18.
In Section V below, State Fund articulates separate, yet connected,
16 schemes conducted by the Surgical Defendant Enterprise to defraud State Fund
17 while simultaneously concealing the misconduct. The schemes are:
18
(a)
As admitted in the Plea Agreement, forming and using shell
19
corporations, or using a co-schemer's company, to grossly and fraudulently
20
increase the bills to State Fund for medical hardware used in Pacific
21
Hospital's surgeries. For example, Drobot Sr. created International Implants
22
and represented it as an implant manufacturer. In reality, International
23
1
Several Defendants, including, but not limited to, Dr. Daniel Capen, , Dr. Andrew
24 Jarminski,
Dr. Timothy Hunt, Dr. Randy Rosen, and Mosaic Medical Management,
have
refused
to produce their agreements and communications with other
25 Defendants, invoking
their Fifth Amendment rights against self-incrimination. Dr.
Richard
Mulvania
was
deposed, and invoked the Fifth Amendment and refused to
26 provide testimony in response
to any questions relating to his relationship with the
Individual
Defendants,
agreements
the Entity Defendants, or his work with (or
27 even knowledge of the existence of)with
any other Provider Defendant. Likewise,
Drobot Sr. and Drobot Jr. have invoked their Fifth Amendment rights and
28 Messrs.
refused to testify about most of the allegations in this Second Amended Complaint,
including agreements with medical providers.
#:10764
1
Implants simply bought implants from other manufacturers across the country
2
and then grossly inflated the price at which it resold the implants to Pacific
3
Hospital, which Pacific Hospital then billed to State Fund as the implant's
4
actual cost.
5
(b)
6
doctors, chiropractors, marketers, and others, including the Provider and
7
Marketer Defendants, to pay kickbacks in return for those persons to refer
8
thousands of patients to Pacific Hospital for spinal surgeries and other
9
medical services including "other types of surgeries, magnetic resonance
As further admitted in the Plea Agreement, conspiring with dozens of
10
imaging, toxicology, durable medical equipment, and other services," and/or
11
in exchange for the medical providers agreeing to use certain equipment or
12
devices, including devices from International Implants.
13
(c)
14
controlling regulations by, among other things, "upcoding" and "unbundling"
15
items in their billings. "Upcoding" is a practice of using medical treatment
16
codes in the submission of insurance claims that represent a substantially
17
higher billing price than the set amount for the actual services rendered.
18
Similarly, many procedures, such as surgeries, are, by regulation, charged at a
19
rate bundling together a number of necessary elements or pieces of equipment
20
for the procedure. Instead of simply charging the bundled rate, the Surgical
21
Defendants here took particular items or steps involved in the procedure,
22
"unbundled" them, and billed them separately, resulting in a significantly
23
higher bill. For example, Pacific Hospital would bill State Fund separately
24
for toxicology tests using five different codes and charging for all of them,
25
even though one code covered all of the administered tests.
26
(d)
27
assistant surgeons, when nurses are considered part of the procedure's cost (a
28
particular type of "unbundling").
Billing for services at substantially higher rates than allowed under
Billing Pacific Hospital Registered Nurse First Assistants separately as
#:10765
1
(e)
Billing State Fund separately for autologous transfusions (a procedure
2
used to save the patient's blood during surgeries), when that cost is included,
3
by regulation, in the bundled cost of inpatient admission.
4
(f)
5
procedures performed at Long Beach Pain, which was also billed by the
6
owner of the equipment used for the procedures. Long Beach Pain was
7
managed by Pacific Hospital.
8
19.
Double-billing State Fund for the technical component for radiology
The involved Defendants concealed this course of conduct for over a
9 decade (although Long Beach Pain and International Implants were formed later),
10 by falsifying invoices and purchase orders, submitting fraudulent bills, hiding the
11 common ownership of the entities in the enterprise, concealing the true nature of the
12 business relationship with providers, and obstructing State Fund's attempts to
13 investigate any issues. While State Fund may have caught certain instances of
14 overbilling and double billing from time to time, Defendants misrepresented these to
15 be mere mistakes; State Fund was misled into making additional payments, as
16 Defendants concealed the fraudulent enterprise of kickbacks, falsified invoices, and
17 sham agreements giving rise to the multifaceted "sub-schemes" designed to cheat
18 the workers' compensation system from all angles.
19
C.
Overview of the Pharmacy Defendant Enterprise
20
20.
The Individual Defendants also conducted many of the same fraudulent
21 schemes using pharmacies and the medication management companies that they
22 formed and operated. As discussed in Paragraphs 33, 55-56, supra, Drobot Sr.
23 owned and created CPM and IPM, while Drobot, Jr. ran the companies on a day-to24 day basis. Dr. Bernadett worked with Drobot Sr. and Drobot Jr. to funnel monies
25 through the Pharmacy Entities to doctors that performed services at, or referred
26 patients to, Pacific Hospital—approving of and facilitating the use of the pharmacy
27
28
- 10 Third Amended Complaint, Case No. 13-00956 AG (CWx)
#:10766
1 entities as vehicles for kickback payments. 2 According to the Pharmacy
2 Defendants' discovery responses, Drobot Jr. purchased CPM and IPM from his
3 father in mid-2010, after being President of these entities for a number of years.
4 Drobot Jr. is also the CEO and a director of the other Pharmacy Defendants,
5 including Coastal, MMG, and LBPP. LBPP is a subsidiary of CPM/IPM. The
6 Pharmacy Defendant Enterprise is responsible for orchestrating at least the
7 following schemes designed to defraud State Fund:
8
(a)
Engaging in activity with respect to prescribed medications without
9
having the licenses required by law, violating the prohibitions against the
10
corporate practice of medicine, and paying kickbacks through sham
11
agreements, all the while concealing the unlawful conduct from State Fund
12
and misrepresenting the nature of their businesses.
13
(b)
14
for medications at rates up to ten times the prices at established retail
15
pharmacies, and well above workers' compensation guidelines. For example,
16
to maximize their profits prior to March 1, 2007, the Individual and Pharmacy
17
Defendants fraudulently manipulated drug pricing benchmarks through their
Overbilling State Fund through a variety of schemes, including billing
18
19
2
20
21
22
23
24
25
26
27
28
For example, in a July 2008 email from Drobot Jr. to Dr. Bernadett, Drobot
Jr. notes that IPM has made $60,000 in payments on behalf of Pacific Hospital and
PSPM, including "$10,000 for two spine procedures performed at PHLB [in] July,"
"$20,000 for [Defendant Alan] Ivar for February" and "$30,000 made up of $18,000
[to Defendant Jeffrey] Catanzarite and $12,000 [to Defendant Alan] Ivar was paid
by IPM in May." Drobot Jr. also noted that "[Defendant Dr. Ian] Armstrong did a
spine at Pacific last week and IPM need to recover $5000" and that Defendant Dr.
David Payne "did/or is doing a spine this week with International Implant
equipment, thus will need $8k. IPM is the legal conduit to this agreement until
something else takes its place." In another email, Drobot Jr. writes to, among
others, Dr. Bernadett, noting that he will "hold all IPM checks to [Defendant] Capen
. . . until we receive the 85k for the month"; an IPM employee responds noting that
IPM has "received the July $25k PSPM today. We've also received the August
$60k from International Implants."
#:10767
1
ownership interests in (or other associations with) drug repackagers. When
2
the opportunity for such manipulation closed in 2007, Defendants and their
3
related entities looked for other ways to game the system; for example, by
4
focusing more heavily on compound or other lucrative medications, ancillary
5
services, and urine drug testing.
6
(c)
7
the scheme. For example, CPM and IPM duplicated bills for thousands of
8
prescriptions submitted to State Fund, with each entity billing State Fund for
9
the same drugs, claim, and date of service. LBPP and Coastal also submitted
Double-billing for prescriptions already billed by other Defendants in
10
duplicate bills.
11
(d)
12
been settled and paid by State Fund.
13
Again, while State Fund may have caught certain instances of overbilling and
Rebilling State Fund on claims even after those particular claims had
14 double billing, Defendants misrepresented these to be mere mistakes; State Fund
15 was misled into making additional payments, as Defendants concealed the
16 fraudulent enterprise of kickbacks, unlicensed corporate practice of medicine,
17 prescription pushing, and sham agreements giving rise to the multifaceted "sub18 schemes" designed to cheat the workers' compensation system.
19
21.
In so doing, each of the Defendants violated, among other laws, the
20 Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq.
21 ("RICO") with their many predicate acts.
22
D.
Connections Between the Surgical and Pharmacy Enterprises
23
22.
Defendants acted together with a common purpose to obtain more
24 money from State Fund than was rightfully owed. While the Surgical Defendant
25 Enterprise and Pharmacy Defendant Enterprise provided somewhat different
26 services to workers' compensation claimants, both Surgical and Pharmacy
27 Defendants were connected through a well-orchestrated kickback scheme and aimed
28
#:10768
1 to defraud State Fund through fraudulent billing practices. The Individual
2 Defendants often coordinated their activities through the Administrative Defendants.
3
23.
Among other things, FMM acted as an out-sourced human resources
4 department for the Surgical and Pharmacy Defendants, supplying employees,
5 generating payroll, and providing information technology services. PSPM entered
6 into contracts with medical groups and providers and also provided information
7 technology support. FMM and PSPM both facilitated the payment of illegal
8 kickbacks by controlling the flow of human as well as monetary capital between the
9 Surgical and Pharmacy Defendant Enterprises.
10
24.
Coordination between and among the Defendants was used to increase
11 profits and ensure a steady stream of income both to Defendants at the expense of
12 workers' compensation insurers and employers. The document shown below,
13 recently produced by Essence Group Holdings, Inc., a company in which Drobot Sr.
14 invested and which acquired pharmaceutical repackaging companies DRx and
15 Wellinx, demonstrates the interconnected fee-splitting arrangement among
16 Defendants.
17
18
19
20
21
22
23
24
25
26
27
28
#:10769
1
25.
This suggests that PSPM was to act as the management company for
2 both CPM/IPM and Pacific Hospital, coordinating the efforts of CPM/IPM and
3 Pacific Hospital and facilitating payments to "MDs" of $20,000 per month or more
4 and splitting profits with them. The goal of the overarching enterprise was to
5 increase the number of patients flowing through this connected group of Defendants
6 and to thereafter submit fraudulent bills to State Fund in connection with the
7 medical services provided to them (often those services offering Defendants the
8 highest profit margins). Defendants pursued and accomplished their goals under the
9 direction of the Individual Defendants using a variety of methods: inflating bills
10 (sometimes through "middleman" or shell companies), double-billing with other
11 entities, concealing the true cost and nature of the services or medications provided,
12 and concealing the true nature of their businesses and contractual relationships with
13 medical providers and groups in order to hide their illegal activities.3
14
26.
As a specific example of PSPM's control over the practices of
15 contracting physicians (and corporate practice of medicine), PSPM wrote a letter to
16 doctors in 2006 reminding them that PSPM controlled all referrals from the doctors,
17 including surgeries, pain management, pharmaceuticals, and psychiatric evaluations.
18 The letter explicitly states that "[a]ccording to our management agreement all
19 referrals from your office are to be coordinated by PSPM." PSPM then went on to
20 specifically demand referrals for: pain management physicians, psychological and
21 psychiatric consultations, MRIs, and durable medical equipment. The paragraph on
22 psychological and psychiatric consultation referrals demands that all referrals be
23
3
24
25
26
27
28
The document also references "DME" and "MRI." In his deposition on
October 24, 2014, Matthew Umbs—Pharmacy Defendants' CFO and/or economic
consultant—testified that another Drobot Jr. entity, Advanced Pharmacy Services,
received "commissions" from durable medical equipment ("DME") companies in
connection with DME sales to certain customers. Drobot Sr. also has a DME
company, PSPM-DME, Inc., to which State Fund has paid over $4 million. In his
Plea Agreement, Drobot Sr. admitted to paying kickbacks for DME and MRIs. Plea
Agreement at 15.
#:10770
1 "through PSPM to Dr. Zubrick," no matter the patient's wishes nor the physician's
2 judgment, because referring to other specialists "severely reduces the revenue from
3 our management contracts." The letter makes clear that PSPM "need[s] this revenue
4 in order to survive and [ ] must take an aggressive approach to ensure [PSPM]
5 capture[s] all revenues that are available."
6
27.
The letter, signed by Drobot Sr., also directs the physician to complete
7 "an accounts receivable purchase agreement" in order for CPM to be able to collect
8 payments from State Fund under its own tax identification number for
9 pharmaceuticals prescribed through its in-office physician dispensing programs.
10 Then, despite instructing physicians to sign those purchase agreements, PSPM
11 assures physicians that "we can proceed as normal to collect a significant amount of
12 receivable from State Fund" and that nothing would change from the existing
13 management agreements in which physicians were to receive a percentage of the
14 collections. The letter asks the physician to fax the sham agreement to Drobot Jr.'s
15 attention, and closes with an exhortation to "Help Us Keep The Pharmacy Alive."
16
28.
In another example of PSPM's control over the physicians' practices,
17 Drobot Sr. sends an email on January 4, 2010 to Defendant Dr. Mulvania, who had a
18 dispensing agreement with IPM, stating "PSPM cannot survive without a reduction
19 in expenses . . . what we need to accomplish with your office is the elimination of
20 paying your PA and your malpractice insurance. This is a $20,000 per month
21 reduction in our costs and a $20,000 increase in yours." Thus, the physician
22 assistants ("PAs") who often prescribed medications under CPM/IPM's dispensing
23 agreements with medical providers were, on information and belief, hired and paid
24 by PSPM or FMM.
25
29.
To assist in coordinating the scheme, the Individual, Pharmacy, and
26 Surgical Defendants share the same offices, the same addresses, and the same
27 personnel. For example, in a prior case, Drobot Jr. submitted a sworn declaration
28 admitting that: "CPM does not employ or pay pharmacy technicians. The pharmacy
#:10771
1 technicians are obtained through a third-party registry, First Medical Management
2 ("FMM"), owned by Michael Drobot, Sr., my father."4 The coordination and
3 oversight of the Individual Defendants facilitated the Defendants' efforts towards the
4 common goal of defrauding State Fund. The Individual Defendants helped ensure
5 the participation of medical providers and groups, including the Provider
6 Defendants, in the fraud schemes and coordinated the payment of illegal kickbacks,
7 referral fees, and fee-splitting arrangements between medical providers and groups
8 (including the Provider Defendants), marketers and other referral sources (including
9 the Marketer Defendants), and the Individual and Entity Defendants.
10
30.
Moreover, corporate formalities were often ignored by the Surgical,
11 Pharmacy, and Administrative Defendants. For example, in a series of emails
12 recently produced by third-party Seaspine, Inc., a "Staff Accountant" for PSPM
13 represented International Implants in communications to Seaspine, Inc., using a
14 "@healthsmartcorp.com" email address. 5 Then, only a few months later, the same
15 employee represented International Implants as a "Staff Accountant" for FMM,
16 using the same email address.
17
31.
Similarly, Vonda Ray, another FMM employee, simultaneously
18 represented IPM, CPM, LBPP, and Advanced Practice Services (another entity
19
20
21
4
Declaration of Michael Drobot in Support of Special Motion to Strike
22 Complaint ¶ 9, Zenith Ins. Co. v. CPM, Los Angeles Superior Court, Case No.
23 BC406917.
5
On information and belief, Healthsmart Corporation was the "corporate
24
umbrella" or "corporate office" under which other Drobot-controlled entities were
25 created and/or managed, including CPM and IPM. In 2001, Healthsmart
Corporation changed its name to First Medical Staffing, Inc., and in 2002, the name
26
was changed to First Medical Management, Inc. Thus, California Secretary of State
27 records suggest that Healthsmart Corporation and Defendant FMM are the same
entity.
28
#:10772
1 owned by Drobot Jr.), as shown in an email produced in this litigation by
2 Defendants.
3
32.
Thus, FMM and PSPM, as with other entities run by the Individual
4 Defendants, were conduits for the conduct of the other entities and individuals in the
5 Surgical and Pharmacy Defendant Enterprises.6
6
33.
Furthermore, the Surgical and Pharmacy Defendants are connected
7 through the Individual Defendants, all of whom were involved in both enterprises.
8 Defendants admit that Drobot Sr. concurrently owned and managed the Surgical
9 Defendants and the Pharmacy Defendants at least until 2010. While Drobot Sr.
10 owned the Pharmacy Defendants, Drobot Jr. ran them, serving as Chief Operating
11 Officer of CPM and IPM since around the time of their formation in 2002 and 2003,
12 respectively. On information and belief, Drobot Jr. also served as President of CPM
13 at least as early as 2006. According to CPM and IPM, Drobot Sr.'s ownership
14 interests in CPM and IPM were transferred to Drobot Jr. in 2010.
15
34.
Drobot Jr. was also involved in the Surgical Defendant Enterprise. For
16 example, documents produced in this litigation show Drobot Jr. facilitating the
17 referral of patients to Defendant Pacific Hospital while encouraging doctors to
18 contract with CPM/IPM. In an email to Defendant Dr. Richard Mulvania dated
19 November 10, 2010, Drobot Jr. states, "attached above you will find the original 4
20 Spine cases that I faxed… with a confirmed delivery notice. Like the 5 I gave you
21 today, please do what you can to make sure that the cases go to Pacific if there is a
22 need for surgery. If you engage [IPM] again I believe I can send 10-15 of these a
23 month." Two days later the spinal surgeon responds to Drobot Jr., declining to
24 engage IPM despite Drobot Jr.'s promise that IPM would "guarantee" a minimum
25
26
6
In his deposition on October 15, 2014, Drobot Sr. invoked his Fifth
27 Amendment right against self-incrimination nearly every time he was questioned
about the conduct of PSPM and FMM, resulting in over fifty invocations during his
28
deposition on topics relating to PSPM and FMM.
#:10773
1 payment of $40,000 for the surgeon's pharmaceutical business, but assuring, "[o]n
2 the patients you referred, if you still want me to see them, I will be sure to do
3 surgery at Pacific Hospital if they come to surgery." Drobot Jr. replies, "please see
4 them and send them to Pacific."
5
35.
Similarly, other emails show Drobot Jr. facilitating the payment of
6 monthly "rent" to Defendant Dr. Jacob Tauber, a physician who referred spinal
7 cases to Pacific Hospital, pursuant to what appears to be a sham sublease agreement
8 between the physician and PSPM (an agreement signed by Drobot Sr.). The
9 documents further suggest that Drobot Jr. arranged for monthly payments of at least
10 $15,000 to be made to Dr. Tauber for his pharmaceutical referrals under a purported
11 dispensing agreement with CPM. When asked about the purported "rent" payments
12 to this physician, Drobot Jr.'s role in facilitating those payments, and CPM's
13 dispensing agreement with the physician, Drobot Sr. invoked his Fifth Amendment
14 right against self-incrimination and refused to respond.
15
36.
Furthermore, according to Pacific Hospital testimony during a Rule
16 30(b)(6) deposition on September 26, 2014, Drobot Jr. also worked at Pacific
17 Hospital in the Purchasing Department for at least some period of time, focusing on
18 the supply chain "because that was his specialty." According to this testimony, this
19 department was responsible for negotiating purchases and discounts of "every
20 supply that's used in the hospital." Drobot Sr. himself confirmed during his
21 deposition on October 15, 2014 that Drobot Jr. worked for Pacific Hospital,
22 including that he negotiated some contracts on behalf of the hospital.
23
37.
Drobot Jr. also had a Pacific Hospital email address (i.e.,
24 michaelr.drobot@phlb.org) and a Healthsmart Corporation email address (i.e.,
25 michaelr.drobot@healthsmartcorp.com).
26
38.
Additionally, around 2011, Drobot Jr. started Advanced Lab-Services,
27 Inc. ("Advanced Lab"), which billed State Fund for lab services performed on
28 patients of physicians who had agreements with one of the Pharmacy Defendants
#:10774
1 and/or patients who were scheduled for surgery at Pacific Hospital or treatment at
2 Long Beach Pain. Another Drobot Jr. entity, Advanced Practice Services,
3 coordinated the lab services for the physicians. When the Pharmacy Defendants'
4 CFO, Matthew Umbs, was questioned about these entities during his deposition on
5 October 24, 2014, counsel for the Pharmacy Defendants instructed him not to
6 answer.
7
39.
Thus, the Defendants are connected through a vast network of entities
8 owned or controlled by the Individual Defendants. State Fund records indicate that
9 over 8,700 claims submitted to State Fund for reimbursement involve at least one
10 Surgical Defendant and one Pharmacy Defendant, further indicating a connected
11 flow of patients between and among these Defendant groups.
12
E.
13
14
Provider Defendants' and Marketer Defendants' Knowing
Agreement to and Participation in the Enterprises
40.
The Provider Defendants and Marketer Defendants all knowingly
15 facilitated the schemes of the Individual Defendants, Surgical Defendants,
16 Pharmacy Defendants, and Administrative Defendants (collectively, the "Individual
17 and Entity Defendants"). The Provider Defendants did so by accepting illegal
18 kickbacks and referral fees (both for referring patients to Defendants' pharmacies
19 and for performing or referring surgeries at or to Pacific Hospital), allowing the
20 operation of illegal pharmacy operations in their offices, allowing their names and
21 signatures to be used in bills submitted to State Fund, and providing the medical
22 services or prescriptions underlying the bills to State Fund with knowledge of the
23 nature of the Individual and Entity Defendants' activities, with the intent to facilitate
24 those illegal activities, and with knowledge and expectation that that the fraudulent
25 insurance bills for medical and surgical goods and services provided to these
26 patients would be sent either on paper through the United States mail or
27 electronically through interstate wire. The Provider Defendants also signed bills and
28 reports containing certifications, either explicit or implicit, that the bills and reports
#:10775
1 submitted were not the product of fraud or illegal referral and kickback fees, and/or
2 did not contain material omissions. These certifications were false, as each Provider
3 Defendant accepted illegal kickbacks from the Individual and Entity Defendants.
4 The Provider Defendants had knowledge or expectation that the bills and reports
5 containing these certifications would be sent either on paper through the United
6 States mail or electronically through interstate wire.
7
41.
Many of the Provider Defendants, including Khalid Ahmed, Gerald
8 Alexander, Ian Armstrong, Daniel Capen, Mitchell Cohen, Catalino Dureza,
9 Timothy Hunt, Ismael Silva, Alan Ivar, Andrew Jarminski, John Larsen, Richard
10 Mulvania, Hamid Rahman, Philip Sobol, Edward Komberg, and Jacob Tauber, also
11 signed sham "lien purchase agreements" in 2006 and 2007 purporting to sell their
12 pharmaceutical accounts receivables or "liens" to the Pharmacy Defendants so that
13 the Pharmacy Defendants could collect on the bills they submitted to State Fund.
14 These defendants did so with knowledge that these agreements would be provided to
15 State Fund to induce State Fund to pay Pharmacy Defendants. In reality, however,
16 the Pharmacy Defendants promised the Provider Defendants that nothing would
17 change as a result of their signing the "lien purchase agreements" required by State
18 Fund and assured the Provider Defendants that the illegal fee-splitting arrangements
19 would remain in place. Financial documents produced in this case confirm that,
20 indeed, the lien purchase agreements did not change the financial arrangements
21 between Pharmacy Defendants and the Provider Defendants.
22
42.
The Marketer Defendants knowingly facilitated the schemes of the
23 Individual and Entity Defendants by negotiating for and accepting illegal kickbacks
24 and referral fees for steering patients to medical facilities owned or managed by the
25 Individual and Provider Defendants. The Marketer Defendants did so with
26 knowledge of the nature of the Individual and Entity Defendants' activities, with the
27 intent to facilitate those illegal activities, and with knowledge and expectation that
28 that the fraudulent insurance bills for medical and surgical goods and services
#:10776
1 provided to these patients would be sent either on paper through the United States
2 mail or electronically through interstate wire.
43.
3
State Fund brought this action to recoup payments made to Defendants,
4 who concealed the system of illegal kickbacks, fee-splitting, corporate practice of
5 medicine, and other misconduct, as described below, and to prevent future
6 fraudulent activity by Defendants and others.
7
II.
THE PARTIES
8
A.
Plaintiff
9
44.
State Fund is a self-supporting, non-profit public enterprise fund that
10 was established by the California Legislature pursuant to California Insurance Code
11 §§ 11770 et seq. State Fund provides workers' compensation insurance to California
12 employers with no financial obligation to the public and is the largest provider of
13 workers' compensation insurance in California.
14
B.
Individual Defendants
15
45.
Drobot Sr., on information and belief, is a resident of Corona Del Mar,
16 CA. His links to, and control of, the relevant entities and other Defendants are set
17 forth in detail in the next section, as demonstrated in part through public records,
18 including California Secretary of State records.
19
46.
Drobot Jr. is the son of Defendant Drobot Sr. On information and
20 belief, Drobot Jr. is a resident of Orange County, CA. His links to, and control of,
21 the relevant entities and other Defendants are also set forth in detail in the next
22 section, as demonstrated in part through public records, including California
23 Secretary of State records.
24
47.
Defendant Dr. Faustino Bernadett is an anesthesiologist and pain
25 management specialist who has a long-standing relationship with Defendants
26 Drobot Sr. and Drobot Jr. His links to, and control of, the relevant entities and other
27 Defendants are set forth in detail in the next section, as demonstrated in part through
28 public records, including California Secretary of State Records. In short,
#:10777
1 Dr. Bernadett was intimately involved in the conduct alleged in this Complaint. For
2 example, an April 2010 email produced in this case establishes his knowledge of
3 kickback payments to physicians, including Defendants in this case, in connection
4 with spinal surgeries, including one agreement with Defendant Dr. Jack Akmakjian
5 that blatantly provided for a payment of $15,000 per surgery, paid only if Dr.
6 Akmakjian used International Implants devices. A November 2009 email shows his
7 involvement in a conversation about which of the Entity Defendants would pay 15%
8 "collection fees" to Defendant Alan Ivar for surgeries he referred that used
9 International Implants hardware. And a July 2008 email produced in this matter
10 shows that Dr. Bernadett was aware of and facilitated payments to medical
11 providers through Defendant IPM.
12
C.
13
14
Surgical, Pharmacy, and Administrative Defendants and Control
Allegations
48.
Defendant Healthsmart is, and at all relevant times was, a California
15 corporation, with its principal place of business at 2776 Pacific Avenue, Long
16 Beach, CA 90806. In 1996, Drobot Sr. signed the Certificate of Amended
17 Incorporation of Healthsmart, filed with the California Secretary of State on
18 December 24, 1996, as its President, and in 1997, filed a Certificate of
19 Determination for Healthsmart, as Chairman of the Board and President (filed with
20 the California Secretary of State on March 18, 1997). In the most recent Statements
21 of Information on file with the California Secretary of State, Drobot Sr. was listed as
22 Chief Executive Officer and a Director of Healthsmart.
23
49.
Defendant Pacific Hospital was at all relevant times a California
24 corporation, and a for-profit hospital that specialized in surgeries in general, and
25 orthopedic and spinal surgeries in particular, with its principal place of business at
26 2776 Pacific Avenue, Long Beach, CA 90806, up until its assets were purportedly
27 sold around October 2013. See the above paragraph regarding Drobot Sr.'s control
28 of the Healthsmart entity which, on information and belief, mirrored that of Pacific
#:10778
1 Hospital. Further, Pacific Hospital filed a corporate disclosure statement in this
2 case, listing Abrazos Healthcare, Inc. ("Abrazos") as the parent corporation;
3 California Secretary of State records indicate that Abrazos is located at 20377 SW
4 Acacia Street, Newport Beach, CA 92660, which is the headquarters for the
5 Pharmacy Defendants described below. Drobot Sr. is listed as the principal of
6 Abrazos. The disclosure statement also references Mickey Medical, Inc. as the
7 holding company of Abrazos; California Secretary of State records list Mickey
8 Medical, Inc. as having the same Acacia Street address, with Drobot Sr. as the
9 principal. Pacific Hospital also occupied 1740 Pacific Avenue, Long Beach, CA
10 90813, which was owned by Mickey Motors, LLC up until August 2013. Secretary
11 of State records reflect that Drobot Sr. is the manager of Mickey Motors, LLC.
12
50.
According to financial statements and testimony obtained during
13 discovery, Pacific Hospital was owned until 2004 by (1) a revocable trust
14 established by Drobot Sr.; (2) Healthsmart MSO, an entity affiliated with Drobot Sr.
15 through direct and indirect ownership interests; and (3) a number of physicians. In
16 2004, Pacific Hospital repurchased the shares of common stock held by physicians
17 and was then fully owned by entities owned or controlled by Drobot Sr. In August
18 2005, through a complicated purchase transaction, Abrazos became either the sole
19 or majority shareholder of Pacific Hospital (according to financial statements,
20 Abrazos was the sole shareholder; according to testimony from Dr. Bernadett,
21 Drobot Sr. maintained an ownership interest in Pacific Hospital). At that time,
22 Abrazos was owned by Dr. Bernadett or by entities or trusts that he owned or
23 controlled, although Defendant Dr. Daniel Capen later acquired a 10 percent interest
24 in Abrazos. In October 2010, the Bernadett Family Trust, the majority shareholder
25 in Abrazos, sold its 90% ownership interest in Abrazos to Michael D. Drobot
26 Revocable Trust and Mickey Medical, Inc., an entity owned by Drobot Sr.
27
51.
During the time period in which Abrazos was the sole or primary
28 shareholder of Pacific Hospital (and prior to and after the acquisition of Abrazos by
#:10779
1 Mickey Medical), Drobot Sr. continued to operate as Pacific Hospital's Chief
2 Executive Officer, and maintained significant financial interests in, and control over,
3 Pacific Hospital. For example, at the time of the Abrazos acquisition, Pacific
4 Hospital executed promissory notes payable over several years to repurchase Drobot
5 Sr.'s common stock in Pacific Hospital. Also, until December 31, 2009, Future
6 Opportunities, LLC, an entity owned by Drobot Sr.'s revocable trust and the
7 Bernadett Family Trust, provided Pacific Hospital with a revolving line of credit of
8 $8,500,000. At the close of 2010, Pacific Hospital had a note payable to Future
9 Opportunities of more than $7 million. Pacific Hospital was also involved in many
10 other related-party transactions with companies owned and/or controlled by Drobot
11 Sr. during this time period.
12
52.
Many of the employees of Healthsmart and Pacific Hospital were
13 supplied by Defendant FMM and many of the properties occupied by Pacific
14 Hospital were purportedly leased by Defendant PSPM. Indeed, documents
15 produced in this litigation reveal significant payments made from Pacific Hospital to
16 FMM and PSPM.
17
53.
Defendant Long Beach Pain is, and at all relevant times was, a
18 California corporation. Long Beach Pain, on information and belief, has a physical
19 location at 2760 Pacific Avenue, Long Beach, CA 90806 (the same block as Pacific
20 Hospital), and, on information and belief, is associated with Pacific Hospital in
21 terms of patient referrals, doctor privileges, and industry publications. According to
22 California Secretary of State records, Long Beach Pain headquarters are also located
23 at 20377 SW Acacia Street, Newport Beach, CA 92660. According to a recent
24 Statement of Information on file with the California Secretary of State (May 18,
25 2012), Drobot Sr. is listed as Chief Executive Officer, Secretary, and a director of
26 Long Beach Pain. Further, Long Beach Pain has filed a corporate disclosure
27 statement in this Court noting that PSPM is its parent corporation. At least until
28 October 2010, Long Beach Pain Center was 100% owned by the Bernadett Family
#:10780
1 Trust. As of December 31, 2010 and 2009, Pacific Hospital had an outstanding
2 balance due from Long Beach Pain of approximately $7,556,000 and $5,950,000,
3 which represented "Pain Center patient receivables" purportedly owned by the
4 Hospital pursuant to a "management agreement."
5
54.
Defendant International Implants is, and at all relevant times was, a
6 California limited liability company. International Implants is also located at 20377
7 SW Acacia Street, Newport Beach, CA. The involvement of International Implants
8 is laid out in the Plea Agreement for Defendant Drobot Sr., USA v. Drobot, No.
9 8:14-cr-00034-JLS-DOC-7 at 14-16 (C.D. Cal. Feb. 21, 2014). International
10 Implants was owned and controlled by Drobot Sr. according to the Plea Agreement,
11 and, on information and belief, was not only staffed with employees from Defendant
12 FMM, but was also involved with PSPM (both Drobot Sr.-controlled entities). In
13 particular, according to the 2009 and 2010 financial statements of Abrazos,
14 International Implants was 100% owned by SI Venture Partners, LLC, which in turn
15 was owned 47.5% by Drobot Sr., 47.5% by PSPM (which in turn was majority
16 owned by the Bernadett Family Trust and by Drobot Sr.), and 5% by the Chief
17 Compliance Officer of the Hospital.
18
55.
Defendant IPM is, and at all relevant times was, a California
19 corporation. At the time the original Complaint was filed, IPM's website states that
20 it helps dispense medications to patients in doctor's offices, and, according to
21 California Secretary of State records, is also located at 20377 SW Acacia Street,
22 Newport Beach, CA, although it states that IPM also has a sales office located in
23 Baltimore, Maryland. IPM also leased property from Mickey Motors, LLC through
24 at least 2013, while Drobot Sr. served as manager of Mickey Motors, LLC. In the
25 Statement of Information filed with the California Secretary of State on September
26 7, 2007, Drobot Sr. was listed as the sole manager for IPM. In its May 31, 2011
27 Statement of Information, Drobot Jr. was listed as the sole manager. Drobot Jr.
28
#:10781
1 acted as an officer of IPM since around the time of its formation in 2003. IPM was
2 also staffed with employees from FMM.
3
56.
Defendant CPM underwent a merger in or around 2010 and became
4 IPM, on information and belief. Following the merger, CPM was no longer a valid
5 California entity and had no right to conduct business, on information and belief.
6 CPM nonetheless continued to bill State Fund for prescription medications well into
7 2012. According to California Secretary of State records, CPM is (or was) also
8 located at 20377 SW Acacia Street, Newport Beach, CA 92660. In the Certificate
9 of Merger on file with the California Secretary of State, dated January 28, 2010 but
10 filed August 17, 2010, Drobot Sr. signed as the manager of both the surviving entity
11 (IPM) and the disappearing entity (CPM). Drobot Jr. served as Chief Operating
12 Officer of CPM since around the time of its formation in 2002. Drobot Jr. also
13 served as President of CPM at least as early as 2006. Drobot Jr.'s role included, for
14 example, representing CPM at a Public Hearings before the State of California
15 Department of Industrial Relations (see Transcript of Public Hearing at 74-76,
16 Workers' Compensation Proposed Regs., Official Medical Fee Schedule –
17 Pharmaceuticals, Oct. 31, 2006) and negotiating and entering contracts on behalf of
18 CPM. According to Drobot Sr.'s deposition testimony, Drobot Jr. "ran the operation
19 on a day-to-day basis underneath [Drobot Sr.'s] direction," including entering into
20 contracts on behalf of CPM. Furthermore, both Individual Defendants
21 simultaneously held an ownership interest in CPM before it merged into IPM.
22 Drobot Sr.'s ownership interests in CPM were transferred to Drobot Jr. in 2010.
23 CPM was also staffed with employees from FMM.
24
57.
Defendant Coastal is, and at all relevant times was, a California
25 corporation. According to California Secretary of State records, Coastal's principal
26 executive office is also located at 20377 SW Acacia Street, Newport Beach, CA
27 92660, with an additional street address of 2632 Pacific Avenue in Long Beach. In
28 the most recent Statement of Information with the California Secretary of State
#:10782
1 (October 29, 2010), Drobot Jr. is listed as the Chief Executive Officer, Chief
2 Financial Officer and a director of Coastal. Coastal also leased property from the
3 Drobot Sr.'s entity Mickey Motors, LLC, through at least mid-2013.
4
58.
Defendant LBPP is, and at all relevant times was, a California
5 corporation. According to California Secretary of State records, LBPP's executive
6 office is also located at 20377 SW Acacia Street, Newport Beach, CA 92660, and
7 also has a place of business on Pacific Avenue in Long Beach, CA (near Pacific
8 Hospital). In response to requests for admission, Defendant LBPP admitted that
9 Drobot Sr. "associated with and acted on behalf of [LBPP] from its inception until
10 late July or early August, 2010 when Michael D. Drobot, Sr. sold his interests in
11 certain aspects of [LBPP] to Michael R. Drobot, Jr." In its most recent Statement of
12 Information filed with the California Secretary of State (December 28, 2011),
13 Drobot Jr. is listed as the Chief Executive Officer, Secretary, and a director. An
14 organization chart produced in this litigation indicates that LBPP was a subsidiary of
15 CPM, with Drobot Jr. acting as President of the enterprise.
16
59.
Defendant MMG is, and at all relevant times was, a California limited
17 liability company. According to California Secretary of State records, MMG is also
18 located at 20377 SW Acacia Street, Newport Beach, CA 92660. In MMG's Articles
19 of Incorporation, filed with the California Secretary of State on March 21, 2011,
20 Drobot Jr. is listed as the initial agent for service of process, and in the Statement of
21 Information filed on April 13, 2011, Drobot Jr. is listed as the sole manager for
22 MMG. On information and belief, MMG was also staffed with employees from
23 FMM.
24
60.
Defendant PSPM is, and at all relevant times was, a California
25 corporation, with its principal place of business also at 20377 SW Acacia Street,
26 Newport Beach, CA 92660. PSPM is the parent entity of Long Beach Pain and
27 holds a significant ownership interest in International Implants. In PSPM's Articles
28 of Incorporation, filed with the California Secretary of State on May 1, 1998, Drobot
#:10783
1 Sr. is listed as the initial agent for service of process, and on PSPM's Statement of
2 Information filed on May 31, 2011 Drobot Sr. is the only officer listed (the
3 subsequent Statement of Information filed on May 19, 2013 indicates that there was
4 no change in the preceding statement). According to financial statements produced
5 in this case, from August 31, 2005 to January 1, 2008, PSPM was 47% owned by
6 the Bernadett Family Trust, 36% owned by Drobot Sr., and 17% owned by "three
7 other parties affiliated with the Company." In 2007 and 2006 alone, PSPM received
8 approximately $5,350,000 and $4,300,000, respectively, for purported "management
9 services" provided to Pacific Hospital's orthopedic surgery program. As described
10 below, on information and belief, the Individual Defendants used PSPM to enter
11 into fraudulent agreements with medical providers and medical groups, including,
12 but not limited to, option and rental agreements, in order to conceal the payment of
13 kickbacks for the medical providers' participation in the Defendants' fraud schemes.
14 Upon information and belief, PSPM was the alter ego of the Individual Defendants
15 and a conduit of CPM, IPM, Healthsmart, International Implants, and LB Pain.
16
61.
Defendant FMM is, and at all relevant times was, a California
17 corporation. According to California Secretary of State records, FMM is also
18 located at 20377 SW Acacia Street, Newport Beach, CA 92660. According to
19 Secretary of State records, FMM was formerly First Medical Staffing, Inc., which
20 was formerly Healthsmart Corporation. Drobot Sr. signed as the President and
21 Secretary of FMM on the October 9, 2002 Certificate of Amendment to the Articles
22 of Incorporation. The April 15, 2014 Statement of Information for FMM indicates
23 that Drobot Sr. is the Chief Executive Officer, Randolph Taylor is the Secretary, and
24 G. William Hammer is the Chief Financial Officer of FMM. FMM entered into
25 various agreements with the Pharmacy Defendants and Surgical Defendants,
26 pursuant to which they, among other things, supplied employees to those
27 Defendants. Moreover, according to the recent deposition testimony of Matthew
28 Umbs, FMM not only supplied employees, but it also provided information
#:10784
1 technology services to the Pharmacy and Surgical Defendants. Upon information
2 and belief, FMM was the alter ego of the Individual Defendants and a conduit of the
3 other Drobot-controlled entities.
4
62.
Collectively, these entities are referred to herein as the "Entity
5 Defendants."
6
63.
The overlap in ownership, officers, personnel, management, addresses,
7 and operations demonstrate that the Entity Defendants and Individual Defendants
8 are alter egos of each other. Corporate formalities were often ignored. On
9 information and belief, many of the entities did not maintain corporate meeting
10 minutes or regularly elect directors. Furthermore, the Individual Defendants acted
11 with disregard for the separate nature of each entity. On information and belief, the
12 Drobots owned and/or controlled several other entities that similarly functioned as
13 mere conduits through which the overall scheme was implemented. The Individual
14 Defendants' network of shell companies ensured that their unlawful acts remain
15 hidden and victims and the courts are unable to easily identify the responsible party
16 or track the flow of money.
17
D.
Provider Defendants
18
64.
Dr. Capen. Defendant Dr. Daniel Capen is, on information and belief,
19 a resident of Los Angeles County, CA. He is an orthopedic spine surgeon who has
20 had a longstanding relationship with the Individual Defendants. He held a financial
21 ownership interest in Abrazos Healthcare, Inc., the parent company of Healthsmart,
22 until the sale of Pacific Hospital in October 2013. Dr. Capen performed spinal
23 surgeries at Pacific Hospital, using hardware ordered from International Implants
24 and other co-schemers' companies, that were billed to State Fund both by Pacific
25 Hospital and by Dr. Capen. Dr. Capen performed and billed for such surgeries
26 starting no later than 2004 and ending no earlier than 2012. Dr. Capen also referred
27 patients for surgeries to be performed at Defendant Long Beach Pain. Dr. Capen
28 received illegal kickback payments from Entity Defendants for these surgeries and
#:10785
1 referrals, and for using International Implants hardware, and knowingly received
2 patient referrals from marketers who were paid kickbacks for those referrals. Two
3 examples of surgeries performed at Pacific Hospital by Dr. Capen using devices
4 from International Implants, and billed to State Fund, are included in Exhibit 2.
5
65.
Dr. Capen also had agreements with CPM and IPM. Under these
6 agreements with CPM and IPM, Dr. Capen knowingly allowed the Individual
7 Defendants to control and operate illegal pharmacy operations out of his practices in
8 exchange for payments. CPM and IPM, with Dr. Capen's cooperation, billed large
9 volumes of pharmaceuticals to State Fund at prices greatly in excess of actual cost,
10 beginning no later than 2005 and ending no earlier than 2012.7 Dr. Capen was paid
11 kickbacks through his agreements for referring patients to the pharmacies, for
12 referring patients to Pacific Hospital, for referring patients to Long Beach Pain, and
13 for using International Implants hardware. He also signed bills and reports (and/or
14 allowed Entity Defendants to sign bills on his behalf), which were submitted to State
15 Fund, and which contained certifications, either explicit or implicit, that the bills and
16 reports submitted were not the product of fraud or illegal referral and kickback fees,
17 and/or did not contain material misrepresentations or omissions.
18
66.
Since the filing of State Fund's original complaint, Dr. Capen has been
19 indicted on charges of receiving kickbacks for prescribing compound medications in
20 excess of $2,500,000, accepting rebates for patient referrals, and filing false claims
21 with numerous insurers including State Fund in connection with a separate scheme
22
23
24
25
26
27
28
7
The dates provided here, and in subsequent paragraphs discussing billing by
the Pharmacy Defendants with the cooperation of the various Provider Defendants,
are not intended to delimit entirely the period in which the Provider Defendants
facilitated or engaged in fraudulent billing by or with the Pharmacy Defendants.
Instead, these dates reflect the dates of the initial billings identified in financial
records produced by Pharmacy Defendants in this matter. Those records may not be
complete, and additional fraudulent billing occurred after the initial bills were sent.
Additionally, payments by State Fund on such fraudulent bills occurred subsequent
to the billings themselves.
#:10786
1 organized by Kareem Ahmed. State of California v. Charbonnet, Case No.
2 14ZF0334 (Cal. Sup. Ct. June 17, 2014).
3
67.
Dr. Capen practiced at Defendant Southwestern Orthopedic Medical
4 Corp. d/b/a Downey Orthopedic Medical Group ("Downey Ortho") where
5 Defendants Dr. John Larsen, Dr. Richard Mulvania, Dr. Andrew Jarminski, Dr.
6 Russell Nelson, and Dr. Faustino Bernadett also practiced. Downey Ortho is located
7 at 7700 Imperial Hwy. Ste. R, Downey, CA 90242. This practice was "managed"
8 by PSPM. Dr. Capen also practiced at Defendant Southwestern Orthopedic Medical
9 Corp. d/b/a Channel Islands Orthopedic ("Channel Islands") where Defendants
10 Dr. Jarminski, and Dr. John Larsen also practiced. Channel Islands is located at
11 1700 Lombard St., Ste. 110, Oxnard, CA 93030. Dr. Capen also practiced at
12 Defendant Allied Medical Group, Inc. ("Allied"), located at 15901 Hawthorne
13 Blvd., Ste. 250, Lawndale, CA 90260 and 4237 Atlantic Ave., Long Beach, CA
14 90807 where Defendants Dr. Jarminski and Dr. Timothy Hunt. Dr. Capen
15 knowingly submitted fraudulent bills to State Fund through Defendants Downey
16 Ortho, Channel Islands, Allied, Daniel Capen MD, a Professional Corporation, and
17 Westlake Surgical Medical Associates, Inc., which, according Secretary of State
18 records, is located at 20377 SW Acacia St., Ste. 110, Newport Beach, CA 92660
19 along with most of the Entity Defendants. When Dr. Capen was subpoenaed for
20 documents prior to this Third Amended Complaint, he refused to produce any
21 documents under his Fifth Amendment Right against self-incrimination.
22
68.
Dr. Larsen. Defendant Dr. John Larsen is, on information and belief, a
23 resident of Los Angeles County, CA. He is an orthopedic spine surgeon.
24 Dr. Larsen performed spinal surgeries at Pacific Hospital, using hardware ordered
25 from International Implants and other co-schemers' companies, that were billed to
26 State Fund both by Pacific Hospital and by Dr. Larsen. Dr. Larsen performed and
27 billed for such surgeries starting no later than 2004 and ending no earlier than 2011.
28 Dr. Larsen received illegal kickback payments from Entity Defendants for these
#:10787
1 surgeries and for using International Implants hardware. Dr. Larsen entered into
2 multiple agreements with PSPM under which he received illegal kickback
3 payments. Two examples of surgeries performed at Pacific Hospital by Dr. Larsen
4 using devices from International Implants, and billed to State Fund, are included in
5 Exhibit 2.
6
69.
Dr. Larsen also had agreements with CPM and IPM. Under these
7 agreements with CPM and IPM, Dr. Larsen knowingly allowed the Individual
9 exchange for payments. CPM and IPM, with Dr. Larsen's cooperation, billed large
10 volumes of pharmaceuticals to State Fund at prices greatly in excess of actual cost,
11 beginning no later than 2005 and ending no earlier than 2010. Dr. Larsen was paid
12 kickbacks through his agreements with Pharmacy Defendants for referring patients
13 to the pharmacies, for referring patients to Pacific Hospital, for performing surgeries
14 at Pacific Hospital, and for using International Implants hardware. He also signed
15 bills and reports (and/or allowed Entity Defendants to sign bills on his behalf),
16 which were submitted to State Fund, and which contained certifications, either
17 explicit or implicit, that the bills and reports submitted were not the product of fraud
18 or illegal referral and kickback fees, and/or did not contain material
19 misrepresentations or omissions.
20
70.
Dr. Larsen practiced at Downey Ortho where Defendants Dr. Daniel
21 Capen, Dr. Richard Mulvania, Dr. Andrew Jarminski, Dr. Russell Nelson, and
22 Dr. Faustino Bernadett also practiced. He also worked at Channel Islands where
23 Dr. Capen, and Dr. Jarminski also practiced. Dr. Larsen submitted fraudulent bills
24 to State Fund through Downey Ortho and Channel Islands, and Defendant John
25 Larsen, MD, A Professional Corporation, which, according to Secretary of State
26 records, is located at 32107 Lindero Canyon Rd. Ste. 235, Westlake Village, CA
27 91361.
28
#:10788
1
71.
Dr. Jarminski. Defendant Dr. Andrew Jarminski is, on information
2 and belief, a resident of Los Angeles County, CA. He specializes in general surgery
3 and occupational medicine. Dr. Jarminski received kickbacks from Entity
4 Defendants for referring patients to Pacific Hospital for spinal surgeries, using
5 hardware from International Implants or another co-schemer's company, that were
6 billed to State Fund both by Pacific Hospital and by Dr. Jarminski. Dr. Jarminski
7 was often the assistant surgeon for those surgeries. Dr. Jarminski referred or
8 assisted in, and billed for, such surgeries starting no later than 2005 and ending no
9 earlier than 2012. Two examples of surgeries performed at Pacific Hospital using
10 devices from International Implants, and billed to State Fund, in which
11 Dr. Jarminski was the assistant surgeon, are included in Exhibit 2.
12
72.
Dr. Jarminski also had agreements with CPM and IPM. Under these
13 agreements with CPM and IPM, Dr. Jarminski knowingly allowed the Individual
15 exchange for payments. CPM and IPM, with Dr. Jarminski's cooperation, billed
16 large volumes of pharmaceuticals to State Fund at prices greatly in excess of actual
17 cost, beginning no later than 2005 and ending no earlier than 2012. Dr. Jarminski
18 was paid kickbacks through his agreements with Pharmacy Defendants for referring
19 patients to the pharmacies, for assisting in spinal surgeries, and for referring patients
20 to Pacific Hospital. He also signed bills and reports (and/or allowed Entity
21 Defendants to sign bills on his behalf), which were submitted to State Fund, and
22 which contained certifications, either explicit or implicit, that the bills and reports
24 did not contain material misrepresentations or omissions.
25
73.
Since the filing of State Fund's original complaint, Dr. Jarminksi has
26 been indicted on charges of receiving kickbacks of $1.9 million for prescribing
27 compound medications, accepting rebates for referrals, submitting false claims to
28 numerous insurers including State Fund, and involuntary manslaughter in
#:10789
1 connection with a separate scheme organized by Kareem Ahmed. State of
2 California v. Charbonnet, Case No. 14ZF0334 (Cal. Sup. Ct. June 17, 2014); State
3 of California v. Ahmed, Case No. 14ZF0335 (Cal. Sup. Ct. June 17 2014).
4
74.
Dr. Jarminski practiced at Downey Ortho where Defendants Dr. Daniel
5 Capen, Dr. John Larsen, Dr. Richard Mulvania, Dr. Russell Nelson, and
6 Dr. Faustino Bernadett also practiced. He worked practiced at Channel Islands
7 where Dr. Daniel Capen and Dr. John Larsen also practiced. He also practiced at
8 Allied where Defendants Dr. Capen and Dr. Timothy Hunt also practiced. He also
9 worked with Defendant Dr. Thomas Haider at Haider Spine Center Medical Group,
10 Inc. He submitted fraudulent bills to State Fund through Downey Ortho, Channel
11 Islands, Allied, ARJ Medical, Inc., Inland Incare Medical Associates, Inc., and
12 Inland Incare of San Bernardino Medical Group, Inc. Defendants Inland Incare
13 Medical Associates, Inc. and ARJ Medical, Inc. are located, according to Secretary
14 of State records, at 212 Capistrano Circle, Fullerton, CA 92835. Defendant Inland
15 Incare of San Bernardino Medical Group, Inc. is located, according to Secretary of
16 State records, at 155 West Hospitality Lane Suite 175, San Bernardino, CA, 92408.
17
75.
Jeffrey Catanzarite, D.C. Defendant Jeffrey Catanzarite, D.C. is, on
18 information and belief, a resident of Orange County, CA. He is a chiropractor who
19 is the principal at Defendant The Center for Better Health, a Medical Group, Inc.
20 d/b/a/ Southland Spine and Rehabilitation, Inc. ("Southland Spine"). Catanzarite
21 received kickbacks for referring patients to Pacific Hospital for spinal surgeries,
22 using hardware from International Implants or another co-schemer's company, that
23 were billed to State Fund.
24
76.
Catanzarite also had agreements with CPM, IPM, and MMG. Under
25 these agreements, Catanzarite knowingly allowed the Individual Defendants to
26 control and operate illegal pharmacy operations out of his practices in exchange for
27 payments. CPM and IPM, with Catanzarite's cooperation, billed large volumes of
28 pharmaceuticals to State Fund at prices greatly in excess of actual cost, beginning no
#:10790
1 later than 2003 and ending no earlier than 2012. Catanzarite was paid kickbacks
2 through his agreements with Pharmacy Defendants for referring patients to the
3 pharmacies and for referring patients to Pacific Hospital.8 He also influenced and
4 facilitated the submission of fraudulent bills and reports by licensed physicians
5 operating out of the medical practices he owned and operated. These bills and
6 reports were submitted to State Fund, and contained certifications, either explicit or
7 implicit, that the bills and reports submitted were not the product of fraud or illegal
8 referral and kickback fees, and/or did not contain material misrepresentations or
9 omissions.
10
77.
Defendant Dr. Jack Akmakjian practiced with Catanzarite out of
11 Southland Spine. Catanzarite submitted or facilitated the submission of fraudulent
12 bills to State Fund through Southland Spine. Southland Spine, according to
13 Secretary of State Records, is located at 1520 Nutmeg Place, Suite 260, Costa Mesa,
14 CA 92626.
15
78.
Dr. Ahmed. Defendant Dr. Khalid B. Ahmed is, on information and
16 belief, a resident of Los Angeles County, CA. He is an orthopedic spine surgeon.
17 Dr. Ahmed performed spinal surgeries at Pacific Hospital, using hardware ordered
19 State Fund both by Pacific Hospital and by Dr. Ahmed. Dr. Ahmed performed and
20 billed for such surgeries starting no later than 2004 and ending no earlier than 2008.
21 Dr. Ahmed received illegal kickback payments from Entity Defendants for those
22 surgeries and for using International Implants hardware, and knowingly received
23 patient referrals from marketers who were paid kickbacks for those referrals.
24 Dr. Ahmed entered into contracts with PSPM under which he received some of the
25 illegal kickback payments. Two examples of surgeries performed at Pacific
26
27
8
As discussed below, Catanzarite was also involved with another Drobot Jr.
entity that provided toxicology tests, and emails show Drobot Jr. encouraging
28
Catanzarite to perform more tests.
#:10791
1 Hospital by Dr. Ahmed using devices from International Implants, and billed to
2 State Fund, are included in Exhibit 2.
3
79.
Dr. Ahmed also had agreements with CPM and IPM. Under these
4 agreements with CPM and IPM, Dr. Ahmed knowingly allowed the Individual
6 exchange for payments. CPM and IPM, with Dr. Ahmed's cooperation, billed large
7 volumes of pharmaceuticals to State Fund at prices greatly in excess of actual cost.
8 Dr. Ahmed was paid kickbacks through his agreements with Pharmacy Defendants
9 for referring patients to the pharmacies, for referring patients to Pacific Hospital, for
10 performing surgeries at Pacific Hospital, and for using International Implants
11 hardware. He also signed bills and reports (and/or allowed Entity Defendants to
12 sign bills on his behalf), which were submitted to State Fund, and which contained
13 certifications, either explicit or implicit, that the bills and reports submitted were not
14 the product of fraud or illegal referral and kickback fees, and/or did not contain
15 material misrepresentations or omissions.
16
80.
Dr. Ahmed owns and operates Defendants Khalid Bashir Ahmed, MD,
17 A Professional Corporation and Defendant Ahmed Pomona Medical Group, Inc.,
18 through which he submitted fraudulent bills for pharmaceutical and surgical services
19 to State Fund and which, according to Secretary of State Records, are located at
20 4511 Rosemead Blvd., Pico Rivera, CA 90660. Dr. Ahmed has also submitted bills
21 through Defendant Healthpointe Medical Group, Inc. ("Healthpointe"), which is
22 owned and operated by Defendant Dr. Ismael Silva. When Dr. Ahmed was
23 subpoenaed for documents prior to the filing of this Third Amended Complaint, he
24 objected to the production of certain documents based on his Fifth Amendment
25 Right against self-incrimination.
26
81.
Dr. Akmakjian. Defendant Dr. Jack H. Akmakjian is, on information
27 and belief, a resident of Riverside County, CA. He is an orthopedic spine surgeon.
28 Dr. Akmakjian performed spinal surgeries at Pacific Hospital, using hardware
#:10792
1 ordered from International Implants and other co-schemers' companies, that were
2 billed to State Fund both by Pacific Hospital and by Dr. Akmakjian. Dr. Akmakjian
3 performed and billed for such surgeries starting no later than 2009 and ending no
4 earlier than 2013. Dr. Akmakjian received illegal kickback payments from Entity
5 Defendants for these surgeries and for using International Implants hardware.
6 Dr. Akmakjian received the illegal kickback payments through agreements with the
7 Entity Defendants. Two examples of surgeries performed at Pacific Hospital by
8 Dr. Akmakjian using devices from International Implants, and billed to State Fund,
9 are included in Exhibit 2.
10
82.
Dr. Akmakjian worked with Defendant Jeffrey Catanzarite at
11 Defendant Southland Spine. Dr. Akmakjian billed for pharmaceuticals under
12 contracts between IPM or MMG and Southland Spine. Under these illegal
13 contracts, Dr. Akmakjian knowingly allowed the Individual Defendants through
14 IPM and MMG to operate their illegal pharmacy operations out of his practice at
15 Southland Spine in exchange for payments. IPM and MMG, with Dr. Akmakjian's
16 cooperation, billed large volumes of pharmaceuticals to State Fund at prices greatly
17 in excess of actual cost, beginning no later than 2010 and ending no earlier than
18 2012. He also signed bills and reports (and/or allowed Entity Defendants to sign
19 bills on his behalf), which were submitted to State Fund, and which contained
20 certifications, either explicit or implicit, that the bills and reports submitted were not
21 the product of fraud or illegal referral and kickback fees, and/or did not contain
22 material misrepresentations or omissions.
23
83.
Dr. Akmakjian also submitted fraudulent bills through his entity
24 Defendant Jack H. Akmakjian, M.D., Inc., which is located in Riverside County,
25 CA.
26
84.
Dr. Chambi. Defendant Dr. Israel Chambi is, on information and
27 belief, a resident of Orange County, CA. On information and belief, he is a
28 neurological surgeon specializing in brain, spine, and nerve surgeries. Dr. Chambi
#:10793
1 performed spinal surgeries at Pacific Hospital, using hardware ordered from
2 International Implants and other co-schemers' companies, that were billed to State
3 Fund both by Pacific Hospital and by Dr. Chambi. These surgeries were performed
4 starting no later than 2010 and ending no earlier than 2011. Dr. Chambi received
5 illegal kickback payments from Entity Defendants for the surgeries and for using
6 International Implants hardware. The payments were made through agreements
7 between Dr. Chambi and the Entity Defendants, including an agreement under
8 which Dr. Chambi was specifically promised a percentage payment for all
9 collections for International Implants devices. Two examples of surgeries
10 performed at Pacific Hospital by Dr. Chambi using devices from International
11 Implants, and billed to State Fund, are included in Exhibit 2.
12
85.
Dr. Chambi also signed bills and reports (and/or allowed Entity
17
86.
Dr. Alexander. Defendant Dr. Gerald Alexander is, on information
18 and belief, a resident of Riverside County, CA. He is an orthopedic spine surgeon.
19 Dr. Alexander performed spinal surgeries at Pacific Hospital, using hardware
21 billed to State Fund both by Pacific Hospital and by Dr. Alexander. Dr. Alexander
23 earlier than 2011. Dr. Alexander received illegal kickback payments from Entity
24 Defendants for these surgeries and for using International Implants hardware. Dr.
25 Alexander received the illegal kickback payments though agreements with the
26 Entity Defendants. Two examples of surgeries performed at Pacific Hospital by Dr.
27 Alexander using devices from International Implants, and billed to State Fund, are
28 included in Exhibit 2.
#:10794
1
87.
Dr. Alexander also had agreements with CPM. Under these
2 agreements with CPM, Dr. Alexander knowingly allowed the Individual Defendants
3 to control and operate illegal pharmacy operations out of his practices in exchange
4 for payments. CPM, with Dr. Alexander's cooperation, billed large volumes of
5 pharmaceuticals to State Fund at prices greatly in excess of actual cost beginning no
6 later than 2006 and ending no earlier than 2007. He also signed bills and reports
7 (and/or allowed Entity Defendants to sign bills on his behalf), which were submitted
8 to State Fund, and which contained certifications, either explicit or implicit, that the
9 bills and reports submitted were not the product of fraud or illegal referral and
10 kickback fees, and/or did not contain material misrepresentations or omissions.
11
88.
Dr. Alexander submitted fraudulent bills through his entities Defendant
12 Gerald J. Alexander, Orthopaedic Surgery, Inc. which, according to Secretary of
13 State records, is located at 333 City Blvd. West Suite 1700, Orange, CA 92868 and
14 Defendant Newport Coast Spine, Inc., which, according to Secretary of State
15 records, is located at 930 South 4th Street, Ste. 150, Las Vegas, NV, 89101. Dr.
16 Alexander also worked with Dr. Thomas Haider and others at Haider Spine Center
17 Medical Group, Inc. and wrote prescriptions billed by Pharmacy Defendants at
18 Haider Spine Center Medical Group, Inc.
19
89.
Dr. Armstrong. Defendant Dr. Ian Armstrong is, on information and
21 Dr. Armstrong performed spinal surgeries at Pacific Hospital, using hardware
23 billed to State Fund both by Pacific Hospital and by Dr. Armstrong. Dr. Armstrong
25 earlier than 2012. Dr. Armstrong received illegal kickback payments from Entity
26 Defendants for these surgeries and for using International Implants hardware.
27 Dr. Armstrong received these kickback payments under various agreements with
28 the Entity Defendants. Two examples of surgeries performed at Pacific Hospital by
#:10795
1 Dr. Armstrong using devices from International Implants, and billed to State Fund,
2 are included in Exhibit 2.
3
90.
Dr. Armstrong had agreements with CPM and IPM. Under these
4 agreements with CPM and IPM, he knowingly allowed the Individual Defendants to
6 payments. CPM and IPM, with Dr. Armstrong's cooperation, billed large volumes
7 of pharmaceuticals to State Fund at prices greatly in excess of actual cost beginning
8 no later than 2005 and ending no earlier than 2012. Dr. Armstrong was paid
9 kickbacks through his agreements with Pharmacy Defendants for referring patients
10 to the pharmacies, for performing surgeries at Pacific Hospital, and for using
11 International Implants hardware. He also signed bills and reports (and/or allowed
12 Entity Defendants to sign bills on his behalf), which were submitted to State Fund,
13 and which contained certifications, either explicit or implicit, that the bills and
15 and/or did not contain material misrepresentations and omissions.
16
91.
Dr. Armstrong submitted fraudulent bills through his entity, Defendant
17 Ian I.T. Armstrong, M.D., Inc., which, according to Secretary of State records, is
18 located at 3831 Hughes Ave. #105, Culver City, CA 90232.
19
92.
Michael E. Barri, D.C. Defendant Michael E. Barri, D.C. is, on
20 information and belief, a resident of Orange County, CA. He is a chiropractor.
21 Barri referred patients for surgeries to be performed at Defendant Long Beach Pain.
22 Barri received illegal kickback payments from Entity Defendants for these referrals.
23
93.
Barri also entered into agreements with IPM. Under these agreements
24 with IPM, he knowingly allowed the Individual Defendants to control and operate
25 illegal pharmacy operations out of his practices in exchange for payments. IPM,
26 with Barri's cooperation, billed large volumes of pharmaceuticals to State Fund at
27 prices greatly in excess of actual cost beginning no later than 2009 and ending no
28 earlier than 2012. Barri was paid kickbacks through his agreements with Pharmacy
#:10796
1 Defendants for referring patients to the pharmacies and for referring patients to
2 Long Beach Pain. He also influenced and facilitated the submission of fraudulent
3 bills and reports by licensed physicians operating out of the medical practices he
4 owned and operated. These bills and reports were submitted to State Fund, and
5 contained certifications, either explicit or implicit, that the bills and reports
8
94.
Barri owns and operates Defendants Jojaso Management, Inc.
9 ("Jojaso") and TriStar Medical Group, a Professional Corporation ("TriStar"), which
10 are, based on California Secretary of State records, located at 999 N. Tustin Ave.,
11 Santa Ana, CA 92705 and 876 Mountain Ave., Suite 200(I), Upland, CA 91786,
12 respectively. Barri submitted fraudulent bills to State Fund through TriStar.
13 Defendants Dr. Andrew Jarminski and Dr. Richard Mulvania both practiced at
14 TriStar.
15
95.
Dr. Cohen. Defendant Dr. Mitchell Cohen is, on information and
16 belief, a resident of Orange County, CA. He is an orthopedic spine surgeon. Dr.
17 Cohen performed spinal surgeries at Pacific Hospital, using hardware ordered from
19 Fund by both Pacific Hospital and Dr. Cohen. Dr. Cohen performed such surgeries
20 beginning no later than 2006 and ending no earlier than 2012. Dr. Cohen knowingly
21 received patient referrals from others who were paid kickbacks for those referrals.
22 Dr. Cohen received illegal kickback payments from Entity Defendants for the
23 surgeries and for using International Implants hardware. Dr. Cohen entered into
24 multiple agreements with Entity Defendants under which he received these illegal
25 kickback payments. Two examples of surgeries performed at Pacific Hospital by
26 Dr. Cohen using devices from International Implants, and billed to State Fund, are
27 included in Exhibit 2.
28
#:10797
1
96.
Dr. Cohen also had agreements with CPM. Under these agreements
2 with CPM, he knowingly allowed the Individual Defendants to control and operate
3 illegal pharmacy operations out of his practices in exchange for payments. CPM,
4 with Dr. Cohen's cooperation, billed large volumes of pharmaceuticals to State Fund
5 at prices greatly in excess of actual cost beginning no later than 2005 and ending no
6 earlier than 2007. Dr. Cohen was paid kickbacks through his agreements with
7 Pharmacy Defendants for referring patients to the pharmacies, for performing
8 surgeries at Pacific Hospital, and for using International Implants hardware. He also
9 signed bills and reports (and/or allowed Entity Defendants to sign bills on his
10 behalf), which were submitted to State Fund, and which contained certifications,
11 either explicit or implicit, that the bills and reports submitted were not the product of
12 fraud or illegal referral and kickback fees, and/or did not contain material
14
97.
Dr. Cohen submitted fraudulent bills through his business entity
15 Defendant Mitchell G. Cohen, MD, Inc., which, according to Secretary of State
16 Records, is located at 11160 Warner Ave., Ste. 305, Fountain Valley, CA 92708.
17
98.
Dr. Haider. Defendant Dr. Thomas Haider is, on information and
18 belief, a resident of Riverside County, CA. He is an orthopedic spine surgeon who
19 formerly owned implant manufacturer Seaspine, Inc., which sold implants to
20 International Implants that were then used in surgeries at Pacific Hospital. Dr.
21 Haider himself performed spinal implant surgeries at Pacific Hospital, which were
22 billed to State Fund by both Pacific Hospital and Dr. Haider, using Seaspine devices
23 that Pacific Hospital "purchased" through International Implants. The prices at
24 which International Implants invoiced these Seaspine devices to Pacific Hospital
25 (which invoices were included in the bills sent to and paid by State Fund) were
26 grossly inflated over the prices actually paid. Dr. Haider received illegal kickback
27 payments from Entity Defendants for the surgeries and for using International
28 Implants hardware. Dr. Haider performed such surgeries beginning no later than
#:10798
1 2010 and ending no later than 2012. Dr. Haider entered into multiple agreements
2 with Entity Defendants under which he received these illegal kickback payments.
3 Two examples of surgeries performed at Pacific Hospital by Dr. Haider using
4 devices from International Implants, and billed to State Fund, are included in
5 Exhibit 2.
6
99.
Dr. Haider had agreements with IPM. Under these agreements with
7 IPM, he knowingly allowed the Individual Defendants to control and operate illegal
8 pharmacy operations out of his practices in exchange for payments. IPM, with Dr.
9 Haider's cooperation, billed large volumes of pharmaceuticals to State Fund at
10 prices greatly in excess of actual cost, beginning no later than 2010 and ending no
11 later than 2012. He also signed bills and reports (and/or allowed Entity Defendants
12 to sign bills on his behalf), which were submitted to State Fund, and which
13 contained certifications, either explicit or implicit, that the bills and reports
16
100. Dr. Haider owns and operates Defendant Haider Spine Center Medical
17 Group, Inc. ("Haider Spine"), located at 6276 Rivercrest Dr., Riverside, CA 92507.
18 Defendant Dr. Andrew Jarminski worked with Dr. Thomas Haider at Haider Spine,
19 where Defendant Dr. Randy Rosen also practiced, and each of them submitted
20 fraudulent bills to State Fund through Haider Spine. Dr. Haider also owns and
21 operates Defendant Salma Jason Monica, LP, located at 4500 Brockton Avenue, Ste.
22 201, Riverside, CA 92501, which was used to receive illegal kickback payments on
23 behalf of Dr. Haider.
24
101. Dr. Dureza. Defendant Dr. Catalino Dureza is, on information and
25 belief, a resident of Kern County, CA. He is an orthopedic spine surgeon.
26 Dr. Dureza performed spinal surgeries at Pacific Hospital, using hardware ordered
28 State Fund both by Pacific Hospital and by Dr. Dureza. Dr. Dureza performed these
#:10799
1 surgeries beginning no later than 2004 and ending no later than 2009. Dr. Dureza
2 received illegal kickback payments from Entity Defendants for the surgeries and for
3 using International Implants hardware. Dr. Dureza received these kickback
4 payments under various agreements with the Entity Defendants. Two examples of
5 surgeries performed at Pacific Hospital by Dr. Dureza using devices from
6 International Implants, and billed to State Fund, are included in Exhibit 2.
7
102. Dr. Dureza had agreements with CPM and IPM. Under these
10 payments. CPM and IPM, with Dr. Dureza's cooperation, billed large volumes of
12 later than 2005 and ending no earlier than 2010. Dr. Dureza was paid kickbacks
14 pharmacies, for performing surgeries at Pacific Hospital, and for using International
15 Implants hardware. He also signed bills and reports (and/or allowed Entity
20
103. Dr. Dureza submitted fraudulent bills to State Fund through his medical
21 corporations Defendant Catalino D. Dureza, M.D., Inc., which, according to
22 Secretary of State records, is located at 2323 16th Street, Ste. 303, Bakersfield, CA
23 93301, and California Neurosurgical and Spine Associates, a Medical Corporation,
24 which, according to Secretary of State records, is located in Riverside County, CA.
25 Dr. Dureza also owns and controls Defendant Maximus Medical Group, a Medical
26 Corporation, which according to Secretary of State records, is located in Riverside
27 County, CA, and through which Dr. Dureza was paid kickback payments.
28
#:10800
1
104. Dr. Hunt. Defendant Dr. Timothy Hunt is, on information and belief,
2 a resident of Orange County, CA. He is an orthopedic surgeon. Dr. Hunt referred
3 spinal surgeries to Pacific Hospital, to be performed using hardware ordered from
5 Fund. Dr. Hunt received illegal kickback payments from Entity Defendants for
6 these referrals. These kickbacks were paid through multiple agreements with the
7 Entity Defendants.
8
105. Dr. Hunt had agreements with CPM and IPM. Under these agreements
9 with CPM and IPM, he knowingly allowed the Individual Defendants to control and
10 operate illegal pharmacy operations out of his practices in exchange for payments.
11 CPM and IPM, with Dr. Hunt's cooperation, billed large volumes of
13 later than 2005 and ending no earlier than 2012. Dr. Hunt was paid kickbacks
15 pharmacies and for referring surgeries to Pacific Hospital. He also signed bills and
16 reports (and/or allowed Entity Defendants to sign bills on his behalf), which were
17 submitted to State Fund, and which contained certifications, either explicit or
20 omissions.
21
106. Dr. Hunt owns and operates Defendant Allied Medical Group, Inc.
22 ("Allied"), which has a location in Lawndale, CA and Long Beach, CA
23 (collectively, Dr. Hunt and Allied shall be referred to as "Hunt Defendants"). Dr.
24 Hunt practices with Defendants Dr. Daniel Capen and Dr. Andrew Jarminski at
25 Allied and each doctor has submitted fraudulent bills to State Fund through Allied.
26 Dr. Hunt also submitted fraudulent bills through non-party Intercommunity Medical
27 Group, which was owned by his father, the late Dr. Robert Hunt.
28
#:10801
1
107. Alan Ivar, D.C. Defendant Alan Ivar, D.C. is, on information and
2 belief, a resident of Orange County, CA. He is a chiropractor. Ivar was paid
3 kickbacks by Pacific Hospital for referring patients for surgeries to be performed at
4 Long Beach Pain and for referring patients for spinal surgeries to be performed at
5 Pacific Hospital using hardware from International Implants. These kickbacks were
6 paid through various agreements between Ivar and the Entity Defendants.
7
108. Ivar had agreements with CPM and IPM. Under these agreements with
8 CPM and IPM, he knowingly allowed the Individual Defendants to control and
9 operate illegal pharmacy operations out of his practices in exchange for payments.
10 CPM and IPM, with Ivar's cooperation, billed large volumes of pharmaceuticals to
11 State Fund at prices greatly in excess of actual cost beginning no later than 2005 and
12 ending no earlier than 2012. Ivar was paid kickbacks through his agreements with
13 Pharmacy Defendants for referring patients to the pharmacies and for referring
14 patients to Pacific Hospital. He also influenced and facilitated the submission of
15 fraudulent bills and reports by licensed physicians operating out of the medical
16 practices he owned and operated. These bills and reports were submitted to State
17 Fund, and contained certifications, either explicit or implicit, that the bills and
20
109. Ivar owns and operates Defendant Griffin Medical Group, Inc.
21 ("Griffin") and Defendant, South Coast Rehabilitation Center, Inc. ("South Coast
22 Rehab"), which according to Secretary of State records, are located at 1650 Adams
23 Ave., Costa Mesa, CA 92626. Defendant Dr. Lokesh Tantuwaya practiced out of
24 Griffin. Ivar submitted fraudulent bills to State Fund through Griffin and accepted
25 kickback payments through both Griffin and South Coast Rehab.
26
110. Edward Komberg, D.C. Defendant Edward Komberg, D.C. is, on
27 information and belief, a resident of Los Angeles County, CA. He is a chiropractor.
28 Dr. Komberg referred patients for services and surgeries to be performed at
#:10802
1 Defendant Long Beach Pain. He received kickback payments for these referrals
2 from Entity Defendants.
3
111.
Komberg had agreements with CPM. Under these agreements with
4 CPM, he knowingly allowed the Individual Defendants to control and operate illegal
5 pharmacy operations out of his practices in exchange for payments. CPM, with
6 Komberg's cooperation, billed large volumes of pharmaceuticals to State Fund at
8 earlier than 2007. Komberg was paid kickbacks through his agreements with
10 patients to Pacific Hospital. He also influenced and facilitated the submission of
11 fraudulent bills and reports by licensed physicians operating out of the medical
12 practices he owned and operated. These bills and reports were submitted to State
13 Fund, and contained certifications, either explicit or implicit, that the bills and
16
112. Komberg owns and operates Defendant Tri-County Medical Group
17 ("Tri-County"), which, according to Secretary of State records is located at 1200
18 Wilshire Blvd Ste. 308, Los Angeles, CA 90017 and Defendant Tri-City Health
19 Group, Inc. ("Tri-City"), which, according to Secretary of State records, is located at
20 1145 E. San Antonio Dr. Ste. A, Long Beach, CA 90807. Defendant Dr. Mitchell
21 Cohen practiced out of Tri-County. Komberg submitted fraudulent bills to State
22 Fund through Tri County and accepted kickbacks through Tri-City.
23
113. Dr. Moheimani. Defendant Dr. Assad Michael Moheimani is, on
24 information and belief, a resident of Orange County, CA. He is an orthopedic spine
25 surgeon. Dr. Moheimani performed spinal surgeries at Pacific Hospital, using
26 hardware ordered from International Implants and other co-schemers' companies,
27 that were billed to State Fund both by Pacific Hospital and by Dr. Moheimani.
28 Dr. Moheimani performed these surgeries beginning no later than 2009 and ending
#:10803
1 no earlier than 2011. Dr. Moheimani received illegal kickback payments from
2 Entity Defendants for the surgeries and for using International Implants hardware.
3 Two examples of surgeries performed at Pacific Hospital by Dr. Moheimani using
5 Exhibit 2.
6
114. Dr. Moheimani submitted fraudulent bills to State Fund through
7 Defendant Coast Spine and Sports Medical Corporation, which is principally located
8 at 902 N. Grand, Santa Ana, CA 92706. He also signed bills and reports (and/or
13
115. Dr. Mulvania. Defendant Dr. Richard Mulvania is, on information
14 and belief, a resident of Orange County, CA. He is an orthopedic spine surgeon.
15 Dr. Mulvania performed spinal surgeries at Pacific Hospital, using hardware ordered
17 State Fund both by Pacific Hospital and by Dr. Mulvania. Dr. Mulvania performed
18 these surgeries beginning no later than 2004 and ending no earlier than 2012.
19 Dr. Mulvania received illegal kickback payments from Entity Defendants for the
20 surgeries and for using International Implants hardware. Two examples of surgeries
21 performed at Pacific Hospital by Dr. Mulvania using devices from International
23
116. Dr. Mulvania had agreements with CPM and IPM. Under these
26 payments. CPM and IPM, with Dr. Mulvania's cooperation, billed large volumes of
28 later than 2005 and ending no later than 2011. He also signed bills and reports
#:10804
5
117. Dr. Mulvania submitted fraudulent bills to State Fund through
6 Defendant Richard L. Mulvania, MD, Inc., which, according to Secretary of State
7 records, is located at 9930 Research Dr. Suite 100, Irvine, CA 92648. Dr. Mulvania
8 also practiced at Downey Ortho where Dr. Daniel Capen, Dr. John Larsen, Dr.
9 Andrew Jarminski, Dr. Russell Nelson, and Dr. Faustino Bernadett also practiced.
10
118. Dr. Obukhoff. Defendant Dr. Serge Obukhoff is, on information and
12 Dr. Obukhoff performed spinal surgeries at Pacific Hospital, using hardware ordered
14 State Fund both by Pacific Hospital and by Dr. Obukhoff. Dr. Obukhoff performed
15 these surgeries beginning no later than 2004 and ending no earlier than 2012.
16 Dr. Obukhoff received illegal kickback payments from Entity Defendants for the
17 surgeries and for using International Implants hardware. Two examples of surgeries
18 performed at Pacific Hospital by Dr. Obukhoff using devices from International
20
119. Dr. Obukhoff had agreements with CPM. Under these agreements with
22 pharmacy operations out of his practices in exchange for payments. CPM, with Dr.
23 Obukhoff's cooperation, billed large volumes of pharmaceuticals to State Fund at
25 earlier than 2007. He also signed bills and reports (and/or allowed Entity
28
#:10805
3
120. Dr. Obukhoff submitted fraudulent bills to State Fund through
4 Defendant Serge Obukhoff, MD, Professional Corporation, which is located,
5 according to Secretary of State records, in Santa Monica, CA.
6
121. Dr. Payne. Defendant Dr. David Payne is, on information and belief, a
7 resident of Orange County, CA. He is an orthopedic spine surgeon. Dr. Payne
8 performed spinal surgeries at Pacific Hospital, using hardware ordered from
10 Fund both by Pacific Hospital and by Dr. Payne. Dr. Payne performed these
11 surgeries beginning no later than 2006 and ending no earlier than 2011. Dr. Payne
12 received illegal kickback payments from Entity Defendants for the surgeries and for
13 using International Implants hardware. Two examples of surgeries performed at
14 Pacific Hospital by Dr. Payne using devices from International Implants, and billed
15 to State Fund, are included in Exhibit 2.
16
122. Dr. Payne had agreements with IPM. Under these agreements with
17 IPM, he knowingly allowed the Individual Defendants to control and operate illegal
18 pharmacy operations out of his practices in exchange for payments. IPM, with Dr.
19 Payne's cooperation, billed large volumes of pharmaceuticals to State Fund at prices
20 greatly in excess of actual cost beginning no later than 2008 and ending no later than
21 2009. Dr. Payne was paid kickbacks through his agreements with Pharmacy
22 Defendants for referring patients to the pharmacies, for performing surgeries at
23 Pacific Hospital, and for using International Implants hardware. He also signed bills
24 and reports (and/or allowed Entity Defendants to sign bills on his behalf), which
25 were submitted to State Fund, and which contained certifications, either explicit or
28 omissions.
#:10806
1
123. Dr. Payne submitted fraudulent bills through his business entity,
2 Defendant David H. Payne, MD, Inc., which, according to Secretary of State
3 Records, is located in Orange County, CA.
4
124. Dr. Rahman. Defendant Dr. Hamid Rahman is, on information and
5 belief, a resident of Riverside County, CA. On information and belief, he is an
6 orthopedic surgeon specializing knee, hand, and shoulder surgery. Dr. Rahman
7 referred spinal surgeries to Pacific Hospital, to be performed using hardware ordered
9 State Fund. Dr. Rahman received illegal kickback payments from Entity
10 Defendants for these surgeries.
11
125. Dr. Rahman had agreements with CPM. Under these agreements with
14 Dr. Rahman's cooperation, billed large volumes of pharmaceuticals to State Fund at
16 earlier than 2007. He also signed bills and reports (and/or allowed Entity
21
126. Dr. Rosen. Defendant Dr. Randy Rosen is, on information and belief,
22 a resident of Riverside County, CA. He is an anesthesiologist and pain management
23 specialist that performed many procedures at Long Beach Pain that were billed to
24 State Fund. Dr. Rosen also referred spinal surgeries to Pacific Hospital, to be
25 performed using hardware ordered from International Implants and other co26 schemers' companies, that were billed to State Fund. Dr. Rosen received kickbacks
27 from the Entity Defendants for referring patients to Pacific Hospital for spinal
28
#:10807
1 surgeries, including surgeries with International Implants hardware, that were billed
2 to State Fund, and for performing procedures at Long Beach Pain.
3
127. Dr. Rosen had agreements with IPM and MMG. Dr. Rosen also
4 prescribed medications through Haider Spine's agreement with IPM. Under these
5 agreements with IPM and MMG, he knowingly allowed the Individual Defendants
6 to control and operate illegal pharmacy operations out of his practices in exchange
7 for payments. IPM and MMG, with Dr. Rosen's cooperation, billed large volumes
8 of pharmaceuticals to State Fund at prices greatly in excess of actual cost beginning
9 no later than 2010 and ending no earlier than 2012. He also signed bills and reports
14
128. Since the filing of State Fund's original complaint, Dr. Rosen has been
15 indicted on charges of receiving kickbacks for prescribing compound medications in
16 excess of $600,000, accepting rebates for patient referrals, and filing false claims
17 with numerous insurers including State Fund in connection with a separate scheme
18 organized by Kareem Ahmed. State of California v. Charbonnet, Case No.
19 14ZF0334 (Cal. Sup. Ct. June 17, 2014).
20
129. Dr. Rosen accepted kickbacks through Defendant Mosaic Medical
21 Management, Inc., which based on Secretary of State Records, is located at 1600
22 Rosecrans Avenue, Building 7, 4th Floor, Manhattan Beach, CA 90266. Emails
23 produced in this case show Dr. Rosen and Liza Vismanos (who, on information and
24 belief, is Dr. Rosen's wife) emailing Dr. Bernadett regarding patients referred to
25 Drs. Moheimani and Capen and inquiring about an "independent contractor"
26 agreement.
27
130. Dr. Silva. Defendant Dr. Ismael Silva is, on information and belief, a
28 resident of Orange County, CA. He is an orthopedic surgeon referred spinal
#:10808
1 surgeries to Pacific Hospital, to be performed using hardware ordered from
3 Fund. Dr. Silva received illegal kickback payments from Entity Defendants for the
4 referrals. Dr. Silva received these kickbacks, at least in part, through an agreement
5 between PSPM and Defendant Starbase, Inc. ("Starbase"), which, according to
6 Secretary of State records, is located at 2244 Faraday Ave., Carlsbad, CA 92008.
7
131. Dr. Silva had agreements with CPM. Under these agreements with
8 CPM he knowingly allowed the Individual Defendants to control and operate illegal
10 Dr. Silva's cooperation, billed large volumes of pharmaceuticals to State Fund at
12 later than 2007. Dr. Silva was paid kickbacks through his agreements with
14 patients to Pacific Hospital. He also signed bills and reports (and/or allowed Entity
19
132. Dr. Silva operates a network of clinics under Defendant Healthpointe
20 Medical Group, Inc. ("Healthpointe"), which has locations throughout Southern
21 California. Dr. Ahmed also practiced with Dr. Silva at Healthpointe. Dr. Silva
22 submitted fraudulent bills to State Fund through Healthpointe.
23
133. Dr. Sobol. Defendant Dr. Philip Sobol is, on information and belief, a
24 resident of Los Angeles County, CA. On information and belief, he is an orthopedic
25 surgeon specializing in hand surgery. Dr. Sobol referred spinal surgeries to Pacific
26 Hospital, to be performed using hardware ordered from International Implants and
27 other co-schemers' companies, that were billed to State Fund, and referred patients
28
#:10809
1 to Long Beach Pain for surgeries that were billed to State Fund. Dr. Sobol received
2 illegal kickback payments from Entity Defendants for these surgeries and referrals.
3
134. Dr. Sobol had agreements with CPM and IPM. Under these
6 payments. CPM and IPM, with Dr. Sobol's cooperation, billed large volumes of
8 later than 2005 and ending no earlier than 2012. Dr. Sobol was paid kickbacks
10 pharmacies, for performing surgeries at Pacific Hospital, and for referring surgeries
11 to Pacific Hospital and Long Beach Pain. He also signed bills and reports (and/or
16
135. Dr. Sobol submitted fraudulent bills to State Fund through Defendant
17 Sobol Orthopedic Medical Group, Inc., which, according to Secretary of State
18 records, is located at 8618 S. Sepulveda Blvd., Ste. 130, Los Angeles, CA 90045.
19
136. Dr. Nelson. Defendant Dr. Russell Nelson is, on information and
20 belief, a resident of Ventura County, CA. He is an orthopedic spine surgeon.
21 Dr. Nelson performed spinal surgeries at Pacific Hospital that were billed to State
22 Fund both by Pacific Hospital and by Dr. Nelson. These surgeries were performed
23 beginning no later than 2003 and ending no earlier than 2007. Dr. Nelson received
24 illegal kickback payments from Entity Defendants for performing these surgeries at
25 Pacific Hospital. These kickbacks were paid through multiple agreements with the
26 Entity Defendants. Two examples of surgeries performed at Pacific Hospital by Dr.
27 Nelson, and billed to State Fund, are included in Exhibit 2.
28
#:10810
1
137. Dr. Nelson had agreements with CPM. Under these agreements with
3 pharmacy operations out of his practices in exchange for payments. CPM, with Dr.
4 Nelson's cooperation, billed large volumes of pharmaceuticals to State Fund at
5 prices greatly in excess of actual cost. He also signed bills and reports (and/or
10
138.
Dr. Nelson submitted fraudulent bills to State Fund through Defendant
11 Nelson Spine Institute, Inc., which, according to Secretary of State records, is
12 located at 110 Jensen Ct., Suite 1-C, Thousand Oaks, CA 91360. Dr. Nelson also
13 practiced at Downey Ortho where Dr. Daniel Capen, Dr. Richard Mulvania,
14 Dr. John Larsen, Dr. Andrew Jarminski, and Dr. Faustino Bernadett also practiced.
15
139. Dr. Lokesh Tantuwaya. Defendant Dr. Lokesh Tantuwaya is, on
16 information and belief, a resident of San Diego County, CA. He is an orthopedic
17 spine surgeon. Dr. Tantuwaya performed spinal surgeries at Pacific Hospital, using
18 hardware ordered from International Implants and other co-schemers' companies,
19 that were billed to State Fund both by Pacific Hospital and by Dr. Tantuwaya.
20 Dr. Tantuwaya performed such surgeries beginning no later than 2010 and ending
21 no earlier than 2012. Dr. Tantuwaya received illegal kickback payments from
22 Entity Defendants for the surgeries and for using International Implants hardware.
23 Two examples of surgeries performed at Pacific Hospital by Dr. Tantuwaya using
25 Exhibit 2.
26
140. Dr. Tantuwaya submitted fraudulent bills to State Fund through
27 Defendant Lokesh S. Tantuwaya, M.D., Inc., which according to Secretary of State
28 records, is located at 7830 Clairmont Mesa Blvd. Ste. 203, San Diego, CA 92111.
#:10811
1 Dr. Tantuwaya also practiced out of Griffin with Defendant Ivar. He also signed
2 bills and reports (and/or allowed Entity Defendants to sign bills on his behalf),
3 which were submitted to State Fund, and which contained certifications, either
4 explicit or implicit, that the bills and reports submitted were not the product of fraud
5 or illegal referral and kickback fees, and/or did not contain material
7
141. Dr. Jacob Tauber. Defendant Dr. Jacob Tauber is, on information and
8 belief, a resident of Los Angeles County, CA. He is an orthopedic surgeon.
9 Dr. Tauber performed many non-spinal surgeries at PHLB that were billed to State
10 Fund. Dr. Tauber referred spinal surgeries to Pacific Hospital, to be performed
11 using hardware ordered from International Implants and other co-schemers'
12 companies, that were billed to State Fund. Dr. Tauber received kickbacks for
13 referring patients to Pacific Hospital for spinal surgeries, using hardware from
14 International Implants or another co-schemer's company, that were billed to State
15 Fund, and for performing non-spinal surgeries at Pacific Hospital.
16
142. Dr. Tauber had agreements with CPM and IPM. Under these
19 payments. CPM and IPM, with Dr. Tauber's cooperation, billed large volumes of
21 later than 2005 and ending no earlier than 2012. Dr. Tauber was paid kickbacks
23 pharmacies, for referring patients to Pacific Hospital, and for performing surgeries
24 at Pacific Hospital. He also signed bills and reports (and/or allowed Entity
#:10812
1
143. Dr. Tauber submitted fraudulent bills to State Fund through Defendant
2 Jacob E. Tauber, MD, a Professional Corporation, which is located, which,
3 according to Secretary of State records, is located at 9033 Wilshire Blvd., Ste. 401,
4 Beverly Hills, CA 90211.
5
144. Collectively, the medical providers named herein and their associated
6 medical practices and corporations are referred to as the "Provider Defendants."
7
E.
8
145. Jason Bernard. Defendant Jason Bernard is, on information and
Marketer Defendants
9 belief, a resident of Los Angeles County, CA. He was a manager of Defendant
10 Progressive Orthopedic Solutions, LLC ("Progressive"), which, according to
11 Secretary of State records, is located in Santa Fe Springs, CA. Progressive is a
12 supplier of durable medical equipment and medical supplies. However, on
13 information and belief, Progressive also operated as a spinal implant distributor, not
14 unlike International Implants. Bernard, through Progressive, worked as a marketer,
15 referring patients to physicians for services, including spinal fusions surgeries, to be
16 performed at Pacific Hospital and services at LB Pain. In an email recently
17 produced in this litigation, Bernard sent Drobot Sr. and Dr. Bernadett two
18 spreadsheets, one showing "a list of 85 patients that have been identified by their
19 PTP [Primary Treating Physician], as strong candidates for spine surgery," and the
20 other showing "250+ patients that we have sent to the PSPM network of
21 physicians." In this same email, Bernard also stated that he "hosted and event with
22 Dr [sic] Larsen and several attorneys" that "went extremely well." And "[f]rom that
23 meeting Dr [sic] Larsen received 5 cases that same week and a few more cases the
24 following week." Bernard was paid kickback payments the referrals like these that
25 resulted in surgeries being performed at Pacific Hospital. These payments were
26 made to Bernard, at least in part, through a "collections" agreement whereby he was
27 a paid a percentage of the amount collected on surgeries he referred. Bernard
28 referred patients to physicians, including, but not limited to, Defendants Dr. Daniel
#:10813
1 Capen, Dr. John Larsen, Dr. Andrew Jarminski, Dr. Richard Mulvania, and Dr. Jack
2 Akmakjian.
3
146. Collectively, Bernard and Progressive are referred to as “Marketer
4 Defendants”
5
F.
6
147. State Fund is unaware of the true names and capacities, whether
DOE Defendants
7 individual, corporate, associate or otherwise, of those defendants named herein as
8 DOES 1 through 10, inclusive. State Fund sues DOES 1 through 10 by fictitious
9 names. State Fund will seek leave to amend this complaint to show their true names
10 and capacities when the same have been ascertained. Said defendants are sued as
11 principals, and all of the acts performed by them as agents, servants or employees
12 were performed within the scope and course of their authority and employment.
13 State Fund is informed and believes, and thereon alleges, that each of the fictitiously
14 named defendants is responsible for the events, harm, and damages as alleged
15 herein.
16
148. State Fund is further informed and believes, and thereon alleges, that
17 each of the defendants was the co-conspirator of each and every other defendant
18 and, in performing the acts herein alleged, was acting within the scope of such
19 conspiracy, and that such actions were reasonably foreseeable to each of the other
20 co-conspirators, and/or were taken with the express or implied consent of each of
21 the other co-defendants.
22
149. The named and DOE defendants are occasionally referred to
23 collectively as "Defendants."
24
25
III.
JURISDICTION AND VENUE
150. This Court has subject matter jurisdiction over this action pursuant to
26 28 U.S.C. § 1331 because it arises under 18 U.S.C. § 1961 et. seq., the Racketeering
27 Influenced and Corrupt Organizations Act ("RICO"). This Court has supplemental
28 jurisdiction over State Fund's state law claims under 28 U.S.C. § 1367(a).
#:10814
1
151. Venue is proper in the Central District of California under 28 U.S.C.
2 § 1391, because all or almost all Defendants reside in this District, and a substantial
3 portion of the events or omissions giving rise to the claims herein occurred in this
4 District. Venue is proper in the Southern Division because, based on information
5 from the California Secretary of State and other sources, a majority of Defendants
6 reside in this Division, and Plaintiff State Fund has an office in Santa Ana.
7
8
IV.
STATE FUND AND ITS CLAIMS PROCESS
152. State Fund provides workers' compensation insurance policies to
9 employers, under which medical treatment and compensation benefits are provided
10 to employees who are injured or become ill during the course of employment, or due
11 to employment-related injury. In California, every employer is required to carry
12 insurance to cover the cost of occupational injuries and illnesses. This is also true
13 for California offices or branches of multistate or multinational corporations,
14 meaning the system itself has a significant impact on interstate commerce.
15
153. State Fund pays medical providers for medical services provided to
16 covered workers, including spinal implants, other spinal surgeries, and a wide
17 variety of other procedures. State Fund also pays medical providers for prescription
18 drugs supplied to injured workers.
19
154. In order to receive reimbursement from State Fund for Medical
20 Services, providers submit a Health Insurance Claim Form or other types of bills to
21 State Fund. The Health Insurance Claim Form includes, among other things,
22 warning language that any person who knowingly files a claim containing any
23 misrepresentation or any false, incomplete, or misleading information may be guilty
24 of a criminal act punishable under law and may be subject to civil penalties.
25
155. State Fund does not knowingly pay for fraudulent bills, including:
26 (a) bills for office visits or medical services not provided; (b) bills for unnecessary
27 medical services; (c) bills that are the product of a provider's employment of
28 runners, cappers, or steerers to solicit or obtain patients for the medical provider; (d)
#:10815
1 bills involving illegal kickbacks; (e) bills that are "upcoded"; (f) bills that are
2 "unbundled"; and (g) bills that are artificially inflated. State Fund does not
3 knowingly reimburse unlicensed providers or entities, or those who engage in illegal
4 activity such as kickbacks and the corporate practice of medicine, which are
5 violations of the California Labor and Insurance Codes. State Fund also attempts to
6 adhere to all California guidelines and regulations on costs.9
7
156. State Fund is generally required to pay all bills within a relatively short
8 statutory period of time pursuant to the California Labor Code and attendant
9 regulations, or face large penalties, with some exceptions. As such, State Fund has a
10 limited ability to review each bill and corresponding claim prior to paying within the
11 requisite time period. The schemes described in this Amended Complaint are not
12 readily apparent upon the face of the bills, and Defendants have actively sought to
13 conceal their various schemes. This, along with the sheer volume of bills State Fund
14 processes on a daily basis and the fact that State Fund is the largest workers'
15 compensation carrier, makes detection of this fraudulent behavior extremely
16 difficult. While State Fund was sometimes able to detect certain instances of
17 overbilling or double billing, it could not catch them all; Defendants knew this and
18 took advantage of it, purposefully overwhelming the system to maximize their
19 chances of getting their fraudulently inflated bills reimbursed.
20
157. At all times relevant to this Second Amended Complaint, medical
21 providers or their representatives submitted insurance bills to State Fund manually
22 (on paper) through the United States mail or electronically through interstate wire.
23 Representative mailings and/or wire communications for each particular scheme,
24 broken down by entity Defendant, have been lodged with the Court. For each claim
25
9
Some medical procedures are governed by an Official Medical Fee Schedule
("OMFS"), pursuant to Title 8, Article 5.5, Sections 9790 et seq. of the California
27 Code of Regulations. The OMFS was promulgated by the Administrative Director
of the Division of Workers' Compensation to rein in medical costs and generally ties
28
provider reimbursement to a multiplier of Medicare's rates for the same service.
26
#:10816
1 submitted, State Fund would send an explanation of benefits ("EOB") and/or related
2 correspondence to the provider via U.S. Postal Service. State Fund also reimbursed
3 providers by sending payment through the United States mail.
4
158. State Fund has paid Pacific Hospital around $125 million (see ¶ 162, n.
5 10) and Long Beach Pain around $7.585 million for services purportedly rendered
6 by Pacific Hospital and Long Beach Pain pursuant to workers' compensation
7 policies, not including sums paid on liens, global settlements and other payments.
8 This includes at least 16,490 bills for services, including spinal surgery and
9 implants.
10
159. State Fund has also paid over $60 million to the Pharmacy Defendants,
11 not including sums paid on liens, global settlements, and other payments. Of the
12 over $60 million paid to the Pharmacy Defendants, over $30 million related to
13 claims for injured workers who were also treated by the Surgical Defendants.
14
160. On information and belief, State Fund is one of the largest victims of
15 Defendants' unlawful behavior. State Fund has suffered millions of dollars in
16 damage as a result of the payments it has made to the Surgical Defendants,
17 Pharmacy Defendants, Provider Defendants, and their coconspirators for these
18 procedures, medical services, and prescriptions. State Fund would not have paid
19 Defendants or their coconspirators had it known of their unlawful and fraudulent
20 misconduct.
21
161. State Fund is informed and believes, and thereon alleges, that the
22 Defendants engaged in the following schemes to defraud, broken out by Defendant,
23 particular scheme, and particular examples of each such scheme. This information
24 is based on discovery in this litigation, the Plea Agreement, and State Fund's review
25 of bills and internal reports, which was prompted by the reported service of federal
26 warrants on Pacific Hospital's and IPM's offices in April 2013 (Section VII below,
27 "State Fund Uncovers Defendants' Well-Concealed Fraud").
28
#:10817
1
V.
FRAUDULENT SCHEMES BY THE SURGICAL DEFENDANT
2
ENTERPRISE
3
A.
4
162. From 1998 to the present, State Fund has received thousands of bills
Fraudulent Scheme re: Spinal Implants/Surgeries (All Defendants)
5 and claims relating to spinal surgery from Pacific Hospital. Many of these surgeries
6 were performed, and were also billed, by Dr. Daniel Capen, Dr. John Larsen,
7 Dr. Khalid Ahmed, Dr. Jack Akmakjian, Dr. Gerald Alexander, Dr. Ian Armstrong,
8 Dr. Mitchell Cohen, Dr. Thomas Haider, Dr. Israel Chambi, Dr. Catalino Dureza,
9 Dr. Andrew Jarminski (as an assistant surgeon), Dr. Assad Moheimani, Dr. Richard
10 Mulvania, Dr. Serge Obukhoff, Dr. David Payne, Dr. Russell Nelson, and
11 Dr. Lokesh Tantuwaya (collectively "Implant Provider Defendants"). The spinal
12 implant/surgery claims that Pacific Hospital and the Implant Provider Defendants
13 submitted to State Fund were fraudulent. 10
14
163. Before January 1, 2013, providers were entitled to reimbursement
15 provided under the Official Medical Fee Schedule for the cost of spinal implants.
16 Because the reimbursement amount depends on how much the provider paid for the
17 implant, Pacific Hospital and Drobot Sr. sought to defraud State Fund by
18 establishing shell entities, and holding them out as manufacturers of spinal implants,
19 according to the Plea Agreement. The Implant Provider Defendants, Drobot Sr., and
20 Pacific Hospital then arranged to acquire spinal hardware from the shell entities or a
21 "co-schemer's company" at fraudulently excessive costs under the names of the
22 Implant Provider Defendants. These Defendants knew the fraudulent invoices did
23 not reflect the actual or reasonable cost of the implants, which was significantly
24 lower.
25
10
State Fund reserves the right to amend its Third Amended Complaint to add
additional claims and increased damages if material is uncovered in discovery or
27 through expert analysis. State Fund continues to investigate, for example, the
approximately $125 million in payments to Pacific Hospital as well as payments
28
made to the Pharmacy Defendants and related entities.
26
#:10818
1
164. In or around August of 2007, Drobot Sr. formed International Implants.
2 Pacific Hospital, Drobot Sr., and International Implants represented International
3 Implants as a manufacturer of spinal implants. Such a manufacturer must be
4 registered with the United States Food and Drug Administration ("FDA"). In fact,
5 many of the International Implants invoices submitted to State Fund included the
6 legend that it was an "FDA registered manufacturer." See Plea Agreement at 17.
7 However, State Fund, pursuant to its investigation, discovered that the FDA lists
8 International Implants as a "repackager," not a manufacturer.
9
165. This scheme centers on inflating the prices of implants used in spinal
10 surgery. Physicians performing surgeries at Pacific Hospital would "order" implants
11 from an implant repackager, including International Implants. The repackager
12 would purchase the implants from a manufacturer of implants like Seaspine, Inc.,
13 Alphatec Spine, Inc., and US Spine, Inc., and then would "sell" the implants to
14 Pacific Hospital at a grossly inflated price. Pacific Hospital would then typically
15 double the price of the "documented" cost from International Implants and often
16 added an additional charge. Pacific Hospital then would bill State Fund the grossly
17 inflated prices. A kickback is paid to the Provider Defendant or Marketer Defendant
18 who referred and/or performed the surgery at Pacific Hospital using the implants
19 from International Implants or another coconspirator company under the guise of an
20 unrelated contractual agreement.
21
166. These charges are fraudulent because Pacific Hospital actually pays
22 only a small percentage of the prices reflected on the invoices or purchase orders
23 submitted to State Fund, in addition to being illegal because of the kickbacks
24 provided.
25
167. To create the illusion that Pacific Hospital actually paid the grossly
26 inflated prices, International Implants, for example, transmitted to Pacific Hospital
27 invoices listing the fraudulent prices. Pacific Hospital then sent these invoices or
28 purchase orders reflecting the same fraudulent prices to State Fund, representing that
#:10819
1 it had paid the false wholesale invoice or purchase order amounts. In reality, the
2 price on the invoice and purchase order is not the actual and reasonable cost of the
3 implant, but is grossly inflated.
4
168. Pacific Hospital also sent claims forms and progress reports to State
5 Fund with certifications as to the propriety of the bills and underlying procedures.
6 The medical providers who signed these forms, or allowed them to be electronically
7 signed and submitted on their behalf, signed subject to the various certifications,
8 knowing that they were false or recklessly without knowledge of their truth or
9 falsity.
10
169. By engineering and participating in these sham transactions, the
11 Implant Provider Defendants, the referring Provider Defendants, the Marketer
12 Defendants, Pacific Hospital, and the Individual Defendants reaped substantial
13 profit from the scheme, as described in more detail below.
14
170. The involved Defendants misrepresented that: (a) the costs Pacific
15 Hospital purportedly incurred in purchasing implants from International Implants or
16 another coconspirator entity were the actual and reasonable cost of the implants,
17 when in fact the prices reflected on the invoices were much greater than the prices
18 actually paid to manufacturers; (b) the supplies were ordered by a physician based
19 on medical necessity and the independent medical judgment of the physician, when
20 in fact the involved Defendants and their coconspirators were influencing the
21 medical decisions of physicians, including the Provider Defendants, by providing
22 them with kickbacks and controlling their medical operations through fraudulent
23 management contracts; and (c) Pacific Hospital and International Implants (or
24 another co-schemer company) were independent companies conducting bona fide
25 business transactions, when in fact the Drobot Sr. owned and/or controlled both
26 Pacific Hospital and International Implants.
27
171. These Defendants each knew or believed that these statements were
28 false and/or misleading. They made the false and/or misleading statements and
#:10820
1 certifications to induce State Fund and others to overpay for the medical services
2 and supplies provided.
3
172. Defendants made use of the United States mail and interstate wires in
4 furtherance of their scheme, by sending the bills and supporting documentation to
5 State Fund through the United States mail or interstate wires. They also collected
6 their checks from State Fund via the U.S. Postal Service.
7
173. As an example, Exhibit 1.A contains documents from Pacific Hospital
8 and International Implants, sent to State Fund, to commit precisely this type of fraud
9 on State Fund on or shortly after September 2, 2011.
10
a.
On or shortly after September 2, 2011, Pacific Hospital
11 submitted a bill to State Fund (Claim #SP401079) via the U.S. Postal Service for,
12 among other things, spinal implants. Pacific Hospital billed the spinal implants and
13 related hardware at $161,952.00, which Pacific Hospital and other Defendants knew
14 misrepresented the amount of reimbursement to which Pacific Hospital was entitled.
15 State Fund was also provided, via the U.S. Postal Service, with two invoices from
16 International Implants purportedly showing the prices paid by Pacific Hospital for
17 these items. The invoices listed prices for spinal implant hardware several times
18 higher than the prices Pacific Hospital actually paid. Pacific Hospital purchase
19 orders were also submitted with the bills. The purchase orders listed the same items
20 and the same prices as the International Implants invoices.
21
b.
Both invoices from International Implants represent that
22 "International Implants is an FDA Registered Manufacturer." One of the invoices,
23 dated August 15, 2011, shows the following supplies were purchased from
24 International Implants, along with the fraudulent prices Pacific Hospital purportedly
25 paid:
26
27
28
#:10821
1
Qty
Product ID
Description
I.I. Price Each
Total
2
1
64715-106
Novel XS-Peek 5 Degrees
$4,000.00
$4,000.00
3
Medium Spacer 14mm x 12mm x
4
5mm
5
1
64713-106
8-5, Novel XS Peek 5mm
$4,000.00
$4,000.00
1
64713-105
$4,000.00
$4,000.00
1
64713-107
$4,000.00
$4,000.00
1
61001-014
Anterior Cervical Plate LVL 1,
$3,385.00
$3,385.00
$4,407.00
$4,407.00
$692.00
$6,228.00
$786.00
$2,368.00
$4,000.00
$8,000.00
6
7
8
9
10
11
Assy, 14mm, TI
12
13
1
61003-054
Assembly, 54mm
14
15
9
61340-014
3
61345-014
4.5mm Variable Angle SelfTapping Screw 14mm, TI
18
19
4.0mm Variable Angle SelfTapping Screw 14mm
16
17
Anterior Cervical Plate Level 3
2
64715-105
M-5, Novel XS-Peek 5mm
20
c.
21
22
23
24
the implants and other hardware, but the prices actually paid for these items, based
on the Distribution Agreement between Alphatec and International Implants (see
Exhibit 1.B), show they were not:
25
Qty
26
1
27
Pacific Hospital represented the prices above as the actual cost of
Product
ID
64715-106
Description
I.I. Price
Novel XS-Peek 5
$4,000.00
Alphatec
Price
$875.00
Degrees Medium
28
Spread
$3,125.00
%
Markup
357%
#:10822
1
Spacer 14mm x 12mm
2
x 5mm
3
1
64713-106
4
5
1
64713-105
8-5, Novel XS Peek
1
64713-107
8-5, Novel XS Peek
1
61001-014
Anterior Cervical Plate
LVL 1, Assy, 14mm,
11
TI
1
61003-054
Anterior Cervical Plate
13
Level 3 Assembly,
14
54mm
15
9
61340-014
4.0mm Variable Angle
16
Self-Tapping Screw
17
14mm
18
3
61345-014
4.5mm Variable Angle
19
Self-Tapping Screw
20
14mm, TI
21
2
64715-105
22
23
$3,125.00
357%
$4,000.00
$875.00
$3,125.00
357%
$4,000.00
$875.00
$3,125.00
357%
$3,385.00
$873.00
$2,512.00
288%
$4,407.00
$1,136.00
$3,271.00
288%
$692.00
$178.00
$514.00
289%
$786.00
$202.00
$584.00
289%
$4,000.00
$875.00
$3,125.00
357%
7mm
10
12
$875.00
6mm
8
9
$4,000.00
5mm
6
7
8-5, Novel XS Peek
M-5, Novel XS-Peek
5mm
d.
For each of these items, International Implants listed a price on
24 its invoices that far exceeded what it paid Alphatec—which in these examples
25 represented the actual cost of the implants and other hardware. On the first invoice,
26 International Implants—and thus, Pacific Hospital—actually paid $9,467.00 for the
27 implants and hardware, not the $40,378.00 represented on the invoice submitted to
28 State Fund. Similarly, the second invoice from International Implants that was
#:10823
1 submitted to State Fund, dated August 16, 2011, purports to charge Pacific Hospital
2 $33,621 for implants and hardware that actually cost Pacific Hospital $8,838.
3
e.
When the items listed on the two invoices from International
4 Implants are priced using the Alphatec Distribution Agreement, the total comes to
5 $18,305. In other words, under the Alphatec Distribution Agreement, Pacific
6 Hospital effectively paid only $18,305 for the items listed on the two invoices from
7 International Implants, yet billed State Fund around $148,148.00 for the same
8 items—more than eight times the amount it paid. State Fund paid approximately
9 $110,000 for the implants listed on the invoices from International Implants, which
10 is over six times the actual cost.
11
f.
State Fund paid at least $202,660 in total on bills from Pacific
12 Hospital relating to the spinal surgery procedure under this claim, relying on
13 certifications that the bill was not the product of an illegal kickback or other
14 fraudulent activity in addition to the fraudulent purchase orders and invoices
15 submitted by Pacific Hospital.
16
174. As another example, Exhibit 1.C contains documents from Pacific
17 Hospital and International Implants, sent to State Fund, to commit precisely this
18 type of fraud on or shortly after March 30, 2010.
19
a.
On or shortly after March 30, 2010, Pacific Hospital submitted a
20 bill to State Fund (Claim #01067019) via the U.S. Postal Service for, among other
21 things, spinal implants. Pacific Hospital billed the spinal implants and related
22 hardware at $90,282.00, which Pacific Hospital and other Defendants knew
24 State Fund was also provided, via the U.S. Postal Service, with a Pacific Hospital
25 purchase order and International Implant invoice purportedly showing the prices
26 paid by Pacific Hospital for these items. The purchase order listed prices for spinal
27 implants and hardware several times higher than the prices Pacific Hospital actually
28 paid.
#:10824
b.
1
The purchase order lists the following supplies from
2 International Implants, along with the fraudulent prices Pacific Hospital supposedly
3 paid:
4
Qty
Product ID
Description
I.I. Price Each
Total
5
4
62065-45
6.5 x 45 Poly Implant Screw
$2,364.00
$9,456.00
6
2
62075-40
7.5 x 40 Poly Implant
$2,364.00
$4,728.00
7
2
64815-012
12mm SD Peek
$6,009.00
$12,018.00
8
2
64815-014
9 x 25 x 14 SD Med Peek
$6,009.00
$12,018.00
9
6
22015
Set Screw
$396.00
$2,376.00
10
2
62004-07
70mm Rod Curved
$868.00
$,1,736.00
11
1
11-2053
Medium Cross Link
$2,734.00
$2,734.00
12
c.
13 the implants and other hardware, but the prices actually paid for these items, based
14 on the Distribution Agreement between Alphatec and International Implants
15 (Exhibit 1.B) show they were not:
16 Product ID
Description
I.I. Price
Alphatec
Price
Spread
%
Markup
17
18
19
62065-45
Screw
$2,364.00
$712.50
$1,651.50
232%
62075-40
$2,364.00
$712.50
$1,651.50
232%
64815-012
12mm SD Peek
$6,009.00
$1,250.00
$4,759.00
381%
64815-014
9 x 25 x 14 SD Med
Peek
$6,009.00
$1,250.00
$4,759.00
381%
22015
Set Screw
$396.00
$95.00
$301.00
317%
62004-07
70mm Rod Curved
$868.00
$142.50
$725.50
509%
11-2053
Medium Cross Link
$2,734.00
$775.00
$1,959.00
252%
20
21
22
23
24
25
26
27
28
#:10825
1
d.
For each of these items, International Implants listed a price that
2 far exceeded what it paid Alphatec—which in these examples represented the actual
3 cost of the implants and other hardware.
4
e.
Pacific Hospital billed State Fund $90,282.00 for the items on
5 the March 30, 2010 purchase order. When the items on the Pacific Hospital
6 purchase order are priced using Alphatec Distribution Agreement, the total comes to
7 $10,905.00. In other words, under the Alphatec Distribution Agreement, Pacific
8 Hospital effectively paid only $10,905.00 for the items listed on the Pacific Hospital
9 purchase order, yet billed State Fund $90,282.00 for the same items, more than eight
10 times the amount it paid. State Fund paid around $51,395.94 for the implants listed
11 on the purchase order from International Implants, over four times the actual cost of
12 those implants.
13
f.
16 fraudulent activity in addition to the fraudulent invoices and purchases orders
17 submitted by Pacific Hospital. Another $13,250 was paid directly to the surgeon
18 that billed on this claim, Defendant Dr. Daniel Capen.
19
175. As another example, Exhibit 1.D contains documents from Pacific
20 Hospital and International Implants, to commit precisely this type of fraud on State
21 Fund on or shortly after March 17, 2009.
22
a.
On or shortly after March 17, 2009, Pacific Hospital submitted a
23 bill to State Fund (Claim #01048725) via the U.S. Postal Service for, among other
24 things, spinal implants. Pacific Hospital billed the spinal implants and related
25 hardware at $83,980.00, which Pacific Hospital and other Defendants knew
27 State Fund was also provided, via the U.S. Postal Service, with a Pacific Hospital
28 purchase order, and other supporting documents from International Implants,
#:10826
1 purportedly showing the prices paid by Pacific Hospital for these items. The
2 purchase order lists prices for spinal implants and hardware several times higher
3 than the prices Pacific Hospital actually paid.
b.
4
The purchase order lists the following supplies from
5 International Implants, along with the fraudulent prices Pacific Hospital purportedly
6 paid:
7
Qty
Product ID
Description
I.I. Price Each
Total
8
2
62004-06
80mm Rod Precontoured
$789.00
$1578.00
9
6
22015
Set Screw
$360.00
$2,160.00
10
3
62055-45
5.5 x 45 Multi Screw
$2,149.00
$6,447.00
11
1
62055-40
5.5 x 40 Implant Screw
$2,149.00
$2,149.00
12
2
62065-40
6.5 x 40 Poly Implant Screw
$2,149.00
$4,298.00
13
1
11-2053
Medium Cross Link
$2,485.00
$2,485.00
14
4
64113-110
10 xx 20 x 10 LCC Peek Cage
$5,485.00
$21,940.00
15
c.
16 the implants, but the prices actually paid for these items, based on the Distribution
17 Agreement between Alphatec and International Implants (Exhibit 1.B), show they
18 were not:
19
Description
I.I. Price
20
Product
ID
62004-06
$789.00
Alphatec
Price
$118.75
80mm Rod Precontoured
21
22015
22
$670.25
%
Markup
564%
Set Screw
$360.00
$95.00
$265.00
279%
62055-45
5.5 x 45 Multi Screw
$2,149.00
$712.50
$1,436.50
202%
23
62055-40
5.5 x 40 Implant Screw
$2,149.00
$712.50
$1,436.50
202%
24
62065-40
$2,149.00
$712.50
$1,436.50
202%
$2,485.00
$775.00
$1,710.00
221%
25
26
Spread
Screw
11-2053
Medium Cross Link
27
28
#:10827
1
64113-110
10 xx 20 x 10 LCC Peek
$1,704.00
$3,781.00
222%
Cage
2
3
$5,485.00
d.
For each of these items, Pacific Hospital listed a price that far
4 exceeded what it paid Alphatec—which in these examples represented the actual
5 cost of the implants.
6
e.
Defendants billed State fund $83,980.00 for the items supplied
7 on the April 23, 2009 purchase order. When the items on that purchase order are
8 priced using the Alphatec Distribution Agreement, the total comes to $11,195.00. In
9 other words, Pacific Hospital effectively paid $11,195.00 for these items, yet billed
10 State Fund $83,980.00—more than seven times what it paid. State Fund paid
11 around $41,290.00 for the implants from International Implants, which is over three
12 times the actual cost.
13
f.
16 fraudulent activity in addition to the fraudulent invoices and purchase orders
17 submitted by Pacific Hospital. Another $16,018 was paid directly to the surgeon
18 that billed on this claim, Defendant Dr. Richard Mulvania.
19
176. Defendants created, provided, and/or facilitated the provision of such
20 fraudulent invoices and purchase orders to State Fund when Pacific Hospital billed
21 State Fund for spinal implants and related hardware, including, but not limited to,
22 the bills listed in the document titled "Pacific Hospital – Spinal Hardware," lodged
23 with the Court, in order to induce State Fund to overpay for spinal implants. These
24 Defendants caused the fraudulent invoices and purchase orders to be mailed and
25 wired to State Fund. State Fund reasonably relied on the misrepresentations in these
26 fraudulent bills and on the misrepresentations in invoices and purchase orders in
27 issuing payment on the bills. As these Defendants expected, payment was delivered
28 via the U.S. Postal Service.
#:10828
1
177. Based on State Fund's bill review, International Implants provided
2 around 75% of the spinal implants that Pacific Hospital billed to State Fund since
3 International Implants' formation in 2007. As Defendants knew and intended,
4 International Implants fraudulently listed excessive prices for its spinal implants and
5 related equipment. State Fund relied on Defendants' claims and invoices.
6
178. As described below, Pacific Hospital paid, or caused to be paid through
7 the Entity Defendants or other related entities, fees to physicians and others,
8 including the Provider Defendants and the Marketer Defendants, for referring
9 patients to Pacific Hospital and certain affiliates and for ordering and using
10 International Implants hardware in performing those surgeries. Such referral fees
11 are illegal under California and federal law, as admitted and established in the Plea
12 Agreement. Once referred, the hardware could be overbilled in the manner set forth
13 above.
14
179. Pacific Hospital paid, or caused to be paid through the Entity
15 Defendants or other related entities, the illegal referral fees with proceeds from the
16 fraudulently excessive spinal implant and other fees it charged insurers, including
17 State Fund. These payments were made to medical providers and others, including
18 the Provider Defendants and Marketer Defendants, via fraudulent and illegal
19 contracts, including so-called management agreements, consulting agreements,
20 rental agreements, option agreements, collection agreements, rental agreements,
21 option agreements, collection agreements, research and development agreements,
22 marketing agreements, and pharmacy management agreements. This illegal scheme
23 allowed Pacific Hospital to acquire additional patients, while further defrauding
24 State Fund.
25
180. As described further below, the Individual Defendants were responsible
26 for devising the fraudulent scheme, and received and controlled profits from it.
27 State Fund is informed and believes, and thereon alleges that the Individual
28 Defendants conducted periodic meetings with medical professionals, staff, and other
#:10829
1 employees in order to give direction and oversee the scheme. Drobot Sr. was,
2 according to California Secretary of State records, Chief Executive Officer and a
3 director of Healthsmart d/b/a Pacific Hospital. Drobot Sr. admitted in the Plea
4 Agreement that he owns International Implants. Additionally, International
5 Implants is located at the same office as the Pharmacy and the Administrative
6 Defendants. Abrazos Healthcare, Inc., alleged as Pacific Hospital's parent
7 corporation, and Mickey Medical, Inc., also share the same office address and have
8 Drobot Sr. as the principal, according to California Secretary of State records.
9 Moreover, documents produced by third parties show that Drobot Jr. not only sent
10 providers spinal surgery patient referrals, requesting that they be performed at
11 Pacific Hospital, but he also facilitated the payment of illegal kickbacks to providers
12 for those surgeries, under the guise of, for example, rent payments.
13
181. With the exception of Dr. Bernadett (who is not a spinal surgeon), the
14 Individual and Entity Defendants have never been licensed medical providers.
15 Thus, the Individual and Entity Defendants had to conspire with licensed physicians,
16 including the Provider Defendants, to perform the surgeries and to generate the
17 fraudulent claims and bills using the providers' names and signatures in order to
18 fraudulently induce State Fund into paying them. Without the participation of the
19 providers, the other Defendants would not have been able to execute their fraudulent
20 schemes.
21
22
23
B.
Billing State Fund for Treatments and Services That Were the
Product of Illegal Kickbacks and Referral Fees (All Defendants)
182. As admitted in the Plea Agreement, Defendants conspired with dozens
24 of doctors, chiropractors, marketers and others to pay kickbacks in return for those
25 persons to refer thousands of patients to Pacific Hospital for spinal surgeries and
26 other medical services including "other types of surgeries, magnetic resonance
27 imaging, toxicology, durable medical equipment, and other services," and/or in
28 exchange for the medical providers agreeing to use certain equipment or devices,
#:10830
1 including devices from International Implants or a co-schemer's company. The
2 individuals and entities that were paid these kickbacks included the Provider
3 Defendants and the Marketer Defendants.
4
183. To facilitate and conceal the payment of these kickbacks, Pacific
5 Hospital—often through the various Entity Defendants or other related entities—
6 entered into fraudulent contracts with providers and others, including the Provider
7 Defendants and the Marketer Defendants, under the guise of management
8 agreements, consulting agreements, rental agreements, option agreements, collection
9 agreements, research and development agreements, and marketing agreements.
10
184. These fraudulent contracts also allowed the Defendants to control or
11 influence the medical decisions of the providers, including the Provider Defendants,
12 resulting in bills generated by providers that were driven by financial considerations
13 rather than the needs of the patients.
14
185. California Bus. & Prof. Code § 650(a) forbids this specific conduct in
15 prohibiting "the offer, delivery, receipt, or acceptance" by or to any licensed medical
16 provider or chiropractor "of any rebate, refund, commission, preference, patronage
17 dividend, discount, or other consideration, whether in the form of money or
18 otherwise, as compensation or inducement for referring patients, clients, or
19 customers to any person." Moreover, California Bus. & Prof. Code §§ 652
20 and 652.5 provide that violations of the article constitute misdemeanors as to any
21 and all persons, whether or not licensed. California Insurance Code §§ 750 and 754
22 similarly prohibit offering or paying referral fees for services or goods for which
23 reimbursement will or may be made by an insurer.
24
186. Many of the bills and various reports submitted to State Fund for
25 services, including reports by the Provider Defendants, contained representations
26 that the provider had "not offered, delivered, received or accepted any rebate,
27 refund, commission, preference, patronage, dividend, discount or other
28 consideration, whether in the form of money or otherwise, as compensation or
#:10831
1 inducement for any referred examination or evaluation" or words to similar effect,
2 or that the bills and/or reports contained no material misrepresentations or
3 omissions. Provider Defendants knew and intended that these representations were
4 false, and knew that State Fund would not have paid for goods or services rendered
5 absent such misrepresentations.
6
187. Two of the "Overt Acts" that Drobot Sr. admitted to in the Plea
7 Agreement specifically involve Pacific Hospital submitting a fraudulent bill to State
8 Fund. Drobot Sr. admitted that, "[o]n or about November 10, 2009, defendant
9 caused a check in the amount of $43,650.00 from SCIF to be sent by mail to Pacific
10 Hospital in reimbursement for a claim for spine surgery on patient J.M. performed
11 by doctor C.D., which claim was induced by the payment of a kickback to J.C."
12 Plea Agreement at 19. State Fund paid at least $89,624.99 on the fraudulent bills
13 relating to this surgery. The "C.D." referred to in the plea agreement is Defendant
14 Dr. Catalino Dureza. "J.C." is Defendant Jeffrey Catanzarite, D.C.
15
188.
Drobot Sr. also admitted that "[o]n or about April 14, 2010, [he]
16 caused a check in the amount of $90,467.80 from SCIF to be sent by mail to Pacific
17 Hospital in reimbursement for a claim for spine surgery on patient L.T. performed
18 by doctor M.C., which claim was induced by the payment of a kickback to P.S."
19 Plea Agreement at 20. State Fund paid at least $141,532.80 on the fraudulent bills
20 relating to this surgery. The "M.C." referred to in the plea agreement is Defendant
21 Dr. Mitchell Cohen. "P.S." is Defendant Dr. Philip Sobol.
22
189. Pacific Hospital, PSPM, FMM, CPM, IPM, and MMG (detailed further
23 below), among other Drobot-related entities, entered into various contractual
24 agreements with medical providers and medical groups and other individuals,
25 including Provider Defendants and Marketer Defendants. These contractual
26 agreements included rental agreements, management agreements, option
27 agreements, consulting agreements, lending agreements, and pharmaceutical
28 dispensing agreements. As Drobot Sr. admitted in the Plea Agreement, through
#:10832
1 these agreements Defendants remitted referral fees to medical providers and groups
2 under the guise of contracts for legitimate services.
3
190. For example, Drobot Sr., through PSPM, entered into an "Option
4 Agreement" with Dr. Serge Obukhoff on or around March 15, 2010. The Option
5 Agreement purports to grant PSPM the exclusive right or "option" to purchase the
6 unspecified assets of Dr. Obukhoff's orthopedic medical practice. Pursuant to the
7 agreement, PSPM was to make monthly payments to the surgeon of $50,000 in
8 "readily accessible cash" as purported consideration for the grant of the option. It
9 was contemplated that PSPM would make, in the aggregate, payments equal to
10 $10,000,000 for the "Option," "taking into account the Option Payments previously
11 made to [the surgeon]."
12
191. On information and belief, payments contemplated by this agreement
13 were not really "Option Payments" but illegal kickbacks to be paid to the surgeon
14 for performing spinal implant surgeries at Pacific Hospital using devices from
15 International Implants or another coschemer's company and/or for the referral of
16 patients to the Surgical or Pharmacy Defendants. Drobot Sr. admitted in the Plea
17 Agreement that he paid a kickback to an individual in connection with a spinal
18 surgery performed by that individual on at least one occasion. Plea Agreement at
19 21. In fact, according to payment records produced by Dr. Obukhoff, PSPM paid
20 such kickbacks on numerous occasions, paying Dr. Obukhoff at least $2,307,500 in
21 purported "Option Payments" between April 10, 2010 and March 18, 2013. When
22 asked at his deposition whether he or Pacific Hospital paid kickbacks through
23 purported option agreements, Drobot Sr. invoked the Fifth Amendment.
24
192. Furthermore, as alleged in paragraphs 170, 178-180, supra, Drobot Jr.
25 sent spinal surgery patient cases to providers, requesting that the surgeries be
26 performed at Pacific Hospital, and facilitated the payment of the kickbacks for
27 referrals of patients to Pacific Hospital. Medical providers, including Provider
28
#:10833
1 Defendants, also received kickbacks for referrals of patients to Pacific Hospital
2 through CPM and IPM.
3
193. The Plea Agreement further establishes that this scheme, as well as the
4 scheme in the previous subsection, has operated to defraud State Fund since 1998
5 through at least 2013.
6
C.
Fraudulent Scheme to Overbill Services By Unbundling/Upcoding,
7
Including Unbundling and Overbilling re: Toxicology Screening
8
(Pacific Hospital, Long Beach Pain, and Drobot Sr.)
9
194. The Surgical Defendants generated substantial bills by "upcoding"
10 claims and billing double or triple the approved rate for services. The Surgical
11 Defendants represented that higher and more complex services were provided than
12 actually were and represented that codes with higher billing rates were justified,
13 when, in fact, they were not. Both Pacific Hospital and Long Beach Pain overbilled
14 their services through upcoding.
15
195. The Surgical Defendants have also repeatedly submitted bills to State
16 Fund with "unbundled" services. A surgical procedure's rate often "bundles"
17 elements such as surgical gloves, trays, and other equipment, including them in the
18 procedure's cost. The Surgical Defendants billed for the surgical procedure while
19 also billing State Fund for the individual elements or pieces of equipment involved
20 in performing the procedure. This practice amounts to double-billing on the
21 bundled elements, and it substantially increases the billed amounts.
22
196. By providing upcoded and unbundled bills to State Fund (through the
23 United States mail and interstate wires, as described above), the Surgical Defendants
24 provided State Fund with fraudulent bills, purportedly signed or reviewed by
25 medical providers. Defendants knew the upcoded and unbundled charges did not
26 reflect the actual or reasonable cost of the services. By submitting upcoded and
27 unbundled bills, Defendants represented that the services they rendered justified a
28 higher billing than was appropriate.
#:10834
1
197. When State Fund receives a bill that is upcoded, unbundled, or
2 overbilled, State Fund generally pays the approved rates for that procedure and
3 indicates to the billing provider that if it disagrees with the amount of the payment,
4 to send additional documentation showing that the services rendered were above and
5 beyond what is normally provided for the particular treatment (upon which the rates
6 are based). Despite such requests, the Surgical Defendants typically did not (and do
7 not) submit any additional documentation to justify the excess billing. Instead,
8 Surgical Defendants routinely filed liens against State Fund with the Workers'
9 Compensation Appeals Board ("WCAB") and then sought (and continue to seek) to
10 collect for the balance of the amount billed ("Liens").11
11
198. Lodged with the Court is a spreadsheet documenting hundreds of
12 instances where Pacific Hospital engaged in unbundling and upcoding for individual
13 services (titled "Pacific Hospital – Unbundling and Upcoding"). The spreadsheet
14 contains the claim number, the document mailed or wired, the approximate date it
15 was sent, the billed amount, and an explanation of the issue.
16
199. Also lodged with the Court is a spreadsheet documenting hundreds of
17 instances where Long Beach Pain engaged in unbundling and upcoding for
18 individual services (titled "Long Beach Pain – Unbundling and Upcoding"). The
19 spreadsheet contains the claim number, the document mailed or wired, the
20 approximate date it was sent, the billed amount, and an explanation of the issue.
21
22
23
24
25
26
27
28
11
State Fund does not assert that the procedure of filing Liens before the
WCAB constitutes independently actionable fraud – the fraud is the attempt to
collect more for services than the authorized rate. However, the lien process helps
to conceal the fraud and puts additional pressure on State Fund to settle such claims
quickly, whether or not a proper investigation can take place. Accordingly, State
Fund asserts the remedy of rescission of certain settlements for fraudulent claims
involving Liens, or damages if rescission is not available. Plainly, if the Lien
represents an attempt to collect on an illegal bill, such as one representing a
transaction involving an illegal kickback, referral, or false certification, the act of
filing a lien does not cleanse the prior fraud.
#:10835
1
200. As a particular and discrete example, Pacific Hospital practiced
2 unbundling and upcoding in its bills for urine toxicology services, allegedly
3 rendered at the request of doctors treating workers' compensation patients.
4
201. In these bills, Pacific Hospital billed State Fund using a batch of CPT
5 codes, including those for a urine drug screen (80101), chromatography (82541),
6 creatinine (82570), molecular diagnostic tests (83896), and opiates (83925). State
7 Fund has identified four separate issues with respect to these bills for toxicology
8 testing, which resemble and relate to many of the other schemes alleged in this
9 Amended Complaint.
10
202. First, CPT code 80101 has been out of usage since January 1, 2011,
11 according to Medicare regulations, but Pacific Hospital continued to use it
12 throughout 2012.
13
203. Second, these toxicology tests – allegedly ordered to monitor usage of
14 prescribed opiates – are performed using simple "dipstick" cups, similar to over-the15 counter pregnancy tests which show immediate results on the cup. The non-defunct
16 CPT codes listed above are reserved for "confirmatory" testing, which is more
17 complicated and intensive and usually performed in a laboratory. Pacific Hospital,
18 nevertheless, uses these codes to bill State Fund each time it administers a simple
19 toxicology test—an example of upcoding.
20
204. Third, confirmatory testing for opiates would include the other tests for
21 creatinine, chromatography, and molecular diagnostic tests. By unbundling these
22 tests from the opiate test, Pacific Hospital charged more for the test than
23 contemplated by the bundle.
24
205. Fourth, starting in or around May 2012, Pacific Hospital ceased billing
25 for toxicology directly, apparently in order to submit claim amounts higher than
26 Pacific Hospital's contracts allowed. Pacific Hospital has occasionally agreed, via
27 contracts with networks and insurers, to fee schedules for certain services, including
28 its toxicology reports. Beginning in May 2012, State Fund began receiving bills
#:10836
1 from UDT Solutions, discussed above, which was not a party to these contracts.
2 According to UDT Solution's website, the president of UDT Solutions was Jennifer
3 Ensminger, the daughter of Drobot Sr., who was also listed by various sources as the
4 Chief Executive Officer of Pacific Hospital. According to its website's contact
5 page, UDT Solutions shared a physical address with Pacific Hospital (2776 Pacific
6 Avenue). State Fund received toxicology bills from UDT Solutions even though the
7 bills state that the testing was performed at Pacific Hospital. Accordingly, Pacific
8 Hospital was attempting to avoid its lower contract rates for the toxicology bills,
9 resulting in inflated bills and payments. By passing its upcoded and unbundled bills
10 for toxicology services through UDT Solutions without informing State Fund,
11 Pacific Hospital inflated further the amounts it billed State Fund.
12
206. Through this toxicology scheme, Pacific Hospital, acting by itself or
13 through UDT Solutions or other Drobot entities, has billed and received payments in
14 (at least) the hundreds of thousands of dollars. Lodged with the Court is a
15 spreadsheet containing sixty particular examples of the toxicology scheme just
16 described (titled "Pacific Hospital – Toxicology Overbilling"). This spreadsheet
17 lists upcoded and unbundled bills for toxicology services, with claim numbers,
18 approximate dates of service, the provider, and other details, including which entity
19 sent each bill. It includes thirty representative examples of unbundled and upcoded
20 bills sent to State Fund by Pacific Hospital and another thirty sent by UDT
21 Solutions. These Defendants concocted this scheme to mislead State Fund into
22 paying inflated prices for these tests; State Fund reasonably relied on these
23 misrepresentations in making payments.
24
207. On information and belief, the involved Defendants were responsible
28 employees in order to give direction and oversee the scheme. Drobot Sr. is,
#:10837
1 according to California Secretary of State records, Chief Executive Officer and a
2 director of Healthsmart d/b/a Pacific Hospital as well as Long Beach Pain. As
3 documented above, Drobot Sr. and Drobot Jr. have worked together in numerous
4 business ventures, sharing control and personnel through management contracts.
5
6
7
D.
Fraudulent Scheme re: Nurse Billing (Pacific Hospital and Drobot
Sr.)
208. At Pacific Hospital, a Registered Nurse First Assistant ("RNFA") was
8 provided during most surgeries. Based on State Fund's review, Pacific Hospital had
9 a pattern and practice of billing RNFAs as "assistant surgeons," allowing it to
10 double-bill the services provided by its RNFAs. This is a particular example of
11 "unbundling," where State Fund is charged for the "bundle" and then again for the
12 separated service.
13
209. California's OMFS, which is modeled on the federal Medicare system,
14 already accounts for services performed by RNFAs in setting reimbursement rates
15 for inpatient medical services. 8 CCR § 9798.22(b) provides that the "maximum
16 payment for inpatient medical services includes reimbursement for all of the
17 inpatient operating costs specified in Title 42, Code of Federal Regulations, Section
18 412.2(c)." 42 CFR § 412(c) in turn provides that inpatient operating costs include
19 "routine nursing services." 42 CFR § 413.53(b) defines "routine services" to mean
20 "the regular room, dietary, and nursing services … and the use of equipment and
21 facilities for which a separate charge is not customarily made."
22
210. California law does not allow providers to seek separate reimbursement
23 for inpatient medical services rendered by an RNFA: "Except for physician services,
24 all fees shall be in accordance with the fee-related structure and rules of the relevant
25 Medicare and Medi-Cal payment systems . . . ." Cal. Lab. Code § 5307.1.
26
211. As one example of this type of fraud, on or shortly after November 17,
27 2010, Pacific Hospital sent State Fund claim number 05597226 (date of surgery
28 November 12, 2010), which included a bill of $11,000.00 for the services of an
#:10838
1 RNFA, who was listed in the surgical report as an assistant surgeon, even while the
2 report recorded that the individual's proper position was an RNFA.
3
212. Lodged with the Court is a spreadsheet (titled "Pacific Hospital –
4 RNFA Billing") with thirty examples of an RNFA—whose services are supposed to
5 be included within the bundled charge for the procedure—billed separately from
6 Pacific Hospital while still using Pacific Hospital's tax identification number. In
7 each bill, Pacific Hospital misrepresented that it was entitled to payment for
8 purported services rendered by an RNFA when such cost, under the OMFS, was
9 included in the bundled rate for the procedure. Defendants made the false and
10 misleading statements to induce State Fund to overpay for the medical procedures
11 purportedly provided.
12
213. These Defendants thus misrepresented the services provided and their
13 right to collect these additional payments, in addition to reimbursement for inpatient
14 medical services, for the services of an RNFA. They made these misrepresentations
15 in furtherance of their scheme to double-bill and overbill State Fund for the services
16 of an RNFA. State Fund reasonably relied on the misrepresentations in Pacific
17 Hospital's bills in issuing payment on the admission and RNFA bills. As these
18 Defendants expected, payment was delivered via the U.S. Postal Service.
19
214. On information and belief, Drobot Sr. was responsible for devising the
20 fraudulent scheme, and received and controlled profits from it. State Fund is
21 informed and believes, and thereon alleges that Drobot Sr. gave direction and
22 oversaw the fraudulent overbilling schemes, given his control of Pacific Hospital
23 and related entities as specified above.
24
25
26
E.
Fraudulent Scheme re: Autologous Transfusion Billing (Pacific
Hospital and Drobot Sr.)
215. During some surgeries, autologous blood transfusion technologies are
27 used to save the patient's blood. The machines (one brand of which goes by the
28 name "Cellsaver") are often provided by a third party during surgeries. The use of
#:10839
1 this technology is, according to the standard procedures (including Medicare
2 procedures), bundled as a part of inpatient admission.
3
216. Pacific Hospital, however, engaged in an apparent practice of not
4 paying the third-party provider (often Cardiovascular Plus). This most often led to
5 the third-party provider billing the cost directly to State Fund, effectively
6 unbundling this particular charge that should have been included in Pacific
7 Hospital's inpatient admission charge.
8
217. This particular instance of unbundling happens with Pacific Hospital
9 admissions. Lodged with the Court is a spreadsheet with over thirty examples of a
10 separate invoice coming from a third-party provider for autologous blood
11 transfusion technologies, when the service should have been included in the Pacific
12 Hospital bundled admission charge (titled "Pacific Hospital – Autologous
13 Transfusions").
14
218. These Defendants misrepresented the services provided and their right
15 to collect these additional payments (in addition to reimbursement for inpatient
16 medical services) for autologous blood transfusion services. They made these
17 misrepresentations in furtherance of their scheme to double-bill and overbill State
18 Fund for these services. State Fund reasonably relied on the misrepresentations in
19 Pacific Hospital's claims and on the misrepresentations in purchase orders in issuing
20 payment on the admission and third-party bills. As Defendants expected, payment
21 was delivered via the U.S. Postal Service.
22
24 informed and believes, and thereon alleges that Drobot Sr. gave direction and
25 oversaw the fraudulent overbilling scheme, given their control of Pacific Hospital
26 and related entities as specified above.
27
28
#:10840
1
F.
2
3
Fraudulent Scheme re: Duplicate Radiology Billing (Long Beach
Pain and Drobot Sr.)
220. State Fund's review uncovered that Long Beach Pain uses outside
4 radiology services on numerous occasions, often on claimants involving Pacific
5 Hospital as well. Long Beach Pain is or was managed by Pacific Hospital, and is
6 also owned by Drobot Sr. These services are generally billed to State Fund by the
7 outside vendor, yet Long Beach Pain bills State Fund for them as well, even though
8 a Pacific Hospital representative indicated at deposition that there would be no
9 reason to bill for technical radiology services provided by a third party. For
10 example, for a number of services provided by Saddleback Portable X-Ray
11 ("Saddleback") for spinal X-Rays, Long Beach Pain billed for the same technical
12 component as Saddleback, resulting in duplicate billing. Radiology services, under
13 the physician OMFS, can be split up into technical and professional (physician)
14 components, or billed globally. Long Beach Pain splits up the components and bills
15 State Fund for both, while the owner of the equipment (Saddleback) also bills for
16 the technical component. While the "unbundling" here is allowed by the
17 regulations, the double–billing, of course, is not. Because these billings are
18 submitted by two wholly different entities, it is very difficult for State Fund to catch
19 this duplication without a searching and time-intensive review.
20
221. As specific examples, same-service bills were received from Long
21 Beach Pain and Saddleback on State Fund Claim Number 01341571 (date of service
22 July 15, 2011) and Claim Number SP199038 (date of service June 3, 2011). This
23 pattern has continued since at least 2007, and Long Beach Pain continues to bill for
24 services rendered by a third-party provider and paid to that provider. Lodged with
25 the Court is a spreadsheet of thirty such examples (titled "Long Beach Pain –
26 Duplicate Radiology Billing") with separate claim numbers, CPT codes, and dates
27 of service.
28
#:10841
1
222. Long Beach Pain knowingly misrepresented its right to collect these
2 additional payments. Long Beach Pain knew that the third-party providers directly
3 billed State Fund—not Long Beach Pain—for their radiology services, yet billed
4 State Fund for those same services, claiming "reimbursement" for services they
5 neither provided nor paid for. These misrepresentations were made in furtherance
6 of their scheme to double-bill and overbill State Fund for these services. State Fund
7 reasonably relied on the misrepresentations in Long Beach Pain's bills in accepting,
8 processing, and paying them in full or in part. As Defendants expected, payment
9 was delivered via the U.S. Postal Service.
10
12 informed and believes, and thereon alleges that Drobot Sr. conducted periodic
13 meetings with medical professionals, staff, and other employees in order to give
14 direction and oversee the scheme. Drobot Sr. is, according to California Secretary
15 of State records, Chief Executive Officer and a director of Healthsmart d/b/a Pacific
16 Hospital as well as Long Beach Pain. The alleged parent of Long Beach Pain,
17 PSPM, shares the same office address and Drobot Sr. is the principal, according to
18 California Secretary of State records.
19
20
21
VI.
FRAUDULENT SCHEMES BY THE PHARMACY DEFENDANT
ENTERPRISE
224. The Surgery Defendant Enterprise shares much in common with the
22 Pharmacy Defendant Enterprise, including the Individual Defendants as operators,
23 owners, officers and directors; offices and addresses; submission of bills for services
24 or pharmaceuticals provided or prescribed by the same medical providers; the
25 provision of employees and management services by the same Administrative
26 Defendants; and similar methods of defrauding State Fund, including the referral of
27 spine patients to doctors (for surgeries to be performed at Pacific Hospital) in
28 connection with inducing these doctors to engage CPM/IPM. The Pharmacy
#:10842
1 Defendants shared many patients with the Surgical Defendants; as noted above, of
2 the over $60 million paid to the Pharmacy Defendants by State Fund, more than $30
3 million of it can be traced to patients who received services from the Surgical
4 Defendants.
5
225. The five schemes below are all closely related to the Surgery Defendant
6 Enterprise schemes, but are broken out separately because they some contain unique
7 elements.
8
A.
9
Lack of Licenses, Corporate Practice of Medicine, and Payment of
Illegal Referral Fees (CPM, IPM, MMG, Administrative
10
Defendants, Individual Defendants, All Provider Defendants except
11
Drs. Akmakjian, Chambi, Tantuwaya, and Moheimani 12)
12
1.
13
Lack of Licenses
226. CPM and IPM, entered into "Physician Office Dispensing Program
14 Management Agreements" with physicians and other medical providers, including
15 Provider Defendants, pursuant to which the providers purportedly retained the
16 Pharmacy Defendants to "implement and maintain a Pharmacy Program in
17 Physician's various offices and places of practice for Physician's patients covered
18 under the California Workers' Compensation Program." Pursuant to these
19 agreements, CPM and IPM would receive a share of the profits generated by the
20 filling of prescription drugs in return for managing the "Pharmacy Program."
21
227. But rather than simply assisting the physicians in the management of
22 their dispensing programs, CPM and IPM controlled nearly every aspect these
23 programs. They chose the suppliers, purchased the drugs, employed and supervised
24 (through FMM) the pharmacy technicians and other employees who dispensed the
25 drugs, determined which drugs could and could not be listed on the formularies,
26 provided monetary incentives to push providers to overprescribe or to prescribe the
27
12
28
For purposes of this Section VI.A., the term "Provider Defendants" should
be read to exclude Drs. Akmakjian, Chambi, Tantuwaya, and Moheimani.
#:10843
1 most lucrative medications, covered direct pharmacy costs, submitted bills for
2 reimbursement to insurers, and ultimately controlled the flow of money and how
3 much physicians would be paid for their prescriptions. On information and belief,
4 FMM also provided the physicians' assistants to the providers, who would prescribe
5 medications to patients.
6
228. Deposition testimony of the Pharmacy Defendants' CFO, Matthew
7 Umbs, confirms that CPM and IPM had complete control over the funds paid to
8 pharmaceutical repackagers and over the funds received from insurers in the form of
9 reimbursements. For example, while the dispensing agreements provided that the
10 physicians were responsible for purchasing the medications necessary for the
11 pharmacy programs, instead, CPM and IPM purchased the medications directly
12 from pharmaceutical repackagers with funds held in a "physician lockbox account,"
13 an account controlled by CPM and IPM and to which the physicians had no access.
14 The Pharmacy Defendants' "management fee" was generally "50% of gross
15 collections after deducting the costs of drugs sold and other direct pharmacy costs,
16 including collections and advances." Upon reimbursement from State Fund,
17 Pharmacy Defendants would control the funds, determine whether or not to
18 "paydown" or "write off" the advances paid to the medical providers, including the
19 Provider Defendants (which were purportedly paid to enable the medical providers
20 to purchase the pharmaceuticals, even though CPM and IPM in fact did the
21 purchasing), and provide the physicians with some portion of the profits from the
22 reimbursements.
23
229. Thus, the physicians, including the Provider Defendants, never bore
24 any significant out-of-pocket financial risk and were paid simply for prescribing
25 medications to their patients and referring them to the pharmacies run by the
26 Pharmacy Defendants, which were often exam rooms in the same building as the
27 physicians' office buildings. The fee-splitting agreements were therefore simply
28 vehicles through which CPM and IPM paid kickbacks to physicians for referring
#:10844
1 patients to the pharmacies run by CPM and IPM, and for prescribing lucrative
2 medications to their patients. Financial documents produced in this case show that
3 this was true for the Provider Defendants, who did not bear any costs of medications
4 or operational costs, but were simply paid a percentage of profits each month (or, in
5 many cases, large "advances" which were often later written off). The amounts paid
6 under these pharmacy agreements did not reflect the fair market value of the
7 services provided. For example, in 2006, Dr. Capen and CPM were both paid
8 around $2 million each for drugs that cost CPM only $500,000. The pharmacy
9 agreements also often drove the Provider Defendants to write prescriptions at an
10 alarming, implausible rate. For example, Dr. Capen purportedly wrote over 30,000
11 prescriptions in 2006, and averaged 123 prescriptions per day in March of that year,
12 indicating that he was writing prescriptions for medications not dispensed or
13 overprescribing medications to his patients. Similarly, in 2005, Defendant Dr.
14 Khalid Ahmed entered into an agreement with PSPM pursuant to which he would be
15 paid $450,000 per month for medication and surgery referrals to the Entity
16 Defendants. In 2006, he purportedly wrote nearly 23,000 prescriptions, and
17 averaged 92 prescriptions per day in March of that year. He was paid nearly $2.7
18 million in "advances" for writing those prescriptions in 2006, for drugs that cost
19 CPM only $327,039. When the Drobots were questioned about the dispensing
20 agreements, they regularly invoked their Fifth Amendment rights against self21 incrimination.
22
230. This conduct violates the restrictions placed on provider dispensaries
23 set forth in California Bus. & Prof. Code § 4170. Moreover, by illegally operating
24 physician dispensaries, CPM and IPM also acted as pharmacies under California
25 Bus. & Prof. Code § 4037, which defines "pharmacy" as "includ[ing], but not
26 limited to, any area, place, or premises…from which the controlled substances,
27 dangerous drugs, or dangerous devices are furnished, sold, or dispensed at retail."
28
#:10845
1 Yet neither CPM nor IPM ever had pharmacy licenses, nor were they licensed
2 medical providers.
3
231. CPM and IPM acted also acted as wholesalers, despite the fact that
4 CPM never had a wholesaler license, and IPM's wholesaler license expired on
5 September 1, 2012, according to California state public records.
6
232. Under California Bus. & Prof. Code § 4043,"wholesaler" means and
7 includes a person who acts as a wholesale merchant, broker, jobber, customs broker,
8 reverse distributor, agent, or a nonresident wholesaler, who sells for resale, or
9 negotiates for distribution, or takes possession of, any drug or device included in
10 California Bus. & Prof. Code § 4022. A wholesaler license is required by any
11 business that distributes, brokers, or transacts the sale or return of dangerous drugs
12 or dangerous devices into or within California to other wholesalers, practitioners, or
13 pharmacies.
14
233. Here, CPM and IPM, not the physicians, purchased the drugs from the
15 pharmaceutical repackagers. They also controlled all, or nearly all, aspects of the
16 pharmacy operations for the physicians. At the very least, then, CPM and IPM
17 acted as "brokers" for the acquisition of pharmaceuticals for the physicians, meaning
18 that under California Bus. & Prof. Code § 4160, they required a license from the
19 California Board of Pharmacy to operate.
20
234. According to California state public records, after a 2005 inspection of
21 CPM, the California Board of Pharmacy on October 28, 2005 ordered CPM to cease
22 and desist operations so long as CPM did not have a license. In response, CPM
23 assured the California Board of Pharmacy that it had ceased operations and had
24 transferred its contracts to IPM. CPM also stated that it intended to operate "as a
25 broker, the same as IPM," and thus was applying for a wholesale license.
26
235. Above is an excerpt from a letter to the California Board of Pharmacy
27 dated December 6, 2005, where CPM represented that "all operations did cease [as
28
#:10846
1 of October 28, 2005] and all contracts were assigned or transferred to IPM in order
2 that we would be compliant with the Board's orders."
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
236. Despite this representation to the Pharmacy Board, CPM never ceased
operation—indeed, it billed State Fund for over 7,000 prescriptions from October
28, 2005 through the end of 2005 alone. No license was ever issued to CPM, yet
CPM continued its operations, including billing State Fund, through 2012.
19
20
21
22
23
24
25
26
27
237. On information and belief, Defendant MMG also ran pharmacies out of
physicians’ offices and used the physicians’ names to submit bills to State Fund.
According to California state public records, MMG, like CPM, was never licensed
in any capacity by the Board of Pharmacy when it submitted these bills to State
Fund.
238. CPM, IPM, and MMG misrepresented the services they provided and
their right to collect payment. Lacking the required license and/or authority, these
Defendants misrepresented their right to collect from State Fund in furtherance of
their scheme to overbill State Fund for prescriptions. State Fund reasonably relied
28
#:10847
1 on the misrepresentations in receiving, processing, paying, and settling the invoices
2 and bills from these Defendants. Each Defendant requested payment from State
3 Fund through the United States mail and/or interstate wires, and payments were
4 delivered via the U.S. Postal Service or wires.
5
239. On information and belief, the Individual Defendants were responsible
6 for devising the fraudulent scheme to bill without license or authority, and received
7 and controlled profits from it. State Fund is informed and believes, and thereon
8 alleges that the Individual Defendants gave direction and oversaw the fraudulent
9 scheme, through their control over the Pharmacy Defendants, Administrative
10 Defendants, and related entities as specified above. All the Pharmacy Defendants
11 share the same address and the Individual Defendants were involved in their
12 ownership and management structure.
13
14
2.
Corporate Practice of Medicine
240. The Medical Practice Act, California Bus. and Prof. Code section 2052,
15 provides: "Any person who practices or attempts to practice, or who holds himself
16 or herself out as practicing...[medicine] without having at the time of so doing a
17 valid, unrevoked, or unsuspended certificate...is guilty of a public offense."
18 California Bus. and Prof. Code section 2400, within the Medical Practice Act,
19 provides in pertinent part: "Corporations and other artificial entities shall have no
20 professional rights, privileges, or powers."
21
241. The policy expressed in Business and Professions Code against the
22 corporate practice of medicine is intended to prevent unlicensed persons, like
23 Defendants, from interfering with or influencing the physician's professional
24 judgment. For example, the following types of decisions and activities should not
25 be delegated to an unlicensed person, including Defendants: (1) determining what
26 diagnostic tests, medications, or treatments are appropriate for a particular
27 condition; (2) determining the need for referrals to, or consultation with, another
28 physician/specialist; (3) selection and hiring/firing of health staff and medical
#:10848
1 assistants; (4) decisions regarding coding and billing procedures for patient care
2 services; (5) determining the selection of medical equipment and medical supplies
3 for the medical practice; and (6) arranging for, advertising, or providing medical
4 services rather than only providing administrative staff and services for a physician's
5 medical practice (i.e., non-physician exercising controls over a physician's medical
6 practice, even where physicians own and operate the business).
7
242. Here, Defendants interfered with or influenced the physicians'
8 professional judgment, including the Provider Defendants, by paying them for
9 patient referrals and for prescribing medications or tests (or using devices) that
10 would yield the greatest profit margins, regardless of whether those decisions were
11 in the best interests of their patients. Indeed, as discussed in paragraphs 26 and 27,
12 supra, PSPM wrote a letter to doctors in 2006 reminding them that PSPM controlled
13 all referrals from the doctors, including surgeries, pain management,
14 pharmaceuticals, and psychiatric evaluations. The letter explicitly states that
15 "[a]ccording to our management agreement all referrals from your office are to be
16 coordinated by PSPM." PSPM then goes on to specifically demand referrals for:
17 pain management physicians, psychological and psychiatric consultations, MRIs,
18 and durable medical equipment.
19
243. The Pharmacy Defendants' similarly took control of the physicians'
20 pharmacy programs through their "Physician Office Dispensing Program
21 Management Agreements." Indeed, on information and belief, and as evidenced by
22 financial statements produced in this case with regard to the Provider Defendants,
23 the physicians committed almost nothing in the way of financial, capital, or human
24 resources to the pharmacy program. Instead, the Pharmacy Defendants purchased
25 the medications from vendors of their choosing, selected, hired, and supervised the
26 pharmacy technicians and other health staff for the pharmacies, dispensed the drugs
27 through their employees, controlled which drugs would be listed on the formularies,
28 and submitted bills to State Fund for collection. When the costs of certain
#:10849
1 pharmaceuticals escalated (e.g., Wellbutrin), making them less lucrative from
2 Drobot Jr.'s perspective, he unilaterally decided that those pharmaceuticals needed
3 to be removed from the formularies.
4
244. Moreover, documents recently produced in this litigation demonstrate
5 that the Pharmacy Defendants went so far as to actually form or attempt to form
6 sham corporations for the medical providers in order to collect against State Fund.
7 In a letter dated February 1, 2005, CPM explained to a medical provider that in
8 order to avoid issues with collecting on bills submitted to State Fund, CPM had
9 "formed a new California Professional Corporation for [the provider] at no expense
10 to [the provider] and [ ] obtained a new EIN for the new corporation." The letter
11 included a list of forms that were "necessary to complete the formation of" the
12 corporation and offered to "maintain the Corporation's Minute book in our office."
13 Drobot Jr. is copied on this letter and the letter is signed by Randolph Taylor, who,
14 according to Drobot Sr., served as a paralegal for Drobot Sr.'s former counsel,
15 Michael Tichon.
16
245. Recently produced documents also show that the Pharmacy Defendants
17 and Drobot Jr.—through newly created entities—sought to expand their control over
18 physician decision making by branching into urinary drug testing and ancillary
19 durable medical equipment ("DME") services.
20
246. On information and belief, Drobot Jr., through IPM or his more
21 recently formed entity, Advanced Practice Services, would coordinate and control
22 physicians' "UDT testing" within their practices in much the same way they
23 controlled the pharmaceutical dispensing. IPM or Advanced Practice Services
24 would dictate what testing the providers should perform and place a "UDT
25 technician" in a provider's facility. Moreover, recently produced documents show
26 Defendants, or entities controlled by them, making set monthly payments to
27 physicians in exchange for their agreeing to perform a certain number of UDT tests
28 per month, regardless of patient need. And other emails show Drobot Jr.
#:10850
1 encouraging Defendant Catanzarite to perform more UDT testing, again regardless
2 of need. In response, Catanzarite assures Drobot Jr. that he would be "investigating
3 what is going on with the UDT testing" at his facility. Another Drobot Jr. entity,
4 Advanced Lab, would submit bills to State Fund for the lab services.
5
247. When the Pharmacy Defendants' CFO, Matthew Umbs, was asked
6 about these UDT entities in his deposition, counsel for the Pharmacy Defendants
7 instructed him not to answer. Umbs also refused to answer questions about his own
8 recently formed urinalysis laboratory, US Lab LLC, for which the Planning
9 Commission of the City of Newport Beach recently approved a conditional use
10 permit for the laboratory located at 20377 Acacia Street, the same address listed for
11 many of the Defendants (as described above).
12
248. Similarly, Pharmacy Defendants' CFO, Matthew Umbs, recently
13 testified at his deposition that another entity owned by Drobot Jr., Advanced
14 Pharmacy Services, received "commissions" from DME companies whenever such
15 companies sold their products (e.g., back braces) to certain "customers" –
16 presumably physicians associated with Pharmacy Defendants. Drobot Sr. also has a
17 DME company, PSPM-DME, Inc., to which State Fund has paid over $4 million.
18 On information and belief, Pharmacy Defendants' exercised control over physicians'
19 professional judgment through these types of arrangements, which were simply
20 vehicles through which the Pharmacy Defendants paid kickbacks to physicians for
21 referring patients to the Pharmacy Defendants (and other Drobot-controlled entities),
22 for medications, UDT testing, and DME.
23
249. The Provider Defendants each knowingly relinquished control over
24 their medical practices to the Individual and Pharmacy Defendants, who were not
25 licensed medical providers (or even licensed pharmacies), by allowing them to
26 operate pharmacies in the physician's office and direct or influence the Provider
27 Defendants as to which pharmaceuticals could and could not be prescribed. These
28 medical providers thus assisted the Individual and Pharmacy Defendants in their
#:10851
1 violation of the California Corporate Practice of Medicine Doctrine, codified in
2 California Bus. & Prof. Code §§ 2400 and 2052. Accordingly, the agreements
3 under which the Pharmacy Defendants billed State Fund were illegal because they
4 allowed for the corporate practice of medicine by unlicensed lay corporations.
5
6
3.
Payment of Referral Fees and Fee-Splitting Agreements
250. On information and belief, as discussed above, the Pharmacy
7 Defendants paid kickbacks to medical providers, including the Provider Defendants,
8 in the form of "advances" for the purchase of pharmaceuticals under the "Physician
9 Office Dispensing Program Management Agreements" and through illegal fee10 splitting agreements. In reality, the Pharmacy Defendants, not the physicians,
11 purchased the pharmaceuticals from repackagers and other suppliers (often
12 obtaining substantial "rebates" in light of their ownership interests in or other
13 associations with these repackagers/suppliers, thereby increasing profit margins).
14 Physicians did not incur any significant out-of-pocket expense in connection with
15 these pharmaceutical purchases because CPM and IPM wrote the checks for such
16 purchases using funds from a bank account controlled by them.
17
251. In other words, the physicians, including Provider Defendants, kept the
18 sizable monthly advances as payment for referring patients to the pharmacies run by
19 the Pharmacy Defendants in the physicians' offices. On information and belief,
20 additional kickbacks were paid to physicians pursuant to the fee-splitting provisions
21 in the Physician Office Dispensing Program Management Agreements after the
22 Pharmacy Defendants were reimbursed by State Fund. The fee-splitting provisions
23 typically provided that the physicians were entitled to 50% of the collections after
24 costs. Many also specified a minimum, "guaranteed" monthly payment for the
25 physicians.
26
252. The Individual Defendants asked medical providers to sign sham
27 medical lien purchase agreements to satisfy State Fund's requests for proof that the
28 Pharmacy Defendants had the right to collect directly on the claims submitted by
#:10852
1 them, all the while assuring the medical providers that the fee-splitting arrangement
2 would stay intact despite the purported "sale" of the claims to the Pharmacy
3 Defendants. Financial statements produced in this matter as to the Provider
4 Defendants show that these "lien purchase agreements" provided to State Fund were
5 false and fraudulent. While the agreements signed by the Provider Defendants and
6 the Pharmacy Defendants, and provided to State Fund, purport to provide that
7 Pharmacy Defendants will purchase the Provider Defendants' claims, the financial
8 statements show that this did not occur. Instead, the Pharmacy Defendants'
9 relationship with the Provider Defendants continued as it had before, with the
10 Provider Defendants receiving either "advances," a percentage of profits, or both
11 after the date of the lien purchase agreements. The Provider Defendants never
12 intended to enforce or abide by the terms of "lien purchase agreements," and signed
13 them only to facilitate the fraudulent billing of the Pharmacy Defendants. 13
14
253. Moreover, doctors were encouraged to sign CPM/IPM contracts with
15 the promise that spinal surgery referrals (to be performed at Pacific Hospital) would
16 be made as consideration for the contract (e.g., Drobot Jr.'s emails to Dr. Richard
17 Mulvania). CPM/IPM also "subsidized" PSPM and Pacific Hospital by paying
18 kickbacks to medical providers, including Defendants Dr. Khalid Ahmed, Dr. Ian
19 Armstrong, Jeffrey Catanzarite, Dr. Timothy Hunt, Dr. Philip Sobol, Alan Ivar, and
20 Dr. Ismael Silva, for the referral of patients to Pacific Hospital. PSPM and FMM
21 provided another "bridge" between the Pharmacy Defendants Enterprise and the
22 Surgical Defendants Enterprise. On information and belief, in recruiting medical
23
24
25
26
27
28
13
In some cases, some of the Provider Defendants did begin accepting
payment for purported "claims purchases" years after the "lien purchase"
agreements were signed with different entities. However, these "claims purchases"
were not bona fide, and the amounts paid often bore no reasonable economic
relationship to the claims purchased. Instead, these "claims purchases" were
disguised kickbacks paid for referring patients to the pharmacy programs or
referring patients to or performing surgeries at Pacific Hospital.
#:10853
1 providers and other coconspirators to participate in their scheme, the Individual
2 Defendants marketed the strength of the overall enterprise as a "full-service"
3 operation, whereby patients could be recruited at all points of service—from pain
4 management to medications to diagnostic testing to DME to spinal fusion surgery.
5 PSPM's management allowed it (and related Drobot Sr. entity FMM) to control the
6 medical practices of physicians from all angles.
7
254. Had State Fund known that the claims submitted by the Pharmacy
8 Defendants were the byproduct of illegal kickback and fee-splitting arrangements, it
9 would not have paid on those claims.
10
255. In addition to the prohibitions against such referral fees and kickbacks
11 contained in California Bus. & Prof. Code §§ 650, 652, and 652.5 and California
12 Insurance Code §§ 750 and 754, California Lab. Code § 139.3 specifically prohibits
13 this conduct in the worker's compensation context, including, but not limited to, the
14 referral of patients for "pharmacy goods" to entities in which the physician has a
15 "financial interest" and payment for a referred evaluation or consultation. California
16 Lab. Code § 139.3(f) also provides, "No insurer, self insurer, or other payor shall
17 pay a charge or lien for any goods or services resulting from a referral in violation of
18 this section." Many medical providers, including Provider Defendants, submitted
19 certifications to State Fund along with their claims for reimbursement that they had
20 not violated California Lab. Code § 139.3 or had "not offered, delivered, received or
21 accepted any rebate, refund, commission, preference, patronage, dividend, discount
22 or other consideration, whether in the form of money or otherwise, as compensation
23 or inducement for any referred examination or evaluation," or otherwise stating their
24 compliance with the law and/or that the bills contained no material omissions.
25
256. Furthermore, since the contracts between the medical providers and
26 Pharmacy Defendants violated California Bus. & Prof. Code §§650, 652, 652.5,
27 2400, 2052, 4022, 4037, 4043, 4160, and 4170, Cal. Ins. Code §§ 750, 754, and
28 1871.4, California Lab. Code § 139.3, 3215, and 3820, and Penal Code 549 and 550,
#:10854
1 among other laws, they are illegal. As mentioned above, illegal contracts are void
2 and unenforceable; the Pharmacy Defendants therefore had no standing to submit
3 the bills to State Fund or receive payment for them.
4
B.
Overbilling and Pricing Manipulation (Pharmacy Defendants,
5
Drobot Sr., Drobot Jr., All Provider Defendants except Drs.
6
Akmakjian, Chambi, Moheimani, and Tantuwaya 14)
7
257. The Pharmacy Defendants—acting as the purported "assignees" of
8 medical providers, including the Provider Defendants—engaged in an overbilling
9 scheme against State Fund, similar to that of the Surgical Defendants, only with
10 medications. From 2002 to the present, the Pharmacy Defendants and the Provider
11 Defendants have billed over half a million prescription drugs to State Fund. State
12 Fund has paid out over $60 million to these Defendants based on these bills.
13
14
1.
Background on Drug Pricing
258. All drugs intended for retail sale are identified by an eleven-digit
15 National Drug Code ("NDC") that is listed with the FDA. The NDC is used to
16 identify the drug delivered to the patient. The first five digits of the NDC identify
17 the company that manufactured and/or packaged the drug, the middle four digits
18 identify the drug ingredient and dosage, and the last two digits identify package size.
19
259. Once a drug gets repackaged by a repackager it gets assigned a new
20 NDC. The first five NDC digits are changed to correspond to the repackager. Thus,
21 when a repackager sells a drug to a retailer and that drug gets dispensed to a patient,
22 the reported NDC identifies the repackager, not the manufacturer.
23
260. Each NDC has associated with it pricing benchmarks reported by the
24 manufacturer or repackager that are published in commercial publications. The two
25 benchmarks relevant to this action are the wholesale acquisition cost ("WAC") and
26 average wholesale price ("AWP").
27
14
28
For purposes of this Section VI.B., the term "Provider Defendants" should
be read to exclude Drs. Akmakjian, Chambi, Tantuwaya, and Moheimani.
#:10855
1
261. A drug's wholesale acquisition cost ("WAC") is the baseline price at
2 which the drug's manufacturer sells the drug to wholesalers/repackagers. While
3 WAC may not represent a wholesaler's actual acquisition cost (as wholesalers may
4 obtain modest discounts off the WAC), it is the baseline price at which the
5 manufacturer sells the drug to wholesalers. Due to a competitive market, drug
6 wholesaler margins on their sales to retailers tend to be thin. As a result, the WAC
7 serves as the de facto baseline price for two different transactions: (1) the price a
8 wholesaler pays the manufacturer to acquire the drug, and (2) the price a retailer
9 pays a wholesaler to acquire the drug.
10
262. A drug's average wholesale price or "AWP" is the nominal price at
11 which wholesalers sell that drug to retailers, including pharmacies and physicians
12 who operate in-office dispensaries. Historically, a drug's AWP is set directly or
13 indirectly by its manufacturer. The Red Book, a trade publication that publishes
14 AWPs and other data for thousands of drugs, explains that "[w]hen the manufacturer
15 does not provide an AWP or markup formula from which AWP can be calculated,
16 the AWP will be calculated by applying a standard 20% markup over the
17 manufacturer supplied WAC." A repackager is also free to report its own AWPs for
18 any drugs it repackages. Since each NDC comes with its own AWP, any firm that
19 repackages can set both a new NDC and a new AWP.
20
263. AWP is important because it is used as a baseline for reimbursement by
21 end payors, including State Fund, to retailers for drugs provided to patients. This
22 results in a system where the amount retailers pay wholesalers for drugs is pegged to
23 the drug's WAC, but the amount retailers get paid (i.e., receive in reimbursement) is
24 pegged to the drug's AWP. The amount by which a drug's AWP exceeds its WAC
25 creates a "spread" between the actual cost of the drug to the retailer and the
26 reimbursement paid to the retailer by an insurer.
27
28
#:10856
1
2
2.
Defendants' Schemes
264. Pharmacies and repackagers can increase their profits by increasing the
3 "spread." Given the proliferation of NDC codes and generic medications, it
4 becomes difficult to track the actual prescription and the actual price.
5
265. Since they began billing State Fund, the Pharmacy Defendants have
6 engaged in a massive overbilling scheme whereby they billed up to ten or more
7 times the price of basic-over-the-counter medication. As discussed above, in 2006,
8 CPM billed approximately $8 million for drugs prescribed by Defendant Dr. Capen;
9 it purchased those drugs for only $500,000. Excessive amounts were charged for
10 tablets, and occasionally, the same provider billed the same prescription twice on the
11 same day. For example, IPM consistently billed $3.50 for 20 mg of omeprazole (an
12 antacid) per tablet. Omeprazole is available, over the counter, for approximately
13 $0.40 per tablet.
14
266. As with medical procedures and the Surgical Defendants, State Fund
15 indicates to the billing provider that if it disagrees with the amount of the payment
16 for prescriptions, it should send additional documentation in support of the claimed
17 amount. Despite such requests, the Pharmacy Defendants typically did not (and do
18 not) submit any additional documentation to justify the excess billing. Instead, the
19 Pharmacy Defendants routinely send additional bills to State Fund and take other
20 actions to collect additional amounts, as detailed below.
21
267. For each of the five Pharmacy Defendants, a spreadsheet specifying
22 particular examples listing medication overbilling has been lodged with the Court,
23 with claim numbers, dates of mailing or wiring, amounts, and descriptions (titled
24 "CPM – Overbilling;" "IPM – Overbilling;" titled "LBPP – Overbilling;" "MMG –
25 Overbilling;" and "Coastal – Overbilling").
26
268. CPM and IPM have billed for compound medications as well, which
27 are generally topical creams that contain more than one drug in the ingredients.
28 CPM consistently billed the entire costs of these medications based on the highest- 101 Third Amended Complaint, Case No. 13-00956 AG (CWx)
#:10857
1 priced drug in the combination, even when that drug represents the smallest
2 percentage (for example, 10% or less) of the total ingredients. A spreadsheet of
3 examples of this misconduct is lodged with the Court (titled "CPM – Overbilling
4 Compounds").
5
269. State Fund reasonably relied on the Pharmacy Defendants' and Provider
6 Defendants' fraudulent bills and invoices in paying for the services and
7 prescriptions. Based on State Fund's review of billing runs and particular bills, the
8 bills submitted by the Pharmacy Defendants and Provider Defendants contained
9 false statements, primarily that the alleged cost of prescriptions provided to covered
10 workers was the actual or reasonable cost of those pharmaceuticals. On information
11 and belief, each Defendant in the Pharmacy Defendant Enterprise knew that these
12 bills contained false statements, which were made to induce State Fund to grossly
13 overpay for the prescriptions provided.
14
270. The bills and accompanying forms submitted by the Pharmacy
15 Defendants and Provider Defendants (as well as other medical providers) also
16 contained false certifications by the providers and/or material omissions or
17 misrepresentations.
18
21 Defendants gave direction and oversaw the fraudulent overbilling scheme, given
22 their control of the Pharmacy Defendants and related entities as specified above. All
23 the Pharmacy Defendants share the same address, and involve the Individual
24 Defendants in their ownership and management structure.
25
26
3.
2001-2007 Overbilling Through AWP Manipulation
272. A more particular kind of overbilling scheme was carried out by the
27 Pharmacy, Individual Defendants, and Provider Defendants from 2001 to 2007, in
28
#:10858
1 an attempt to exploit the then-existing regulatory structure which, like the spinal
2 implant structure, often based charges on middleman charges.
3
273. From 2001 to 2007, the "spread" between a drug's AWP and WAC had
4 a predictable standard dictated by industry custom. For most drugs, the market
5 understood and expected a spread of about 20%. For example, a particular NDC
6 might have a published WAC (e.g., $100 for a 100 count bottle) and a published
7 AWP typically 1.20 times its WAC (e.g., $120). A retailer who bought this drug at
8 WAC and sold it at AWP would pocket the $20—the spread. The standard spread
9 thus allowed retailers a 20% return on each drug they dispense (and sometimes
10 more). 15
11
274. From 2001-2007, the Pharmacy Defendants, Individual Defendants,
12 and Provider Defendants, on information and belief, enacted a complex scheme
13 where Individual Defendants and Pharmacy Defendants acquired or partnered with
14 repackagers, allowing them to engineer spreads over 600% by having the
15 repackagers report wildly inflated AWPs and/or by having the repackagers provide
16 them with steep rebates or discounts. Defendants and the repackagers they
17 conspired with knew these inflated AWPs were nowhere near the "average
18 wholesale price" paid by retailers, nor were they remotely tethered to the drugs'
19 WACs. Once these inflated AWPs were published, Defendants billed State Fund
20 and others based on these fraudulent AWPs, allowing the Defendants to reap returns
21 in excess of 600% per transaction. Provider Defendants also had knowledge of the
22 massive spread between the drugs' acquisition prices and their reported AWPs, since
23 Provider Defendants were provided with financial statements by the Pharmacy
24 Defendants, which contained the costs of goods sold for each month.
25
15
A retailer who pays exactly WAC (e.g., $100) and bills exactly AWP (e.g.,
$120) would see a 20% profit. But retailers often pay below WAC (due to discounts
27 on the WAC from the manufacturer to wholesaler, passed on to the retailer). And
retailers often bill above AWP—until 2007, California generally allowed retailers to
28
bill generic drugs at 1.4 times AWP.
26
#:10859
1
275. For drugs prescribed before March 2007, the amount a retailer could
2 charge for drugs depended on whether its NDC was listed in the Medi-Cal fee
3 schedule. For NDCs not listed in the Medi-Cal fee schedule, California law
4 generally authorized payment for generic drugs at 1.4 times the drug's AWP; brand
5 name drugs were generally paid at 1.1 times the drug's AWP.
6
276. Because State Fund and other workers' compensation insurers were
7 required by law to reimburse retailers based on AWP for drugs whose NDC was not
8 listed in the Medi-Cal fee schedule, State Fund relied on AWP data published in
9 commercial publications such as the Red Book. This reliance was well known to the
10 Defendants, who, on numerous occasions, actively induced State Fund and others to
11 rely on the Red Book's published AWPs. When State Fund denied payment on one
12 of IPM's many excessive bills, CPM often responded with data taken from the Red
13 Book showing the relevant AWP (which State Fund later discovered during its
14 investigation was fraudulently inflated).
15
277. Defendants conducted a scheme in which the repackagers under their
16 control vastly overstated the AWPs of many drugs in the data they reported to Red
17 Book and other drug pricing publications. After the inflated AWPs were published,
18 the involved Defendants would continue to pay the same price to acquire their
19 drugs, but they would now charge State Fund much more, claiming that
20 reimbursement was pegged to the published AWPs. This artificial, fraudulent
21 inflation of reported AWP data led to enormous spreads, which, on information and
22 belief, Pharmacy Defendants split with physicians, including Provider Defendants,
23 as part of the payment of kickbacks for referrals and for the use of CPM or IPM's
24 services and pharmacy technicians.
25
278. The kickback fees incentivized providers, including the Provider
26 Defendants, to only order drugs through CPM or IPM's preferred repackagers (who
27 offered the opportunity for huge profit margins through inflated AWPs and sizeable
28
#:10860
1 rebates and/or discounts) and to direct their patients fill their prescriptions at the
2 pharmacies run by the Pharmacy Defendants in the providers' offices.
3
279. CPM frequently chose to buy from the repackager DRx. This choice
4 was deliberate. In his deposition, Drobot Sr. admitted that he and Drobot Jr.
5 invested in Essence Group Holdings, Inc., the parent company of DRx and another
6 pharmaceutical repackager, Wellinx. On information and belief, the Individual
7 Defendants exerted control over DRx by demanding rebates on pharmaceuticals in
8 exchange for access to the medical providers' (including Provider Defendants')
9 pharmaceutical business, which the Individual Defendants controlled through CPM,
10 IPM, and MMG. The Individual Defendants had arranged for DRx to report
11 fraudulently high AWPs to the Red Book. Defendants would order from DRx drugs
12 with wildly inflated AWPs and then bill insurers at least 1.4 times these AWPs.
13
280. This scheme to systematically overbill State Fund and other insurers by
14 fraudulently reporting inflated AWPs ran from 2001 through March 2007. It
15 effectively ended in March 2007 after California scrapped its AWP-based
16 reimbursement model for repackagers (the effect is not retroactive, however, so
17 claims with dates of service before March 2007 continue to be reimbursed under the
18 AWP-based formula). However, Defendants continue to contract with
19 pharmaceutical repackagers to receive "rebates" or "refunds" based on the volume of
20 drugs they were able to broker and dispense with the cooperation of medical
21 providers, including the Provider Defendants.
22
23
4.
Specific Examples
281. After acquiring an ownership share in Essence Group Holdings
24 Corporation, the parent company of DRx and Wellinx, Defendants began to falsify
25 the AWP data that DRx reported to the Red Book.
26
282. For instance, DRx reported an AWP of $185.40 for 60 tablets of 150
27 mg Ranitidine. Yet an invoice from DRx produced in another litigation reveals that
28 DRx actually sold 60 tablets of 150mg Ranitidine to CPM for just $5.26 during the
#:10861
1 same period. Assuming DRx sold Ranitidine to CPM at its wholesale acquisition
2 cost, the AWP-WAC spread comes out to 3,424%—many, many times over the
3 standard industry markup. DRx also reported an AWP of $177.00 for 60 tablets of
4 350mg Carisoprodol. A relatively contemporaneous DRx invoice shows DRx sold
5 the same amount of the same medication for $8.12, a spread of 2,079%.
6
283. The $185.40 AWP for DRx's Ranitidine is over nine times the drug's
7 federal upper limit ("FUL") of $20.47—the maximum amount a state Medicaid
8 program is permitted to reimburse providers for the drug. Before 2007, a drug's
9 FUL was calculated as 150% of the lowest published AWP for therapeutically
10 equivalent products (e.g., the same generic drug from a different manufacturer or
11 repackager). The same drug has recently been available over the counter for $0.135
12 per 150mg tablet, amounting to $8.10 for 60 tablets. IPM billed $259.56 (1.4 times
13 AWP) for a drug it had purchased for $5.26 and that retails for $8.10—a 4,900%
14 markup over CPM's actual acquisition cost, and a 3,200% markup over the drug's
15 retail price.
16
284. As another example, on or shortly after October 26, 2006, CPM and the
17 Individual Defendants used the United States mail in furtherance of their scheme to
18 defraud. CPM submitted a bill to State Fund (Claim #01114173) via the U.S. Postal
19 Service for drugs one of its physicians had prescribed and dispensed to a patient at
20 Pacific Hospital for $815.34, which CPM and other Defendants knew
21 misrepresented the amount of reimbursement to which CPM was entitled.
22
285. All the drugs for this particular bill have NDCs beginning with
23 "55045," indicating that DRx had supplied all the dispensed drugs. Defendants used
24 DRx's fraudulently reported AWPs to charge State Fund excessive amounts for the
25 drugs dispensed. In doing so, Defendants knowingly misrepresented DRx's AWPs,
26 which it knew to be fraudulently inflated and false. For example, CPM billed State
27 Fund $255.30 for Carisprodol by multiplying DRx's fraudulent AWP—$177.00—by
28
#:10862
1 1.4 and adding a $7.50 dispensing fee. DRx's reported AWP for Carisprodol is over
2 20 times higher than what it actually charges CPM for the drug: $8.12.
3
286. As another example on this bill, CPM billed State Fund $267.06 for
4 Ranitidine by multiplying DRx's fraudulent AWP—$185.40—by 1.4 and adding a
5 $7.50 dispensing fee. DRx's reported AWP for Ranitidine is over 34 times higher
6 than what it actually charges CPM for the drug: $5.26.
7
287. These Defendants knew and intended that the submitted invoice
8 misrepresented the pharmaceuticals' AWPs, and each knew that the reported AWPs
9 were grossly misleading by industry standards. CPM, Individual Defendants, and
10 the Provider Defendants reported and/or billed the fraudulent AWPs in order to
11 induce State Fund to overpay for drugs prescribed by the Provider Defendants (and
12 other CPM physicians). CPM, with the knowledge and approval of the Provider
13 Defendants, caused the fraudulent bills—based off fraudulent AWPs—to be mailed
14 by mailing it to State Fund. State Fund reasonably relied on the misrepresentations
15 in CPM's bill in issuing payment on the bill of at least $552.96. As CPM, the
16 Provider Defendants, and the Individual Defendants expected, payment was
17 delivered via the U.S. Postal Service.
18
288. CPM thus partnered with repackagers such as DRx and Wellinx to offer
19 physicians drugs at one price, while billing State Fund at much higher prices, using
20 those repackagers' fraudulently inflated AWPs. Lodged with the Court is a
21 spreadsheet with representative examples of CPM overbilling State Fund based on
22 the repackagers' fraudulent AWPs (titled "CPM – AWP Manipulation"). Each
23 example is identified by claim number, date of service, NDC, repackager (DRx or
24 Wellinx), the provider, and amount billed.
25
289. Based on the management agreements with PSPM and FMM as well as
26 with CPM and IPM directly, the difference between the actual cost of the drug and
27 the reimbursement paid—the spread—is split between CPM and the prescribing
28 physician. As a result of this fee-splitting arrangement, CPM provided the
#:10863
1 physicians it contracted with, including the Provider Defendants, significant
2 incentives. For certain drugs, the enormous spread between the drugs' actual cost
3 and their reported AWPs gave physicians a significant incentive to prescribe and
4 dispense these drugs—even when better alternatives existed—in order to share in
5 the outsized profits. Moreover, many of the patients referred to CPM/IPM for
6 medications were referred to Pacific Hospital for treatments as well, making the
7 illegal kickback scheme even more lucrative when the patients were induced to have
8 prescriptions filled by the Pharmacy Defendants.
9
290. The Pharmacy and Individual Defendants hid their scheme by using
10 privately held out-of-state repackagers, such as DRx and Wellinx, to manipulate
11 AWPs for CPM's benefit, and by concealing their ownership interests in these
12 repackagers. Defendants meanwhile wielded DRx's and Wellinx's fraudulent AWPs
13 to demand excessive payments from insurers.
14
291. At all relevant times (i.e., 2001-2007), the Individual Defendants
15 owned and controlled CPM, pursuant to California and Secretary of State records.
16 Drobot Jr. was the President of CPM. As President, Drobot Jr. managed and
17 operated CPM's affairs. In managing and operating CPM's affairs, Drobot Jr.
18 collaborated with his father Drobot Sr. as well as with the Administrative
19 Defendants. The Provider Defendants knowingly facilitated the Pharmacy
20 Defendants operations.
21
22
23
C.
Double-Billing of Prescriptions (CPM, IPM, LBPP, Coastal,
Drobot Sr., and Drobot Jr.)
292. Pursuant to its investigation, State Fund has uncovered three related
24 schemes in which the Pharmacy Defendants, excepting MMG, double-billed State
25 Fund for the same prescriptions going to the same claimant, but through different
26 processes. Each of these Pharmacy Defendants, as purported assignees of medical
27 providers, coordinated with the others to submit bills that another Defendant had
28 already submitted to State Fund. On information and belief (see below), the
#:10864
1 Pharmacy Defendants identified and shared the information required to double-bill
2 drugs that another Pharmacy Defendant had dispensed and already billed for.
3
293. First, even though CPM was supposedly terminated (in large part for
4 the lack of a license as described in Section VI.A) by the Individual Defendants in
5 or around 2009, it continued to bill State Fund for medications into 2012, often
6 duplicating bills for the same medications that were submitted by IPM. Lodged
7 with the Court is a spreadsheet of such double-billing (titled "CPM & IPM –
8 Duplicate Billing,") by claim number, date, prescribing provider, and CPT or NDC
9 codes). Indeed, on at least one occasion in 2012, an IPM claim was settled, and
10 State Fund was told by a representative of IPM to (and unwittingly did) use CPM's
11 tax identification number.
12
294. Second, as with IPM and CPM, Coastal, on information and belief, was
13 created by the Individual Defendants to take over the business of LBPP, with the
14 transition occurring in approximately 2011. In 2013, Coastal began to bill for some
15 dates of service that had previously been billed by LBPP. The bills from Coastal
16 have the same date of service, NDC number, and same medication in the same
17 quantities. This double-billing occurred even after State Fund had been fraudulently
18 induced to settle with LBPP on a number of bills on a consolidated basis (see
19 Section VI.C, below). Lodged with the Court is a spreadsheet of Coastal-LBPP
20 duplicative billing examples (titled "Coastal & LBPP – Duplicate Billing").
21
295. Third, Coastal billed State Fund for medications – with the same date
22 of service by the same physician for the same pharmaceuticals – that were also
23 billed through Express Scripts, State Fund's network pharmacy provider, with which
24 Coastal has a contract. Coastal directly billed prescriptions are at higher rates than
25 Express Scripts, which is one reason Coastal is required to bill through Express
26 Scripts. Yet Coastal has engaged in a practice of billing both directly and through
27 Express Scripts for the same medication. Lodged with the Court is a spreadsheet of
28 such double-billing (titled "Coastal & Express – Duplicate Billing").
#:10865
1
296. State Fund reasonably relied on the Pharmacy Defendants' and Provider
2 Defendants' fraudulent bills and invoices for these prescriptions that were double3 billed by (a) CPM and IPM; (b) Coastal and LBPP; and (c) Coastal and Express
4 Scripts. Based on State Fund's review of billing runs and particular bills, the bills
5 submitted by these Defendants contained false statements, primarily that the alleged
6 cost of prescriptions provided to covered workers was the actual or reasonable cost
7 of those pharmaceuticals and had not been paid or billed by others. On information
8 and belief, the Pharmacy Defendants made the false statements in the duplicative
9 bills to induce State Fund to overpay for the prescriptions provided.
10
14 employees of the fraudulent providers in order to give direction and oversee the
15 fraudulent overbilling scheme, given their control of the Pharmacy Defendants and
16 related entities as specified above. Indeed, the constant phasing in and out of the
17 Pharmacy Defendants and other entities show the control and intentional direction
18 of this enterprise.
19
20
21
D.
Double-Billing of Prescriptions after Global Settlements (CPM,
IPM, LBPP, and Drobot Jr.)
298. State Fund's investigation also led it to review certain settlement
22 agreements State Fund entered with Defendants related to liens Defendants brought
23 before the WCAB based on their billings to State Fund. State Fund was unaware of
24 Defendants' pattern of racketeering activity and other misconduct when it entered
25 into the settlement agreements with the Defendants named therein.
26
299. As mentioned above, State Fund entered into one global settlement
27 (meaning it resolved multiple claims and liens) with CPM on August 25, 2010,
28 another with CPM and IPM both on May 19, 2011, and a third with LBPP on July 2,
#:10866
1 2012. State Fund detected that CPM and IPM had submitted a huge number of
2 duplicate claims; State Fund tried to deny duplicate payments, and tried to guard
3 against the submission of duplicate claims in the future in those agreements. While
4 State Fund did detect some of the duplicate bills, CPM and IPM claimed they were
5 mere mistakes and continued to submit duplicate claims after the settlement.
6
300. Even after inducing State Fund to enter into the 2010, 2011, and 2012
7 settlements, Pharmacy Defendants CPM and LBPP continued to bill State Fund and
8 seek payments for claims that were part of the Global Settlements and supposedly
9 resolved, and in some circumstances, received additional payments. Lodged with
10 the Court are two spreadsheets containing examples of CPM (now IPM) and LBPP
11 continuing to bill State Fund for claims that were a part of these Global Settlements
12 after the Global Settlements were concluded. (titled, "CPM – Billing After
13 Settlement" and "LBPP – Billing After Settlement"). State Fund did detect some of
14 these duplicate billings, and is not attempting to recover twice on bills it detected
15 but did not pay.
16
301. A fourth global settlement proposed in 2013 fell apart because CPM
17 and IPM were again commingling their claims. As State Fund's in-house counsel
18 notified Drobot Jr.: "I would note that IPM and Cal Pharmacy comingled their AR
19 [accounts receivable] for our consideration. This was not disclosed to State Fund
20 until we recently called it to their attention. It is the improper comingling of the AR
21 that has caused the current delay." This 2013 settlement was not consummated
22 before federal and state agencies raided the offices of CPM, IPM, and Pacific
23 Hospital as described below.
24
E.
The Global Settlements (CPM, IPM, LBPP, Drobot Sr., Drobot Jr.,
25
and All Provider Defendants except Drs. Akmakjian, Chambi,
26
Tantuwaya, and Moheimani)
27
302. The Global Settlements with CPM, IPM, and LBPP contained
28 "Representations & Warranties" clauses providing that each party to the agreement
#:10867
1 "is not aware of any duress, menace, fraud, coercion, or undue influence which has
2 caused any Party to enter into this Agreement." See Ex. 1-3 to Counterclaim of
3 CPM, IPM, and LBPP (Dkt. No. 67) (three global settlement agreements from 2010,
4 2011 and 2012). Further, as described in Section VI.A, the settlement agreements
5 specifically contemplate that Pharmacy Defendants had the authority to settle claims
6 on behalf of the medical providers because they had the right, title, or interest to the
7 claims at issue.
8
303. State Fund is seeking rescission of the settlement agreements because
9 of the fraud perpetrated on it in the course of submitting fraudulent bills and
10 fraudulently inducing State Fund to settle them. The inflated prices and double11 billing, as alleged above, were meant to make State Fund pay far larger amounts on
12 these claims than otherwise warranted. If State Fund had known the true nature of
13 Pharmacy Defendants' businesses and the scope of the fraudulent enterprise, it
14 would not have settled with these defendants. State Fund relied on Pharmacy
15 Defendants' representations that they had authority to collect and settle the claims at
16 issue—as stated in the agreements themselves—and relied on Pharmacy Defendants'
17 representations that they were not aware of any fraud causing State Fund to enter
18 into the settlement agreements.
19
304. Yet, Pharmacy Defendants were fully aware of their fraudulent
20 activities and billing practices. Not only were Pharmacy Defendants paying illegal
21 kickbacks to providers, engaging in the corporate practice of medicine, and running
22 pharmacies and purchasing pharmaceuticals without licenses, among other things,
23 they were also intentionally misrepresenting and concealing the nature of their
24 arrangements with medical providers from State Fund.
25
305. Indeed, before paying bills submitted by the Pharmacy Defendants and
26 before entering into the Global Settlements, State Fund demanded that the Pharmacy
27 Defendants provide copies of their contracts with providers to demonstrate the
28 Pharmacy Defendants' right to collect from State Fund. Pharmacy Defendants
#:10868
1 deliberately determined to withhold or alter certain agreements with medical
2 providers—e.g., those which showed the amount of guaranteed "advances" being
3 paid to medical providers in exchange for their pharmaceutical business—to
4 "protect the innocent." Furthermore, other documents show the Individual
5 Defendants asking medical providers to sign sham medical lien purchase agreements
6 to satisfy State Fund's requests, all the while assuring the medical providers that the
7 fee-splitting arrangement would stay intact despite the purported "sale" of the claims
8 to the Pharmacy Defendants.
9
10
11
VII. STATE FUND UNCOVERS DEFENDANTS' WELL-CONCEALED
FRAUD
306. Defendants have concealed the fraudulent schemes from State Fund by
12 submitting the same or similar bills for procedures and materials over the course of
13 years. Defendants never indicated they had inflated the costs of procedures or
14 materials in their bills to State Fund. Defendants continued to represent that they
15 were billing State Fund for their actual and reasonable costs. Defendants also did
16 not disclose the connections between and among their related entities, repeatedly
17 discontinuing entities and forming others, while using different tax identification
18 numbers, knowing that State Fund, operating in good faith in the workers'
19 compensation system, could not keep track of morphing entities and
20 schemes. Defendants did not disclose the true contractual relationships with
21 medical providers, including the Provider Defendants, or the involvement of the
22 Administrative Defendants. Indeed, the Plea Agreement with Drobot Sr. indicates
23 that their undetected schemes had been perpetrated against a number of workers'
24 compensation insurers since at least 1998.
25
307. The Surgical and Pharmacy Defendants also filed Liens at the WCAB
26 on the basis of their fraudulent bills, similarly contending before the WCAB that the
27 bills were legitimate and that the Defendants were legally entitled to full payment.
28
#:10869
1
308. As noted, the workers' compensation system provides for, among other
2 things, accelerated treatment and submission and payment of bills, and in certain
3 circumstances, penalties against an insurer when payment of a bill is delayed. State
4 Fund's limited resources as a public enterprise fund and non-profit state agency,
5 along with the massive number of bills it receives each day, make the early
6 detection of fraud—especially complex schemes involving multiple sophisticated
7 entities—difficult, if not impossible. State Fund had no reasonable opportunity to
8 investigate Defendants' individual bills or the schemes as a whole, and had no
9 reason to suspect the extent and systemic nature of the fraud conducted by the
10 Defendants.
11
309. On April 5, 2013, as reported by numerous publications and media
12 outlets, the corporate offices of Pacific Hospital and IPM were served with search
13 warrants by federal and state authorities, including but not limited to the United
14 States Postal Service, the Federal Bureau of Investigation, the Internal Revenue
15 Service, the investigatory arm of the United States Department of Defense, and the
16 California Department of Insurance. The search warrants remain under seal in this
17 Court, so that State Fund still does not know the details, except for those disclosed
18 in the Plea Agreement.
19
310. On the basis of these reports, State Fund has conducted (and continues
20 to refine) an in-depth review of billings from and payments to the Surgical and
21 Pharmacy Defendants, including reviews of ownership structure, control by the
22 Individual Defendants, and patterns of claims. The investigation included the
23 review of thousands of bill runs, thousands of individual bills, and thousands of
24 other records including Secretary of State documents, medical regulations and
25 schedules, and industry and trade publications. The initial complaint in this action
26 was filed on June 24, 2013. Moreover, a qui tam action against some of the
27 Defendants (including Pacific Hospital and Drobot Sr.) was unsealed in Sacramento
28 Superior Court in late July 2013.
#:10870
1
311. Accordingly, State Fund has discovered the various fraudulent schemes
2 described above. These schemes are extensive and go far beyond the traditional
3 relationship of providers and insurers in the workers' compensation system. Given
4 the mass of data and complexity of the schemes, State Fund's investigation is
5 continuing. Defendants' billings demonstrate a systematic course of conduct to
6 defraud State Fund, in violation of the core purpose of the workers' compensation
7 system: the quick and efficient treatment of injured workers. Defendants' fraudulent
8 schemes make health care more expensive and less efficient for workers'
9 compensation claimants, and negatively impact honest providers.
10
312. As a result of the active fraudulent concealment of the conspiracy, State
11 Fund asserts the tolling of the applicable statute of limitations affecting the causes of
12 action by State Fund.
13
FIRST CAUSE OF ACTION
14
(Civil RICO 18 U.S.C. § 1962(c))
15
(Against Surgical Defendants, Individual Defendants, and Administrative
16
Defendants)
17
313. State Fund incorporates by reference the allegations in paragraphs 1-19,
18 22-223, and 306-312 of this Complaint as though fully set forth herein.
19
314. State Fund, Pacific Hospital, International Implants, Long Beach Pain,
20 PSPM, FMM, Dr. Bernadett, Drobot Sr., and Drobot Jr. are each "persons" as
21 defined in 18 U.S.C. § 1961(3).
22
23
24
A.
Individual Defendants, Surgical Defendants, and Administrative
Defendants Formed an Association-in-Fact Enterprise.
315. The Individual Defendants, Surgical Defendants, and Administrative
25 Defendants (in this First Cause of Action, shortened to "Defendants" with
26 exceptions noted below), including their employees and agents, formed an
27 association-in-fact enterprise within the meaning of 18 U.S.C. § 1961(4), the
28 "Surgical Defendant Enterprise."
#:10871
1
316. The Surgical Defendant Enterprise is an ongoing organization
2 consisting of both corporations and individuals that associated for common and
3 shared purposes, including: (a) the fraudulent billing and overbilling of spinal
4 implants through the use of illegal kickbacks and fee-splitting; (b) the fraudulent
5 billing and overbilling of other medical services using sham contracts designed to
6 hide the corporate practice of medicine; (c) deriving increased profits from the
7 activities of the enterprise; and (d) concealing the fraudulent nature of the
8 enterprise's activities. See supra paragraphs 162-223. Lodged with the Court are
9 the following spreadsheets containing non-exhaustive, representative samples of
10 predicate acts committed in furtherance of the alleged fraudulent schemes:
11
• Pacific Hospital – Spinal Hardware (Section V.A)
12
• Pacific Hospital – Unbundling and Upcoding (Section V.C)
13
• Long Beach Pain – Unbundling and Upcoding (Section V.C)
14
• Pacific Hospital – Toxicology Overbilling (Section V.C)
15
• Pacific Hospital – RNFA Billing (Section V.D)
16
• Pacific Hospital – Autologous Transfusions (Section V.E)
17
• Long Beach Pain – Duplicate Radiology Billing (Section V.F)
18
317. Drobot Sr. owns and/or controls each of the Surgical Defendants.
19 Specifically, Drobot Sr. owns and/or controls Pacific Hospital and Long Beach Pain
20 (and is an officer and director of both), as well as International Implants. Moreover,
21 International Implants registered the same business address with the California
22 Secretary of State as the Pharmacy Defendant entities now under Drobot Jr.'s
23 control, including CPM, IPM, Coastal, and LBPP, as well as the Administrative
24 Defendants, PSPM and FMM. Dr. Bernadett owned and/or controlled each of the
25 Surgical Defendants from at least 2005-2010. Specifically, Dr. Bernadett owned
26 and/or controlled Pacific Hospital and Long Beach Pain, as well as International
27 Implants. Drobot Jr., according to Pacific Hospital testimony, also worked in the
28 Purchasing Department of Pacific Hospital, used Healthsmart Corp. and Pacific
#:10872
1 Hospital email addresses, referred patients to spinal surgeons for surgery at Pacific
2 Hospital, facilitated the payment of kickbacks to medical providers, and directed the
3 Pharmacy Defendant Entities at the same address as many Surgical Defendants.
4 Thus, on information and belief, State Fund alleges that the Individual Defendants
5 coordinated with one another and with the Surgical Defendants to implement and
6 disguise the enterprise's schemes.
7
318. The enterprise functioned as a continuing unit as evidenced by the
8 numerous, ongoing transactions between its members. For example, since 2007
9 International Implants has provided Pacific Hospital with over 75% of Pacific
10 Hospital's spinal implant equipment, with numerous fraudulent invoices being
11 exchanged between the entities and distributed to State Fund. Indeed, patients have
12 been shuffled back and forth between the surgical and pharmacy sides, with over
13 $30 million of the over $60 million paid by State Fund to the Pharmacy Defendants
14 representing patients who were also used in the Surgical schemes. Further, over
15 8,700 claims submitted to State Fund involved treatment by both a Pharmacy
16 Defendant and a Surgical Defendant.
17
B.
Individual Defendants, Surgical Defendants, and Administrative
18
Defendants Each Conducted the Enterprise's Affairs
19
319. International Implants supplied Pacific Hospital with fraudulent
20 invoices, knowing that the invoices would be used in furtherance of the enterprise's
21 scheme to overbill spinal implants. Pacific Hospital participated in the enterprise by
22 submitting fraudulent invoices and bills containing false certifications by the
23 Provider Defendants to State Fund, in furtherance of the enterprise's scheme to
24 overbill spinal implants. Long Beach Pain participated in the affairs of the
25 enterprise by submitting fraudulent bills to State Fund and other insurers, in
26 furtherance of the enterprise's scheme to overbill medical services. See supra
27 paragraphs 162-223. Drobot Sr. owns and directs the activities of Pacific Hospital
28 (at least until it was recently sold), Long Beach Pain, and International Implants;
#:10873
1 Abrazos Healthcare, Inc. (the parent corporation of Pacific Hospital) and
2 International Implants have registered the same business address with the California
3 Secretary of State as the Pharmacy Defendant entities now under Drobot Jr.'s
4 control, including CPM, IPM, Coastal, and LBPP, as well as the Administrative
5 Defendants, PSPM and FMM. Emails show Drobot Jr. facilitated the payment of
6 kickbacks, referred spine patients to doctors in connection with getting them to sign
7 management agreements with IPM/CPM (for surgeries to be performed at Pacific
8 Hospital), and according to Pacific Hospital testimony, also worked in the
9 Purchasing Department of Pacific Hospital. Thus, State Fund alleges that, on
10 information and belief, working with one another, the Individual Defendants
11 directed their respective entities in carrying out the enterprise's schemes.
12
320. The Administrative Defendants participated in both enterprises by
13 "leasing" or providing employees to facilitate and conceal that the Surgical and
14 Pharmacy Defendants were engaging in kickbacks, the corporate practice of
15 medicine, and illegal fee-splitting. The Administrative Defendants' contracts were
16 designed to, and did, hide the true nature of what the fraud in which the other
17 Defendants were engaged from State Fund and other insurers.
18
C.
The Surgical Defendant Enterprise Engaged in a Pattern of
19
20
Violations
21
321. The Surgical Defendant Enterprise engaged in a pattern of racketeering
22 activity by committing multiple acts of mail fraud, in violation of 18 U.S.C. § 1341,
23 and wire fraud, in violation of 18 U.S.C. § 1343. Pacific Hospital and Long Beach
24 Pain each caused the fraudulent use of United States mail and interstate wires by
25 sending thousands of fraudulent bills and invoices via U.S. Postal Service or
26 electronically, in furtherance of the scheme to overbill spinal surgeries, including
27 spinal implants, and other medical services. International Implants caused the
28 fraudulent use of United States mail by providing Pacific Hospital with fraudulent
#:10874
1 invoices, intending and foreseeing that the invoices would be mailed in furtherance
2 of the enterprise's scheme to overbill spinal implants. The Provider Defendants
3 generated the fraudulent bills and allowed them to be submitted under their names
4 as licensed medical professionals, knowing the bills would be submitted to State
5 Fund through the U.S. Postal Service or electronically.
6
322. Defendants engaged in a pattern of racketeering activity by directing
7 Surgical Defendants to use the United States mail and interstate wires in furtherance
8 of the overbilling schemes, in violation of 18 U.S.C. § 1341 and 18 U.S.C. § 1343.
9 In furtherance of the enterprise's overbilling schemes, Drobot Sr. arranged for:
10 International Implants to mail and wire fraudulent invoices to Pacific Hospital;
11 Pacific Hospital to mail and wire fraudulent bills and invoices to State Fund; Long
12 Beach Pain to mail and wire fraudulent bills to State Fund; and Pacific Hospital,
13 through the Administrative Defendants, to mail and wire illegal payments to medical
14 providers, including the Provider Defendants, and marketers, including the Marketer
15 Defendants. Drobot Jr. acted in furtherance of the enterprise's schemes through his
16 patient referrals and by facilitating the payment of kickbacks to providers, along
17 with his involvement with the Administrative Defendants. Defendants made these
18 arrangements intending to defraud State Fund and others by making them overpay
19 for spinal surgeries, including spinal implants, and other medical services.
20
323. Defendants also used, and caused the use of, the United States mail and
21 interstate wires to submit other correspondence and documents in furtherance of the
22 Surgical Defendant Enterprise, including communications designed to conceal the
23 enterprise's fraudulent activities.
24
D.
25
324. The Surgical Defendant Enterprise could not have been carried out
The Surgical Defendant Enterprise Affected Interstate Commerce
26 without the United States mail or interstate wires, which were used for the
27 submission of the fraudulent bills, correspondence about them, and payment on
28 them.
#:10875
1
325. Further, on information and belief, the Surgical Defendant Enterprise's
2 schemes cheated State Fund and other workers' compensation insurers out of
3 hundreds of millions of dollars. The cost of this fraud is passed on, at least in part,
4 to employers who purchase workers' compensation insurance in California. Many
5 employers with California employees have their principal place of business outside
6 California. Many employers are also publicly traded companies, with shareholders
7 spread across the United States. The Surgical Defendant Enterprise's racketeering
8 injured both in-state and out-of state employers and their shareholders, therefore
9 affecting interstate commerce. Provider fraud affects the premiums charged for
10 workers' compensation insurance for these multi-state and international employers.
11
326. The spinal implants were shipped by interstate commerce carriers,
12 including United States mail services. On information and belief, many of the
13 spinal implants were manufactured outside of California and shipped into
14 California.
15
327. As alleged in a prior RICO action brought by Defendant CPM against
16 another insurer, the interstate nature of many companies and the mobility of
17 employees means that the business of workers' compensation insurance, even for
18 only California workers, dramatically impacts interstate commerce. This is
19 confirmed by the federal nature of the investigation revealed earlier this year, with
20 participation by the United States Postal Service as well as the Federal Bureau of
21 Investigation.
22
23
24
E.
State Fund Relied on the Surgical Defendant Enterprise's
Misrepresentations and Suffered Financial Injury As a Result.
328. In carrying out their fraudulent schemes, Defendants knew that State
25 Fund would rely on the accuracy of the Defendants' misrepresentations in order to
26 set proper reimbursement amounts.
27
329. In addition, Defendants knew that State Fund reimburses medical
28 providers in accordance with the California Labor Code and regulations
#:10876
1 promulgated thereunder. Defendants were keenly aware of these laws and
2 regulations, and made specific misrepresentations intending and foreseeing that
3 State Fund would rely on these misrepresentations in complying with law, causing
4 Defendants to be overpaid.
5
330. State Fund reasonably relied on Defendants' misrepresentations.
6 Defendants' violations of 18 U.S.C. § 1962(c) directly and proximately caused State
7 Fund substantial injury to business and property by causing State Fund to overpay
8 many millions of dollars in inflated reimbursements for spinal implants and other
9 medical services. State Fund would not have made these overpayments had
10 Defendants not engaged in their pattern of racketeering activity. Defendants'
11 racketeering activity also caused State Fund to incur out-of-pocket costs and related
12 expenses that would otherwise not have been incurred.
13
331. As a direct and proximate result of Defendants' unlawful racketeering
14 activity, State Fund suffered damages in an amount to be proven at trial. However,
15 as alleged above, State Fund would not have done business with Defendants had it
16 known of the well-concealed fraud, so that State Fund claims all amounts it paid to
17 Defendants under these false pretenses as damages, since Defendants had no right to
18 it.
19
332. Under the provisions of 18 U.S.C. § 1964(c), Defendants are jointly
20 and severally liable to State Fund for three times the damages that State Fund has
21 suffered, plus the costs of bringing this suit, including reasonable attorneys' fees.
22
SECOND CAUSE OF ACTION
23
(Civil RICO 18 U.S.C. § 1962(c))
24
(Against Pharmacy Defendants, Individual Defendants, and Administrative
25
Defendants)
26
27 20-161 and 224-312 of this Complaint as though fully set forth herein.
28
#:10877
1
334. State Fund, Drobot Sr., Drobot Jr., Dr. Bernadett, each of the Pharmacy
2 Defendants, FMM, and PSPM are "persons" as that term is defined in 18 U.S.C. §
3 1961(3).
4
5
6
A.
Individual Defendants, Pharmacy Defendants, and Administrative
Defendants Formed an Association-in-Fact Enterprise.
335. Individual Defendants, Pharmacy Defendants, Administrative
7 Defendants and their employees and agents formed an association-in-fact enterprise
8 within the meaning of 18 U.S.C. § 1961(4) (the Pharmacy Defendant Enterprise).
9
336. The Pharmacy Defendant Enterprise is an ongoing business
10 organization consisting of both corporations and individuals that are and have been
11 associated for common or shared purposes, including: (a) running pharmacies and
12 purchasing and selling drugs without a license to do so and collecting
13 reimbursements; (b) overbilling for drugs sold, including past manipulation of
14 AWPs; (c) double-billing with each other for medications paid for by State Fund,
15 including after claims had been resolved; (d) entering into fraudulent contracts and
16 engaging in the corporate practice of medicine, and misrepresenting their right to
17 bill State Fund; (e) deriving increased profits from the activities of the enterprise;
18 and (f) concealing the fraudulent nature of the enterprise's activities. See supra
19 paragraphs 224-312. Lodged with the Court are the following spreadsheets
20 containing non-exhaustive, representative samples of predicate acts committed in
21 furtherance of the alleged fraudulent schemes:
22
• CPM – Overbilling (Section VI.B)
23
• Coastal – Overbilling (Section VI.B)
24
• IPM – Overbilling (Section VI.B)
25
• LBPP – Overbilling (Section VI.B)
26
• MMG – Overbilling (Section VI.B)
27
• CPM – Overbilling Compounds (Section VI.B)
28
• CPM – AWP Manipulation (Section VI.C)
#:10878
1
• CPM & IPM – Duplicate Billing (Section VI.C)
2
• Coastal & Express – Duplicate Billing (Section VI.C)
3
• Coastal & LBPP – Duplicate Billing (Section VI.C)
4
• CPM – Billing After Settlement (Section VI.D)
5
• LBPP – Billing After Settlement (Section VI.D)
6
337. Individual Defendants own and control each of the Pharmacy
7 Defendants, or owned and controlled them in the past. Individual Defendants
8 coordinated with one another and with Pharmacy Defendants to implement and
9 disguise the enterprise's schemes. Drobot Jr., who now owns and controls the
10 Pharmacy Defendants, coordinated with Drobot Sr., who formerly owned CPM and
11 IPM, to implement the enterprise's schemed to run pharmacies and purchase and sell
12 drugs without the required licenses. Dr. Bernadett approved and facilitated the
13 payment of kickbacks and other illegal fees to Provider Defendants through the
14 Pharmacy Defendants. As noted above, CPM replaced IPM, and Coastal apparently
15 replaced or took over for LBPP, and IPM used LBPP in its business.
16
338. Individual Defendants also coordinated with DRx and Aidarex, owned
17 by Drobot Sr. and Drobot Jr., in implementing the enterprise's scheme of reporting
18 and disseminating fraudulent AWPs and overbilling for drugs. The Individual
19 Defendants and the Pharmacy Defendants further coordinated with the repackagers
20 in arranging for these drugs to be shipped to physicians and patients. The enterprise
21 functioned as a continuing unit as evidenced by the numerous, ongoing transactions
22 between its members. For example, from 2001 through at least 2007, DRx provided
23 drugs to Pharmacy Defendants and/or the physicians with whom the Pharmacy
24 Defendants contracted. The enterprise's functioning as a continuing unit is further
25 evidenced by Individual Defendants' common ownership and/or control over each of
26 the Pharmacy Defendants and the repackagers with whom they conspired, and the
27 medical providers' continued involvement.
28
#:10879
1
339. The Administrative Defendants and CPM/IPM also entered into
2 contracts with providers, including the Provider Defendants, at the Individual
3 Defendants' guidance and direction, which led to unlicensed activity, the illegal
4 corporate practice of medicine and improper fee-splitting.
5
6
7
B.
Individual Defendants, Pharmacy Defendants, and Administrative
Defendants Each Conducted the Affairs of the Enterprise
340. Each Pharmacy Defendant participated in the affairs of the Pharmacy
8 Defendant Enterprise. For example, to conceal the enterprise's fraudulent activities,
9 each Pharmacy Defendant, acting under the direction of the Individual Defendants,
10 implemented practices of overbilling certain medications. The Pharmacy
11 Defendants also coordinated with one another in submitting duplicate bills to State
12 Fund, for example, by sharing with each other the information needed to submit
13 duplicate claims.
14
341. Individual Defendants conducted the affairs of the Pharmacy Defendant
15 Enterprise by devising the enterprise's schemes and operating the enterprise's
16 members in furtherance of those schemes. Individual Defendants own and control
17 each of the Pharmacy Defendants. For example, Drobot Jr. is currently the owner
18 and the President and CEO of IPM/CPM; in this capacity, he directed and managed
19 CPM's participation in the Pharmacy Defendant Enterprise. Drobot Jr. further
20 conducted the affairs of the Pharmacy Defendant Enterprise by entering into
21 contracts with physicians and repackagers (such as DRx and Aidarex) on
22 IPM/CPM's behalf. Drobot Sr. conducted the affairs of the Pharmacy Defendant
23 Enterprise by owning CPM/IPM and directing its activities at least until 2010, as
24 well as acquiring DRx, on information and belief, in order to manipulate its AWPs.
25 See supra paragraphs 48-63, 152-161, 279, 281-291. Dr. Bernadett conducted the
26 affairs of the enterprise by approving and facilitating the payment of kickbacks and
27 other illegal fees to medical providers, including Provider Defendants, through the
28 Pharmacy Defendants.
#:10880
1
342. The Pharmacy Defendant Enterprise has or had additional connections
2 to the Surgical Enterprise as well. Patients have been shuffled back and forth
3 between the surgical and pharmacy sides, with over $30 million of the $60 million
4 paid by State Fund to the Pharmacy Defendants representing patients who were also
5 used in the Surgical Scheme. Over 8,700 claims submitted to State Fund involved
6 treatment by both a Pharmacy Defendant (or by physicians with whom they
7 contracted) and a Surgical Defendant.
8
9
10
11
C.
The Pharmacy Defendant Enterprise Engaged in a Pattern of
Violations
343. Pharmacy Defendants engaged in a pattern of racketeering activity by
12 committing multiple acts of mail fraud, in violation of 18 U.S.C. § 1341, and wire
13 fraud, in violation of 18 U.S.C. § 1343. Each Pharmacy Defendant caused the
14 fraudulent use of United States mail or interstate wires by sending, via U.S. Postal
15 Service or electronically, bills where it misrepresented its right to reimbursement for
16 drugs on which it had no right to collect. Each Pharmacy Defendant also caused the
17 fraudulent use of United States mail or interstate wires by sending fraudulently
18 inflated bills; some of these bills contained further misrepresentations in the form of
19 falsified AWP data. Pharmacy Defendants mailed and wired their fraudulent bills
20 intending to defraud State Fund and others, making them overpay for the drugs sold.
21
344. Individual Defendants engaged in a pattern of racketeering activity by
22 directing Pharmacy Defendants and their repackagers to use the United States mail
23 and interstate wires in furtherance of the enterprise's schemes, in violation of 18
24 U.S.C. § 1341 and § 1343. In furtherance of the enterprise's schemes, Individual
25 Defendants arranged for, among other things: Pharmacy Defendants to misrepresent,
26 via interstate mail and wire, their right to reimbursement for drugs they had no right
27 to sell; Pharmacy Defendants to enter into improper contracts and activities with
28 providers as well as Administrative Defendants which provided for the illegal
#:10881
1 corporate practice of medicine, illegal fee-splitting, and unlicensed pharmacy work;
2 and Pharmacy Defendants to overbill State Fund via interstate mail and wire.
3 Individual Defendants made these arrangements intending to defraud State Fund and
4 others, making them overpay for the drugs sold.
5
345. Pharmacy Defendants shared patients and providers with the Surgical
6 Defendant Enterprise. On information and belief, Defendants by contract agreed to
7 share certain proceeds from the enterprise's activities with physicians who referred
8 patients to the pharmacies run by Defendants in the physicians' offices. Defendants
9 thus provided physicians with a strong financial incentive to prescribe drugs and
10 refer the patients to Defendants—an incentive that often counseled against the best
11 interests of the physicians' patients, resulting in bills for medically unnecessary
12 pharmaceuticals.
13
346. Defendants also used and caused the use of the United States mail and
14 interstate wires to submit other correspondence and documents in furtherance of the
15 Pharmacy Defendant Enterprise, including communications and contractual
16 agreements with the Entity Defendants designed to conceal the enterprise's
17 fraudulent activities.
18
19
20
D.
The Pharmacy Defendant Enterprise Affected Interstate
Commerce
347. The Pharmacy Defendant Enterprise could not have been carried out
21 without the United States mail and interstate wires, which were used for the
22 submission of the fraudulent bills, correspondence about them, and payment on
23 them.
24
348. Further, on information and belief, the Pharmacy Defendant
25 Enterprise's schemes cheated State Fund and other workers' compensation insurers
26 out of millions of dollars. The cost of this fraud is passed on, at least in part, to
27 employers who purchase workers' compensation insurance in California. Many
28 employers with California employees have their principal place of business outside
#:10882
1 California. Many employers are also publicly traded companies, with shareholders
2 spread across the United States. The Pharmacy Defendant Enterprise's pattern of
3 racketeering injured both in-state and out-of-state employers and their shareholders,
4 therefore affecting interstate commerce. Provider fraud affects the premiums
5 charged for workers' compensation insurance for these multi-state and international
6 employers and entities.
7
349. As alleged in a prior RICO action brought by CPM against another
8 insurer, the interstate nature of many companies and the travel and transport of
9 employees means that the business of workers' compensation insurance, even for
10 California workers, dramatically impacts interstate commerce. This is confirmed by
11 the federal nature of the investigation revealed earlier this year, with participation by
12 the United States Postal Service as well as the Federal Bureau of Investigation.
13
350. CPM/IPM also partnered with at least one medical group in Indiana,
14 OrthoIndy, and used LBPP to dispense prescription medications to individuals
15 living there. IPM's website also lists an apparent business office in Maryland, and
16 promotes itself as a nationwide manager of prescriptions for physicians.
17
18
19
E.
State Fund Relied on the Pharmacy Defendant Enterprise's
Misrepresentations and Suffered Financial Injury as a Result
351. In carrying out their fraudulent schemes, the Pharmacy Defendants,
20 Administrative Defendants, and Individual Defendants knew that State Fund would
21 rely on the accuracy of the Defendants' misrepresentations in order to set proper
22 reimbursement amounts.
23
352. The Pharmacy Defendants, Administrative Defendants, and Individual
24 Defendants knew that State Fund reimburses medical providers in accordance with
25 the California Labor Code and regulations promulgated thereunder. Pharmacy and
26 Individual Defendants were aware of these laws and regulations and made specific
27 misrepresentations intending and foreseeing that State Fund would rely on these
28 misrepresentations in order to comply with law, causing Defendants to be overpaid.
#:10883
1
353. State Fund reasonably relied on Defendants' misrepresentations.
2 Defendants' violations of 18 U.S.C. § 1962(c) directly and proximately caused State
3 Fund substantial injury to business and property by causing State Fund to overpay
4 millions of dollars in inflated reimbursements for the drugs that Pharmacy
5 Defendants illegally sold. State Fund would not have made these payments had
6 Defendants not engaged in their pattern of racketeering activity. Defendants'
7 racketeering activity also caused State Fund to incur out-of-pocket costs and related
8 expenses that would not have otherwise been incurred.
9
354. As a direct and proximate result of Defendants' unlawful racketeering
10 activity, State Fund suffered damages in an amount to be proven at trial. However,
11 as alleged above, State Fund would not have done business with Defendants had it
12 known of the well-concealed fraud, so that State Fund claims all amounts it paid to
13 Defendants under these false pretenses as damages, since Defendants had no right to
14 these funds.
15
355. Under the provisions of 18 U.S.C. § 1964(c), each of the Individual
16 Defendants, each of the Pharmacy Defendants, and each of the Administrative
17 Defendants are jointly and severally liable to State Fund for three times the damages
18 that State Fund has suffered, plus the costs of bringing this suit, including
19 reasonable attorneys' fees.
20
THIRD CAUSE OF ACTION
21
(Civil RICO Conspiracy 18 U.S.C. § 1962(d))
22
(Against All Defendants)
23
24 22-223, 306-312, and 313-332 of this Complaint as though fully set forth herein.
25
357. State Fund, Pacific Hospital, International Implants, Long Beach Pain,
26 PSPM, FMM, Dr. Bernadett, Drobot Sr., Drobot Jr., and each of the other Entity,
27 Provider Defendants, and Marketer Defendants are each "persons" as defined in 18
28 U.S.C. § 1961(3).
#:10884
1
A.
2
3
Each Defendant Knew of and Agreed to Facilitate the Surgical
Defendant Enterprise's Criminal Purpose
358. Defendants formed an agreement to violate 18 U.S.C. § 1962(c). Each
4 of these Defendants knew of the nature of Surgical Defendant Enterprise's
5 conspiracy to defraud State Fund by overbilling State Fund for spinal implants and
6 other medical procedures while taking active steps to conceal the fraud. Drobot Jr.
7 acted in furtherance of the enterprise's schemes through his patient referrals and by
8 facilitating the payment of kickbacks to providers, along with his involvement with
9 the Administrative Defendants.
10
359. Each Defendant agreed to join this conspiracy, agreed to commit at
11 least two predicate acts, and each agreed to commit, facilitate, or participate in a
12 pattern of racketeering activity in furtherance of the conspiracy.
13
B.
14
15
Each Defendant Committed Predicate Acts In Furtherance of the
Enterprise's Criminal Purpose
360. During the existence of the conspiracy, each of the Defendants agreed
16 to the commission of multiple predicate acts in furtherance of the conspiracy to
17 overbill State Fund, and committed, facilitated, or participated in the commission of
18 at least two predicate acts.
19
361. Pacific Hospital agreed to and did commit multiple instances of mail
20 and wire fraud in furtherance of the conspiracy by mailing and wiring fraudulently
21 inflated bills and invoices. International Implants agreed to facilitate Pacific
22 Hospital's pattern of racketeering by supplying Pacific Hospital with fraudulent
23 invoices.
24
362. Long Beach Pain, under the same ownership as the other Pharmacy
25 Defendants, agreed to and did commit multiple instances of mail and wire fraud by
26 mailing and wiring fraudulent bills.
27
363. Individual Defendants agreed to and did commit multiple instances of
28 mail and wire fraud by directing Surgical Defendants to commit the predicate acts
#:10885
1 above, intending and foreseeing that the acts of mail and wire fraud would follow in
2 the ordinary course of business. Individual Defendants also agreed to and did
3 conduct the enterprise's affairs. Among other things, on information and belief,
4 Individual Defendants conducted the enterprise's affairs by devising its schemes,
5 obtaining profits from them, and meeting with the Surgical Defendants' employees
6 and medical providers in order to direct the schemes.
7
364. Provider Defendants agreed and did commit multiple instances of mail
8 and wire fraud by committing and facilitating the predicate acts above, intending
9 and foreseeing that the acts of mail and wire fraud would follow in the ordinary
10 course of business. Provider Defendants also agreed to and did conduct the
11 enterprise's affairs. Among other things, Provider Defendants conducted the
12 enterprise's affairs by generating fraudulent documents, making material
13 misrepresentations to State Fund, accepting kickbacks from the Entity Defendants,
14 and meeting with the Individual Defendants and employees of the Surgical
15 Defendants in order to further the schemes.
16
365. Marketer Defendants agreed and did commit multiple instances of mail
17 and wire fraud by committing and facilitating the predicate acts above, intending
18 and foreseeing that the acts of mail and wire fraud would follow in the ordinary
19 course of business. Marketer Defendants also agreed to and did conduct the
20 enterprise's affairs. Among other things, Marketer Defendants conducted the
21 enterprise's affairs by arranging for surgeries to be performed by the Provider
22 Defendants, directing the Provider Defendants to use fraudulently-inflated hardware,
23 accepting and paying kickbacks, and meeting with the Individual Defendants,
24 Provider Defendants, and employees of the Surgical Defendants in order to further
25 the schemes.
26
366. Specific examples of predicate acts committed in furtherance of the
27 conspiracy are provided in paragraphs 162-223 and in the spreadsheets lodged with
28 the Court.
#:10886
1
C.
2
3
State Fund Suffered Injury From the Predicate Acts Committed In
Furtherance of the Enterprise's Criminal Purpose
367. The predicate acts of mail and wire fraud that Defendants agreed to and
4 did commit directly and proximately caused State Fund to suffer substantial injury
5 to its business and property, as alleged in greater detail above.
6
368. Under the provisions of 18 U.S.C. § 1964(d), Defendants are jointly
7 and severally liable to State Fund for three times the damages that State Fund has
8 suffered, plus the costs of bringing this suit, including reasonable attorneys' fees.
9
FOURTH CAUSE OF ACTION
10
(Civil RICO Conspiracy 18 U.S.C. § 1962(d))
11
(Against Pharmacy Defendants, Individual Defendants, Administrative
12
Defendants, and All Provider Defendants except Drs. Akmakjian, Chambi,
13
Tantuwaya, and Moheimani16)
14
15 20-161, 224-312, and 333-355 of this Complaint as though fully set forth herein.
16
370. State Fund, the Individual Defendants, each of the Administrative
17 Defendants, each of the Provider Defendants, and each of the Pharmacy Defendants
18 are "persons" as that term is defined in 18 U.S.C. § 1961(3).
19
A.
20
21
Each Defendant Knew of and Agreed to Facilitate the Pharmacy
Defendant Enterprise's Criminal Purpose
371. Pharmacy Defendants, Administrative Defendants, and Individual
22 Defendants formed an agreement to violate 18 U.S.C. § 1962(c). Each Defendant
23 knew of the Pharmacy Defendant Enterprise's conspiracy to defraud State Fund by
24 submitting fraudulent bills and overbilling State Fund for drugs that the enterprise
25 illegally sold while taking active steps to conceal the fraud. Each Defendant agreed
26
27
16
For purposes of this Fourth Cause of Action, the term "Provider
Defendants" should be read to exclude Drs. Akmakjian, Chambi, Tantuwaya, and
28
Moheimani.
#:10887
1 to join this conspiracy, and each agreed to commit, facilitate, or participate in a
2 pattern of racketeering activity in furtherance of the conspiracy.
3
4
5
B.
Each Defendant Committed Predicate Acts In Furtherance of the
Enterprise's Criminal Purpose.
372. During the existence of the conspiracy, each of the Defendants agreed
6 to the commission of multiple predicate acts in furtherance of the conspiracy to
7 overbill State Fund, and committed, facilitated, or participated in the commission of
8 at least two predicate acts.
9
373. Each of the Pharmacy Defendants agreed to and did mail or wire State
10 Fund bills for drugs it had illegally purchased and sold, and had no right to collect
11 on. Each did so with intent to defraud State Fund, in furtherance of the conspiracy.
12 Each of the Pharmacy Defendants also agreed to and did mail or wire State Fund
13 bills with fraudulently inflated drug prices. Each did so with intent to defraud State
14 Fund, in furtherance of the conspiracy.
15
374. Through the Individual and Administrative Defendants, the Pharmacy
16 Defendants shared patients and doctors with the Surgical Defendant Enterprise.
17 Individual Defendants agreed to and did commit multiple instances of mail and wire
18 fraud by directing Pharmacy Defendants to commit the predicate acts above,
19 intending and foreseeing that the acts of mail and wire fraud would follow in the
20 ordinary course of business. Individual Defendants also agreed to and did conduct
21 the enterprise's affairs. Among other things, Individual Defendants conducted the
22 enterprise's affairs by devising its schemes, obtaining profits from the schemes, and
23 conducting meetings with medical providers and the Pharmacy Defendants'
24 employees in order to direct the schemes.
25
375. Provider Defendants agreed and did commit multiple instances of mail
26 and wire fraud by committing the predicate acts above, intending and foreseeing that
27 the acts of mail and wire fraud would follow in the ordinary course of business.
28 Provider Defendants also agreed to and did conduct the enterprises affairs. Among
#:10888
1 other things, Provider Defendants conducted the enterprise's affairs by generating
2 the fraudulent documents, accepting kickbacks from the Entity Defendants, making
3 material misrepresentations to State Fund, and meeting with the Individual
4 Defendants and employees of the Pharmacy Defendants in order to further the
5 schemes.
6
376. Specific examples of predicate acts committed in furtherance of the
7 conspiracy are provided in paragraphs 162-223 and in the spreadsheets lodged with
8 the Court.
9
C.
10
11
State Fund Suffered Injury From the Predicate Acts Committed In
Furtherance of the Enterprise's Criminal Purpose
377. The predicate acts of mail and wire fraud that Defendants agreed to and
12 did commit directly and proximately caused State Fund to suffer substantial injury
13 to its business and property, as described in more detail above.
14
378. Under the provisions of 18 U.S.C. § 1964(d), the Individual
15 Defendants, Administrative Defendants, Pharmacy Defendants, and Provider
16 Defendants are jointly and severally liable to State Fund for three times the damages
17 that State Fund has suffered, plus the costs of bringing this suit, including
18 reasonable attorneys' fees.
19
FIFTH CAUSE OF ACTION
20
(Fraud)
21
22
379. State Fund incorporates by reference the allegations in paragraphs 1-
23 312, 313-332, 333-355, and 356-378 of this Complaint as though fully set forth
24 herein.
25
380. As alleged in detail above, Defendants made material
26 misrepresentations to State Fund, and/or concealed and/or suppressed material facts
27 from State Fund. Such misrepresentations included false billings for spinal
28 surgeries and other medical services including "other types of surgeries, magnetic
#:10889
1 resonance imaging, toxicology, durable medical equipment, [] other services," and
2 medications. Each Defendant also made misrepresentations and/or concealed facts
3 with the intent that State Fund not discover its fraudulent schemes.
4
381. The misrepresentations and omissions by Defendants were material and
5 were false and misleading, and Defendants knew they were material and were false
6 and misleading at the time they were made or, at a minimum, Defendants acted with
7 reckless disregard for the truth or falsity of the representations or omissions.
8
382. Defendants misrepresented, concealed and/or suppressed these facts
9 with the intent to deceive and influence the actions of State Fund, including
10 intending to have State Fund pay the fraudulent billings, as well as to stop any
11 investigation of the challenged practices.
12
383. State Fund reasonably and justifiably relied to its detriment on each
13 Defendant's misrepresentations. At the time State Fund acted in reliance on
14 Defendants' misrepresentations, State Fund was unaware of the representations'
15 falsity and of the facts Defendants concealed and suppressed. State Fund would
16 have acted differently if it had known the true facts. In particular, State Fund would
17 not have paid Defendants' fraudulent claims, and State Fund would have contested
18 (or contested further) Defendants' false billings.
19
384. As a direct and proximate result of Defendants' misrepresentations,
20 State Fund suffered damages in an amount to be proven at trial, but in an amount not
21 less than the monies paid to Defendants because of their fraudulent schemes with
22 respect to spinal surgeries and other medical services including "other types of
23 surgeries, magnetic resonance imaging, toxicology, durable medical equipment, []
24 other services," medications, and overbilling.
25
385. As explained above, State Fund was induced by the foregoing
26 fraudulent schemes to enter into settlement agreements with certain of the
27 Defendants on various dates, including but not limited to the Global Settlements and
28 settlement agreements dated April 20, 2004 and September 1, 2009 with Surgical
#:10890
1 Defendants ("Surgical Settlement Agreements"). State Fund's consent to enter into
2 these settlement agreements was obtained by Defendants' fraud, including the
3 misrepresentations and omissions articulated above. With respect to the Surgical
4 Settlement Agreements, Drobot Sr. has admitted to perpetrating fraud on insurance
5 carriers, including State Fund, since 1998.
6
386. With respect to the Pharmacy Global Settlements, these
7 misrepresentations and omissions included, but were not limited to, those that
8 represented the parties were aware of no fraud in entering into the Global
9 Settlements, as well as the representations that the Pharmacy Defendants were the
10 proper parties in interest and were legally entitled to collect on the claims, which
11 were in the Global Settlements themselves.
12
387. These misrepresentations by Drobot Jr. and Pharmacy Defendants were
13 made with the intent to induce State Fund to rely thereon, and State Fund did in fact
14 rely thereon. State Fund would not have settled these claims if it had known
15 Defendants' fraudulent activities and billings and that Defendants had engaged in the
16 foregoing misrepresentations and omissions.
17
388. Indeed, collectively, the contracts between the Provider Defendants
18 (and other medical providers) and the other Defendants violated California Bus. &
19 Prof. Code §§650, 652, 652.5, 2400, 2052, 4022, 4037, 4043, 4160, and 4170,
20 Insurance Code §§ 750, 754, and 1871.4, California Penal Code §§ 549 and 550,
21 and California Lab. Code §§ 139.3 and 3215, among other laws. Accordingly, they
22 are illegal and therefore void and unenforceable; the Defendants therefore had no
23 standing to submit the bills to State Fund or receive payment for them.
24
389. Consequently, the settlement agreements constitute void and/or
25 voidable contracts, and State Fund seeks rescission of them (including the return to
26 State Fund of payments plus interest), or if rescission is not available, damages in an
27 amount to be proven at trial.
28
#:10891
1
390. In making the above false statements, Defendants acted with a
2 conscious disregard for the rights of State Fund, and thus are guilty of oppression,
3 fraud, and malice pursuant to California Civil Code § 3294. State Fund is entitled to
4 recover punitive damages from Defendants in an amount to be proven at trial.
5
SIXTH CAUSE OF ACTION
6
(Business & Professions Code § 17200)
7
8
391. State Fund incorporates by reference the allegations in paragraphs 1-
9 312, 313-332, 333-355, 356-378, and 379-390 of this Complaint as though fully set
10 forth herein.
11
392. Defendants' schemes involving fraudulent misrepresentations and
12 omissions to State Fund constitute unlawful, unfair, or fraudulent business acts and
13 practices, under what is commonly known as the California Unfair Competition Law
14 ("UCL"), California Bus. & Prof. Code §§ 17200 et seq.
15
393. Each Defendant violated Section 17200's prohibition against engaging
16 in an unlawful act or practice through conduct that violates, among other things,
17 RICO, 18 U.S.C. § 1962, as described herein. Through their unfair and improper
18 practices, State Fund suffered injury by virtue of Defendants' billing.
19
394. Defendants further violated Section 17200's prohibition against
20 engaging in an unlawful act or practice through conduct that violates, among other
21 things:
22
a.
California Bus. & Prof. Code §§ 2400 and 2052 by entering into
23 illegal contracts that would allow the Pharmacy, Surgical, Individual, and
24 Administrative Defendants to exercise lay or corporate control over medical
25 decisions without the required license, which runs afoul of the corporate practice of
26 medicine doctrine (Pharmacy, Surgical, Individual, Administrative Defendants, and
27 Provider Defendants);
28
#:10892
1
b.
California Lab. Code § 139.3, 3215, 3820, directly or by aiding
2 and abetting and conspiring with each other to enter into illegal fee-splitting
3 arrangements and provide Provider Defendants and other physicians with monetary
4 incentives for referrals of patients for clinical laboratory, diagnostic imaging goods,
5 pharmacy goods, evaluations, and consultations, among other services and
6 treatments (All Defendants);
7
c.
California Bus. & Prof. Code §§ 650, 652, and 652.5, directly or
8 by aiding and abetting violations by Provider Defendants and other physicians, by
9 entering into illegal fee-splitting arrangements and by providing Provider
10 Defendants and other physicians with monetary incentives to refer patients to Entity
11 Defendants, to prescribe and dispense particular drugs or provide particular services,
12 and to use particular devices, hardware, implants, or equipment from specified
13 suppliers (All Defendants);
14
d.
California Insurance Code §§ 750, 754, and 1871.4 and Penal
15 Code 549 and 550, by presenting and negotiating false or fraudulent claims and by
16 soliciting, offering, and paying referral fees for the referral of patients to Pacific
17 Hospital or other operations controlled and/or owned by Defendants, e.g., the
18 physician office dispensing programs "managed" by the Pharmacy Defendants, so
19 that they could submit insurance claims to State Fund for reimbursement, or
20 soliciting, accepting, or referring any business to or from any other Defendant with
21 the knowledge that, or with reckless disregard for whether, the Defendant for or
22 from whom the solicitation or referral was made, or the individual or entity who was
23 solicited or referred, intended to violate Section 550 of the Penal Code or Section
24 1871.4 of the Insurance Code (All Defendants).
25
e.
California Bus. & Prof. Code §§ 4022, 4037, 4043, 4160, and
26 4170, by operating as a pharmacy, pharmaceutical wholesaler, and prescriber
27 dispensary and submitting claims for reimbursement without the required licenses,
28 and by aiding and abetting Provider Defendants and other physicians in the violation
#:10893
1 of section 4170 (Pharmacy, Individual, Administrative Defendants, and Provider
2 Defendants).
3
395. In addition to being unlawful and fraudulent, each of Defendants'
4 schemes to defraud State Fund constituted unfair business acts and practices under
5 § 17200.
6
396. Defendants' unfair and unlawful practices were performed in
7 California. For example, the fraudulent billings were sent to and received by State
8 Fund in California.
9
397. State Fund has suffered injury to its business and property as a direct
10 and proximate result of Defendants' unfair and unlawful practices.
11
398. Defendants have fraudulently received up to hundreds of millions of
12 dollars from State Fund as a direct and proximate result of their unfair and unlawful
13 practices. Defendants have been unjustly enriched, and it would be inequitable to
14 allow Defendants to retain the monies they obtained from State Fund through fraud
15 or other unfair practices. Disgorgement should be awarded so as to achieve
16 substantial justice between the parties.
17
18
PRAYER FOR RELIEF
WHEREFORE, State Fund prays for judgment against all Defendants as
19 follows:
20
1.
For compensatory damages in an amount to be proven at trial, and
21 treble damages under the RICO statute in the first cause of action (Surgical
22 Defendant Enterprise/Civil RICO);
23
2.
24 treble damages under the RICO statute in the second cause of action (Pharmacy
25 Defendant Enterprise/Civil RICO);
26
3.
27 treble damages under the RICO statute in the third cause of action (Surgical
28 Defendant Enterprise/Civil RICO Conspiracy);
#:10894
1
4.
2 treble damages under the RICO statute in the fourth cause of action (Pharmacy
3 Defendant Enterprise/Civil RICO Conspiracy);
4
5.
For an award of compensatory damages in an amount to be proven at
5 trial, plus an award of punitive and exemplary damages pursuant to the fifth cause of
6 action (fraud);
7
6.
For restitution and disgorgement of unjust enrichment, plus interest,
8 pursuant to all appropriate causes of action;
9
7.
For rescission of the settlement agreements pursuant to all appropriate
10 causes of action;
11
8.
For an award of attorneys' fees and costs, pursuant to all appropriate
12 causes of action; and
13
9.
For such other and further relief as the Court may deem just and proper.
14
15 Dated: May 8, 2015
IRELL & MANELLA LLP
16
17
18
19
By: /s/ John C. Hueston
John C. Hueston
Attorneys for Plaintiff State
Compensation Insurance Fund
20
21
22
23
24
25
26
27
28
#:10895
JURY TRIAL DEMAND
1
2
As it did in its initial and First Amended Complaint and Second Amended
3 Complaint, State Fund continues to demand a trial by jury of all issues so triable on
4 the claims alleged herein.
5
6 DATED: May 8, 2015
7
Respectfully submitted,
8
9
10
11
By: /s/ John C. Hueston
John C. Hueston
Attorneys for Plaintiff State
Compensation Insurance Fund
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
#:10896
EXHIBIT 1-A
TO THIRD AMENDED
COMPLAINT
0.0
Case
Case8:13-cv-00956-AG-CW
8:13-cv-00956-AG-CW Document
Document281-2
593-2 Filed
Filed11/17/14
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Page2149
of 8ofPage
221 ID
Page
#:5374
ID
#:10897
Case
Document281-2
593-2 Filed
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Page3150
of 8ofPage
221 ID
Page
#:5375
ID
#:10898
Case
Document281-2
593-2 Filed
Filed11/17/14
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Page4151
of 8ofPage
221 ID
Page
#:5376
ID
#:10899
Case
Document281-2
593-2 Filed
Filed11/17/14
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Page5152
of 8ofPage
221 ID
Page
#:5377
ID
#:10900
Case
Document281-2
593-2 Filed
Filed11/17/14
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Page6153
of 8ofPage
221 ID
Page
#:5378
ID
#:10901
Case
Document281-2
593-2 Filed
Filed11/17/14
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Page7154
of 8ofPage
221 ID
Page
#:5379
ID
#:10902
Case
Document281-2
593-2 Filed
Filed11/17/14
05/16/15 Page
Page8155
of 8ofPage
221 ID
Page
#:5380
ID
#:10903
#:10904
EXHIBIT 1-B
TO THIRD AMENDED
COMPLAINT
0.0
#:10905
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (this "Agreement") is made and entered into
effective as of July 10, 2008, by and between Alphatec Spine, Inc., a California corporation, (the
"Company"), and International Implants, LLC a limited liability company (the "Distributor").
RECITALS
WHEREAS, Distributor desires to obtain the right to market and sell the Products
developed by Company in the Territory (as such term is defined below);
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and intending to be legally bound, the parties hereby agree as
follows:
1.
Appointment and Acceptance. Subject to the terms and conditions of this
Agreement, in connection with the distribution, marketing and sale of the products listed in
Exhibit A and the instrumentation associated with such products (the "Products"), the Company
hereby appoints Distributor as the exclusive distributor of the Products (other than as set forth on
Exhibit B) in the territory set forth on Exhibit B attached hereto (the "Territory"), and Distributor
hereby accepts such appointment. Company hereby grants to Distributor, and Distributor hereby
accepts, a non-exclusive, non-royalty bearing license to use any trademarks, trade names or
copyrights owned by the Company (the "Trademarks") solely in connection with the distribution,
marketing and sale ofthe Products in the Territory.
2.
Scope of Appointment. Distributor shall be Company's exclusive distributor in
the Territory (other than as set forth in this Agreement) (without any rights to distribute, market
or sell the Products outside of the Territory).
:!£!:!!!. Unless earlier terminated as provided in this Agreement, this Agreement
3.
shall be for an initial term of two years from the date hereof. The parties to this Agreement may
only extend the term of this Agreement in a written document executed by both parties. It is
agreed by the parties hereto that no inference shall be drawn from the execution of this
Agreement as to any subsequent renewals of this Agreement by either party hereto.
Certain Representations, Warranties and Covenants of the Distributor. Distributor
4.
represents, warrants and covenants that it, its affiliates and agents will comply with all laws,
rules, ordinances, requirements of governmental agencies, and regulations applicable to the
promotion, pricing, marketing, distribution and sale of the Products, including, without limitation
(i) the requirements of the FDA, (ii) the Anti-kickback Safe Harbors established by Office of the
Inspector General of the United States and any comparable state statute, (iii) the applicable
provisions of the federal "False Claims Act" and any comparable state statute. Distributor agrees
that neither it nor any of its affiliates or agents shall offer, grant or withhold any money, object or
service of value to any healthcare professional for purposes of influencing any clinical decision
made by such healthcare professional to use or not use the Products. Distributor agrees that it
shall abide by those portions of ASI's Code of Conduct that address interactions with healthcare
ATEC000001 0
#:10906
professionals (see http://atec.client.shareholder.com/docwnentdisplay.cfm?DocumentiD=900).
In addition, Distributor agrees that it shall promptly notify the Company in the event that the
Distributor, or members of the Distributor's ownership acquire an ownership interest in any
medical facility to which the Distributor sells Products. In no event shall the Distributor sell a
Product for a price that is higher than the price set forth in the Company's then-current published
United State's price list for Products. The Distributor agrees to allow the Company to audit its
books and records, solely for the purposes of confirming Distributor's compliance with this
Section 4, upon two (2) business days' notice. A breach of this Section 4 by Distributor shall
constitute a material breach of this Agreement.
5.
Purchase of Products by Distributor; Consigned Inventory.
5.1
Pricing. Subject to the terms of this Agreement, Company will supply to
Distributor, and Distributor will purchase, Distributor's requirements of Products, subject to
Section 6 below, in such quantities as Distributor shall order for the prices shown on Exhibit A
attached hereto. On or shortly following the anniversary of the Effective Date the parties shall
meet to discuss whether it is appropriate to adjust the prices for the subsequent year. The
negotiation of any new pricing shall be conducted in good faith by both parties and shall take
into account, without limitation, (i) the volume of Products purchased by Distributor in the prior
year and whether such amount exceeded the anticipated amounts, and (ii) the then-current price
list of the Company's Products.
5.2
Samples. Subject to the terms of this Agreement, Company will supply to
Distributor, and Distributor will purchase, Distributor's requirements of Product samples (the
"Samples"), subject to Section 6 below, in such quantities as Distributor shall order for the prices
set forth on the Company's then-current price list for the Samples.
5.3
Consigned Inventory. From time to time, the Company may consign
certain Products or related instrumentation to the Distributor. The Company will retain all right,
title and interest in and to such Products and instrumentation (the "Consigned Inventory"). The
Distributor will hold said Consigned Inventory in a fiduciary capacity. If any Consigned
Inventory is returned damaged, then the Company, to the extent possible, will repair or refurbish
the Consigned Inventory and invoice Distributor for the cost of said repairs and handling. If any
Consigned Inventory is lost, missing, stolen, or cannot be repaired, then the Company shall
invoice Distributor for the 100% of the Company's list price of such Consigned Inventory. Upon
the termination or expiration of this Agreement, or upon the request of the Company, the
Distributor shall immediately, and at its own expense, return all Consigned Inventory in its
possession or control to the Company. The Distributor agrees and acknowledges that all loaner
Consignment Inventory shall be subject to the Company's then-current Loaner Inventory Policy.
The Distributor further agrees and acknowledges that the Company shall not be obligated to
provide it with more than 21 sets of Consignment Inventory at any one time.
5.4
Minimum Purchase Commitment. During each three month period of
the Agreement (each such period a "Quarter"), Distributor agrees to make a minimum purchase
of any mix of Products, including Samples, from Company in the following amounts: Quarter 1 $200,000; Quarter 2 - $200,000; Quarter 3 - $200,000; and Quarter 4 - $200,000 (each amount
2
ATEC0000011
#:10907
for such Quarter shall be referred to as the "Minimum Purchase Commitment"). In the event
Distributor fails to purchase the Minimum Purchase Commitment specified above in the time
periods set forth above, the Company shall have the right to terminate this Agreement for cause
at any time effective upon written notice to Distributor. Within 60 days of the end of the first 12month period of the term of this Agreement, Distributor and the Company shall use their
respective good faith commercial best efforts to agree in writing on the Minimum Purchase
Commitment for the second 12-month period of the term of this Agreement. If Distributor and
the Company are unable to agree on the Minimum Purchase Commitment for such time period,
or any subsequent time period if the Agreement is renewed, then the Minimum Purchase
Commitment for each Quarter shall be equal to 130% of the Minimum Purchase Commitment
for the same Quarter in the preceding year.
5.5
Purchase Orders. Prior to purchasing Products Distributor shall provide
Company with a firm purchase order, a form of which is attached hereto as Exhibit C, specifying
the Products it desires to purchase and a desired shipment date for the Products. Such purchase
order, upon acceptance by the Company, shall be deemed to be incorporated into this Agreement
and any conflicts between the purchase order and the terms of this Agreement shall be governed
by the terms of this Agreement. Such shipment date shall be no less than 60 days from the date
of such purchase order. Company shall have 20 days to notify Distributor of rejection of such
purchase order. The Company shall not have any liability for arising from the rejection of any
purchase order, provided that such rejection was delivered within such 20-day notice period. If
no notice of rejection is given, the binding order shall be considered accepted by Company.
Company shall make commercially reasonable efforts to fill such purchase order with Products
within the scheduled delivery times set forth on such order.
6.
Delivery, Payment Terms and Inspection.
6.1
Delivery. All prices are F.O.B. place of manufacture, and are exclusive of
all transportation, insurance, customs and import duties, value added and sales taxes and other
charges relating to or arising out of the supply of the Products and Samples to Distributor. All
orders for Products and Samples shall contain no provisions that are inconsistent with such terms
or those hereof (and to the extent they do, any such inconsistent provision shall be ineffective).
Upon resale of Products by Distributor, Distributor shall make only those representations, and
give only such warranties that are permitted under the rules, regulations and guidelines of the
FDA.
6.2
Payment Terms. For the time period beginning on the Effective date and
ending six months thereafter, within no more than 120 days of delivery of the Products by the
Company, the Distributor will remit payment to the Company (the "Sales Agent Payment"). In
connection with all orders placed after the date that is six months after the Effective Date, the
Sales Agent Payment shall be due and payable no more than 90 days of delivery of the Products
by the Company. Commencing on the applicable due date, interest shall accrue on any amounts
which remain unpaid at the lower of either the rate of twelve percent (12.0%) per annum or the
maximum rate allowed by applicable law. All invoices, and all payments therefore, shall be in
U.S. dollars.
3
ATEC0000012
#:10908
6.3
Inspection. Distributor will inspect each shipment of Products and
Samples for obvious damage when Distributor receives the shipment. If Distributor finds an
obviously damaged or defective Product or Sample, it will provide written notice to Company,
describe the damage or defect and request a return authorization form. The notice and request
for return must be provided within 10 days following receipt of the shipment (the day of receipt
will be counted as one of the days) or the Products and Samples will be deemed accepted by
Distributor. If there is no notice or request for return by Distributor during the 10-day period, or
the damage or defect is due to the act or omission of Distributor, then Company will have no
obligation to replace the Products and Samples and Distributor will pay for the Product and
Samples. Company will pay for the shipment and insurance for the return of damaged or
defective Products and Samples and for other authorized returns. Subject to Section 10.2, the
only remedy available to Distributor for an obviously damaged or defective Product or Sample is
to receive a replacement. Distributor will not receive any refunds of amounts paid or credits
toward future payments to Company.
7.
Limited Warranty. Without limiting the obligations owed by the Company in
accordance with Section 10.2 and subject to the provisions set forth therein, the Company
warrants that, under normal use and service and when used in accordance with specifications
supplied by Company, the Products sold by Company to Distributor will be of merchantable
quality (the "Limited Warranty"). If any Products sold to Distributor do not comply with such
warranty, Company will, at its option and expense, correct, repair, or replace, refund the
purchase price or issue credit against Distributor's outstanding balance hereunder for any
defective Product provided, that, in all such cases that reasonably sufficient evidence is produced
by Distributor to establish that the Product is defective. The Limited Warranty will be void and
Company will not have any obligation to honor the Limited Warranty, or have liability for any
breach of warranty to Distributor, if (a) Products are (i) used for any use outside the Field, or (ii)
used in combination with any product not manufactured or supplied by Company, or (b) if
Distributor: (z) alters, changes or damages the Products or any component of the Products
(unless consent is obtained pursuant to Section 14); or (y) distributes a Product that it has actual
knowledge is defective or damaged. Distributor shall not pass through Company's Limited
Warranty to end-users of the Products. Distributor shall be free to establish the terms of any
warranty it wishes to extend to its customers. Company shall have no liability to end-user
customers of Distributor under the Limited Warranty.
8.
Warranty Disclaimers and Limitation. OTHER THAN THE LIMITED
WARRANTY, COMPANY MAKES NO OTHER WARRANTIES, EXPRESSED OR
IMPLIED, WITH RESPECT TO THE PRODUCTS AND ALL WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE ARE
EXPRESSLY AND SPECIFICALLY EXCLUDED AND DISCLAIMED.
9.
Limitation of Liability. COMPANY'S LIABILITY UNDER THE LIMITED
WARRANTY SET FORTH IN SECTION 7 OR OTHERWISE WITH RESPECT TO THE
PRODUCTS OR THEIR USE (INCLUDING LIABILITY FOR CONTRACT, NEGLIGENCE
OR OTHERWISE IN TORT) IS LIMITED EXCLUSIVELY TO THE REMEDIES PROVIDED
IN SECTION 7 AND 10, AND NO OTHER RIGHT OR REMEDY WILL BE AVAILABLE
TO ANY PERSON OR ENTITY. IN NO EVENT WILL COMPANY BE LIABLE TO ANY
4
ATEC0000013
#:10909
PERSON OR ENTITY FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL
DAMAGES TO PERSON OR PROPERTY OR LOSS OF PROFITS OF ANY PERSON OR
ENTITY RESULTING FROM ANY CAUSE WHATSOEVER, EVEN IF COMPANY HAS
BEEN ADVISED, KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH
DAMAGES OR LOSS OF PROFITS. NO PERSON OR ENTITY IS AUTHORIZED TO
EXTEND OR IN ANY WAY VARY COMPANY'S OBLIGATIONS HEREUNDER OR IN
CONNECTION HEREWITH. ANY REPRESENTATION OR WARRANTY MADE BY ANY
SALES REPRESENTATIVE, DISTRIBUTOR OR OTHER AGENT OR REPRESENTATIVE
OF COMPANY WHICH IS NOT SPECIFICALLY SET FORTH HEREIN, SHALL NOT BE
BINDING UPON COMPANY. SOME STATES AND JURISDICTIONS OUTSIDE OF THE
UNITED STATES DO NOT ALLOW A LIMITATION OR EXCLUSION OF IMPLIED
WARRANTIES, OR LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES,
SO THE ABOVE LIMITATION OR EXCLUSION MAY NOT APPLY. DISTRIBUTOR
ACKNOWLEDGES THAT THE ALLOCATION OF RISKS AND BENEFITS UNDER THIS
AGREEMENT IS BASED ON, AND THE AMOUNTS PAID UNDER THIS AGREEMENT
WOULD BE GREATER IN THE ABSENCE OF, THE LIMITATIONS DESCRIBED ABOVE.
10.
Indemnity.
10.1 Indemnification by Distributor. Subject to the provisions set forth in
Sections 7, 10 and 20, Distributor shall indemnify and hold harmless Company and its officers,
directors, employees, agents and affiliates (the "Company Indemnitees") from all claims,
damages, losses, costs and expenses (including reasonable attorneys' fees) (the "Liabilities")
which a Company Indemnitee may incur to the extent that such Liabilities arise out of or result
from: (i) the sale or distribution of Products damaged or rendered defective by Distributor, (ii)
any representation or warranty given by Distributor with respect to the Products (other than the
labeling of the Products as approved by the FDA and other than as approved pursuant to Section
14), (iii) the sale by Distributor of a Product as combined with any product not manufactured or
supplied by Company, (iv) Distributor's breach of the terms of this Agreement (including
without limitation Section 4 or sales of the Products outside the Territory), or (v) the negligence,
recklessness, gross negligence, or willful misconduct of any Distributor Indemnitee (as defined
below).
10.2 Indemnification by Company. Company shall indemnify and hold
harmless Distributor and its officers, directors, employees, agents and affiliates (the "Distributor
Indemnitees") from all Liabilities which Distributor may incur by reason of (i) any Products sold
or furnished by Company which result in injury, illness or death to the extent that such claims
arise out of or result from the failure of the Products to meet the Products Limited Warranty set
forth in Section 7, (ii) Company's breach of the terms of this Agreement, (iii) Product recalls (in
accordance with the provisions of Section 20) or (iv) the negligence, recklessness, gross
negligence, or willful misconduct of any Company Indemnitee.
10.3 Indemnification Procedures.
The party seeking indemnification
hereunder (the "Indemnified Party") shall: (i) give the other party (the "Indemnifying Party")
notice of the relevant claim, which notice shall specify with reasonable particularity the basis of
such claim, (ii) cooperate with the Indemnifying Party, at the Indemnifying Party's expense, in
5
ATEC0000014
#:10910
the defense of such claim and (iii) give the Indemnifying Party the right to control the defense
and settlement of any such claim, except that the Indemnifying Party shall not enter into any
settlement that affects the Indemnified Party's rights or interest without the Indemnified Party's
prior written approval. The Indemnified Party shall have no authority to settle any such claim.
11.
Insurance. Distributor will procure and maintain in full force and effect such
liability insurance policies, in such amounts, as are reasonable for distribution companies that
purchase the amount of orthopedic medical devices that are purchased by the Distributor,
protecting Distributor, its officers, employees, representatives and agents against any Liabilities
arising from the operation of Distributor's business as it relates to the Products, including,
without limitation, the sale and distribution of the Products. Distributor shall make provision for
workers' compensation, unemployment and similar coverage with respect to the operation of its
business. Copies of certificate of insurance shall be delivered to Company to show Distributor's
compliance herewith and such certificates shall not be cancelled or materially altered without at
least thirty days' notice to Company. The obligations of this Section shall survive the
termination or expiration of this Agreement for one year.
Statements and Claims. Except as approved in writing by Company or by way
12.
of written communication provided by Company, Distributor shall not engage in any discussion
regarding any Company products other than the Products. Distributor shall refer customer
inquiries regarding all Company products to the Company representative designated in Section
28. Distributor shall limit its statements and claims regarding the Products, including as to
efficacy and safety, to those consistent with the product labeling and the promotional materials.
Distributor shall not add, delete or modify claims of efficacy or safety in the promotion of the
Products, nor make any changes (including underlining or otherwise highlighting any language
or adding any notes thereto) in the promotional materials, nor shall Distributor make any untrue
or misleading statements or comments about the Products or any of Company's or its affiliate's
employees, competitors or any of its or their products. Distributor shall promote the Products in
strict adherence to regulatory and professional requirements, and to all applicable laws,
including, but not limited to, the United States Federal Food, Drug and Cosmetic Act of 1938, as
amended, and the regulations promulgated thereunder (the "Act").
13.
Use of Trademarks. Except as granted in this Agreement, Distributor has no
rights in or to the Trademarks, or any other trademarks, trade names or copyrights owned or used
by Company and Distributor agrees that it shall not in any way infringe upon, harm, contest or
otherwise impair the rights of Company to the Trademarks. All material containing Trademarks
shall be used solely in connection with the distribution, marketing and sale of the Products, and
distinguishing and identifying them. Distributor may not use any of the Trademarks in its
corporate title or the corporate title of any corporation it controls or is affiliated with in
connection with the distribution, marketing or sale of the Products, without the written consent of
Company, which shall not be unreasonably withheld. If it becomes necessary, because of
conflicts with trademarks or trade names used by third parties, to develop non-conflicting marks
and names for certain parts of the Territory, Distributor shall so inform Company, and such new
marks and names shall be developed by Company, and shall belong to Company, subject to
Distributor's license to use them pursuant to the terms ofthis Agreement.
6
ATEC0000015
#:10911
14.
Alterations to Products and Labeling. Without Company's prior written
consent Distributor shall make no changes, additions or alterations whatever to the Products, or
to Company's packaging, Trademarks or labels.
15.
Sales Material and Advertising. Distributor shall: (a) submit to, and obtain the
written approval of, Company with regard to all publications, sales brochures, letterheads,
technical bulletins or other such materials before any such material is used in commerce by
Distributor; and (b) submit to Company for approval any advertising relating to the Products
prepared or used by Distributor. Notwithstanding the foregoing, (i) such approval shall be
presumed if Company has not responded to Distributor's written request therefore within 30 days
of receipt by Company of such written request and (ii) Distributor shall not be required to submit
advertising which has been prepared by Company and which has not been altered by Distributor.
16.
FDA Disbarment. Distributor agrees that in the course of the sale, promotions
and distribution of the Product as contemplated by this Agreement, that it will not use in any
capacity the services of any person who has been debarred or disqualified by the FDA pursuant
to the Generic Drug Enforcement Act of 1992 or any other equivalent or successor state or
federal statutes, rules or regulations. Distributor agrees and undertakes to promptly (i) notify the
Company in writing if it becomes aware that any person involved in the sale, promotion or
distribution of Products pursuant to this Agreement has been debarred or disqualified or
proceedings have been initiated with respect to any debarment or disqualification, and (ii) if
requested by the Company, certify in writing that it has not used the services of any such person
in any capacity in performing the sale, promotion or distribution of the Products.
17.
Non-Solicitation. Distributor shall not, during the term of this Agreement and for
a period of one year thereafter, directly or indirectly, on its own behalf or on behalf of any other
person, partnership, association, corporation or other entity, solicit (either orally or in writing), or
in any manner attempt to influence or induce any employee of the Company, or any of its
subsidiaries or affiliates, to leave the employment of the Company or the respective subsidiary or
affiliate, as the case may be.
18.
Regulatory Approvals, Field of Use, Complaints and Recalls. Company shall
be solely responsible, and shall bear all costs associated with obtaining and maintaining
regulatory approval for Products in the U.S. Distributor shall be solely responsible, and shall
bear all costs associated with billing and for collecting fees associated with distribution of the
Products. The Products shall be sold strictly for use in surgical applications involving the human
spine as approved by the FDA (the "Field"). The Products shall not be sold for use outside of the
Field. Distributor acknowledges that the FDA or other applicable regulatory authorities may
narrow the Field at any time. Distributor agrees (i) to promptly notify the Company in writing of
the following: (a) any serious regulatory action relating to the Products; (b) any material
complaints regarding the Products or the related instrumentation; or (c) any adverse incidents
that may be subject to the United States Food and Drug Administration's (the "FDA") Medical
Device Reporting regulation (to the extent that Distributor is actually aware of any of the
foregoing in (a) through (c)); and (ii) to comply with recalls or general corrective actions
initiated by the Company.
7
ATEC0000016
#:10912
19.
Confidentiality and Intellectual Property.
19.1 Confidentiality. All confidential or proprietary information furnished by
Distributor to Company or any of its affiliates, or by Company to Distributor or any of its
affiliates, during the term of this Agreement ("Confidential Information") including, without
limitation, any specification, design information, Product information, quality assurance plans,
marketing strategies, business plans and strategies, Inventions (whether or not the subject of
Patents), trade secrets, know-how, cost and profit data, distribution and marketing plans, and
business and financial information, shall be kept confidential by the party receiving it. The party
receiving Confidential Information shall not disclose it or make use of it, except for purposes
authorized by this Agreement, nor disclose any Confidential Information to any person or firm
unless previously authorized in writing to do so; provided, however, that the receiving party may
disclose it as necessary to responsible officers, employees and agents for the purposes of
performing its obligations under this Agreement, provided that such employees, officers and
agents shall have assumed like obligations of confidentiality in writing. The receiving party may
disclose Confidential Information as required by government and regulatory agents for the
purposes of performing its obligations under this Agreement, provided that a request is made that
such information be kept confidential by such government or regulatory agents. The foregoing
limitations on the use and disclosure of Confidential Information shall not apply to information
which:
(a)
at the time of disclosure is, or thereafter lawfully becomes, part of the
public domain through no fault, act or omission of the receiving party, its employees,
officers, or agents; or
(b)
was otherwise in the receiving party's lawful possession prior to
disclosure as shown by its written records; or
(c)
is subsequently rightfully obtained by the receiving party from a third
party who has the legal right to disclose it, without an obligation to keep such information
confidential; or
(d)
is released from confidential status by mutual agreement of the parties.
Except as required by law or as contemplated in this Agreement, Distributor and Company shall
keep the existence and terms of this Agreement, as well as any discussions and/or materials
provided in connection herewith, strictly confidential, and shall each make all commercially
reasonable efforts to maintain such confidentiality, including restricting employees' access to the
terms of the Agreement on a "need to know" basis, limiting copies and ensuring that all
employees privy to the terms of this Agreement shall undertake like obligations of
confidentiality. Upon expiration or termination of this Agreement for any reason, the receiving
party shall immediately (in its sole discretion) destroy or deliver to the supplying party all
reproductions, copies, extract or the like of any documents or other media containing any
Confidential Information of the other party.
19.2
Intellectual Property. Distributor acknowledges and agrees that any
patent on the Products acquired by the Company or any of its subsidiaries and any patent
applications on the Products filed by the Company or any of its subsidiaries (the "Patents") are
8
ATEC0000017
#:10913
the sole and exclusive property of the Company and that throughout the term of this Agreement
and following its termination or expiration, Distributor will not do anything inconsistent with
such ownership, will not directly or indirectly challenge the title of the Company or any of its
subsidiaries to the same and will not attack the validity of such Patents. Distributor shall submit
to the Company all inventions, discoveries and ideas concerning any modifications and
improvements relating to the Products and related instrumentation (the "Inventions"). Further,
all such Inventions are, and shall remain, the sole property of the Company. Distributor hereby
assigns to the Company all of its rights, title and interest to Inventions, and shall take such
actions as is necessary to vest such rights and interests in the Company and shall require its
employees and agents to take similar actions to vest ownership of such Inventions in the
Company.
20.
Recalls. Company shall be solely responsible for the costs, decision and
execution for a Product recall. Distributor shall fully cooperate and reasonably assist Company
in the event of a recall. If any, or all, of the Products are recalled due to the act or omission of
the Company, then within 60 days after the recall, Company will replace the recalled Products.
Other than as set forth in Section 10.2, the only obligations of Company for recalled Products are
to: (a) replace the recalled Products; and (b) pay for the shipping and insurance for retrieving the
recalled Products and shipping replacements. Following a recall, if Company cannot replace the
recalled Products or is not able to provide Distributor with replacement Products for more than
60 days, then Company will refund to Distributor: (a) all amounts paid to Company by
Distributor for the recalled Products that are not replaced; and (b) all shipping and insurance paid
by Distributor for the recalled Products. If any, or all, of the Products are recalled solely due to
the act or omission of Distributor, then, in addition to any of the remedies available to the
Company at law or at equity: (a) Distributor will pay for all shipping and insurance to return the
Products to Company; and (b) Distributor shall be obligated to immediately order Products to
replace the recalled Products.
21.
Distributor Independence; Use of Independent Representatives. Distributor
shall operate as an independent contractor, and Distributor is not an agent of Company for any
purpose pursuant to this Agreement. Distributor's employees and agents are not employees of
Company. Distributor does not have the right to use independent representatives, distributors or
any other non-employee third party for the promotion, marketing, advertising, sale or distribution
of the Products.
22.
Termination. This Agreement shall be subject to termination by Company upon:
(a) failure by Distributor to pay any sums due to Company hereunder within 15 days of the
applicable due date, or (b) a material breach by Distributor of any terms and conditions of this
Agreement, which breach is not cured within 20 days of notice thereof by Company. This
Agreement shall be subject to termination by Distributor upon a material breach by Company of
any terms and conditions of this Agreement, which breach is not cured within 20 days of notice
thereof by Distributor. This Agreement shall be subject to termination by either party upon the
bankruptcy or receivership of the other party.
23.
Effect of Termination. Upon termination of this Agreement by the Company
pursuant to Section 22 or Section 26, Distributor shall cease the sale and distribution of the
9
ATEC0000018
#:10914
Products and shall cease using the Trademarks, and the license for use of such Trademarks shall
terminate. Upon any termination of this Agreement by the Distributor pursuant to Section 22 or
Section 26, or upon the expiration of this Agreement: (a) Distributor shall return to Company all
Consigned Inventory, except an amount of Consigned Inventory reasonably necessary for the
Distributor to sell Products for a period of one year after such termination or expiration of this
Agreement (the "Sell-Off Period"), which Consigned Inventory shall be returned at the
expiration of the Sell-Off Period, (b) Distributor shall cease the sale and distribution of the
Products and shall cease using the Trademarks, and the license for use of such Trademarks shall
terminate, provided that the Distributor shall be able to sell its remaining inventory of Products
during the Sell-Off Period, (c) Distributor shall execute and deliver all other documents
reasonably required by Company to accomplish and evidence a complete termination of this
Agreement and the surrender by Distributor of all rights hereunder, and (d) at Company's
election, Company will purchase from Distributor all Products held by Distributor at the price
paid Company for such Products (plus the cost of removing such Products from Distributor's
premises and shipping them to another location in the event that the Agreement is terminated by
the Distributor due to the breach of the Company). The termination or expiration of this
Agreement shall not affect the rights of Company to receive, or the obligation of Distributor to
make payment for, Products ordered by Distributor prior to the termination or expiration date,
whether shipped by Company before or after such date.
24.
Governmental Approvals. Nothing in this Agreement shall require either party
to take any action which would violate any governmental regulation or law to which either of
them is subject. Distributor shall obtain in the Territory such governmental approvals, licenses
or permits as may be necessary to effectuate the purposes of this Agreement, and shall comply
with all local laws, regulations and rulings of governmental bodies having jurisdiction over
Distributor's business, in respect of the sale of the Products, including, without limitation, the
Act.
25.
Taxes. Distributor shall pay all taxes, duties, tariffs or similar charges imposed
on the sale or transfer of the Products by any taxing authority other than any tax on the income of
Company.
26.
Force Majeure. Neither party shall be held responsible for any delay or failure
in performance of any part of this Agreement to the extent such delay or failure is caused by fire,
flood, strike, civil, governmental or military authority, or act of God. When a party's delay or
nonperformance continues for a period of at least ninety (90) days due to any such event, the
other party may terminate this Agreement.
27.
Assignability. This Agreement may not be assigned by either party except with
the written consent of the other party, provided that the Company shall be entitled to assign its
rights and obligations under this Agreement to a successor in interest in connection with a
merger ofthe Company or the sale of all or substantially all of the Company's assets.
Notice. All notices, requests or other communications pursuant to this Agreement
shall be in writing and addressed as follows:
28.
10
ATEC0000019
#:10915
If to Company:
Alphatec Spine, Inc.
2051 Palomar Airport Road, Suite 100
Carlsbad, California 92011
Telephone: 760-431-9286
Facsimile: 760-431-1624
Attention: Chief Operating Officer
with a copy to:
2051 Palomar Airport Road, Suite 100
Carlsbad, California 92011
Telephone: 760-431-9286
Facsimile: 760-431-9083
Attention: Ebun S. Gamer, Esq., General Counsel
If to Distributor:
International Imports, It~~.. _ ~ . ,,._
~,.,.....~'.
:2!03 ? S"..w.
,.A
'{~0
,~
~
Pt-t-
,__,..,._wu .
'H.
c~'
·~ t-.,0
.:::> l,') ~ l. t--o( ....
• -
3/'t''l
~11'"1-
-s,,,
Any notice to be given or to be served upon any party to this Agreement will be deemed
to be given and received when delivered (if the notice is delivered on a day other than a business
day or after 5 p.m. (local time where received) on a business day, then delivery shall be deemed
to have taken place on the first business day thereafter) to the address of each party set forth in
this Section via courier or other means of personal service including, but not limited to,
messenger service, FedEx, DHL or United Parcel Service, or if sent by facsimile (telecopier),
when received as long as the full text of any such notice is (i) readable and (ii) is received in full
prior to 5:00 p.m. (local time where received) on a business day which receipt is confirmed. If
the full readable text is received following 5:00p.m., then the notice will be deemed received at
10:00 a.m. (local time where received) on the next succeeding business day. The telecopier
number for each party is set forth in this Section. The notice information in this Section may be
changed by giving written notice of such change to the other party as provided in this Section for
giving notice. However, unless and until such written notice of change is actually received, the
last address or telecopier number as stated by written notice or as provided in this Agreement, if
no written notice of change has been sent or received, will be deemed to continue in effect for all
purposes.
29.
Injunctive Relief. The parties intend that certain obligations and provisions of
this Agreement, including without limitation those governing: intellectual property rights,
confidentiality, non-competition, exclusivity of distribution rights, the termination of rights upon
the termination or expiration of this Agreement, and the obligation to return Consigned Inventory
upon termination or expiration of the Agreement shall be enforceable by specific performance
and other equitable relief (collectively the "Specific Performance Provisions"). The parties
11
ATEC0000020
#:10916
acknowledge that a party seeking to enforce the Specific Performance Provisions will not have
an adequate remedy at law for the breach of the Specific Performance Provisions, damages alone
will not be adequate for a breach of the Specific Performance Provisions, and such party will
suffer irreparable harm as a result of such breach. Such party shall have the right to attempt to
enforce the Specific Performance Provisions through application for specific enforcement and all
equitable remedies, including, but not limited to, mandatory and prohibitory injunctions.
30.
Scope and Modification. This Agreement represents the entire understanding
between the parties relating to the subject matter hereof, and supersedes all prior agreements
between the parties. There are not terms or representations other than those stated herein. No
modification or waiver of this Agreement shall be valid unless in writing and signed by the party
against whom it is asserted.
31.
Waiver. The waiver by either party of any right hereunder or of a failure to
perform or a breach by the other party shall not be deemed a waiver of any other right or of any
other failure or breach by that other party, whether of a similar nature or otherwise.
32.
Severability. In case one or more provisions of this Agreement are invalid, the
validity of the remaining provisions shall not be affected thereby.
33.
Counterparts. The Agreement may be signed in any nwnber of counterparts, and
by the different parties hereto on separate counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same instrument, and in pleading or
providing any provisions thereof it shall not be necessary to produce more than one such
counterpart. The Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the parties reflected thereon as
the signatories.
34.
Survival. Notwithstanding the expiration or termination of this Agreement for
any reason, rights and obligations which by the nature should survive will remain in full force
and effect. In particular, and without limitation, the following sections shall survive the
expiration or termination of this Agreement: Section 9, Section 10, Section 11, Section 17,
Section 19, Section 20, Section 21, Section 23, Section 25, Section 28, Section 29, Section 34
and Section 35. The following sections shall survive the expiration or termination of this
Agreement through the Sell-OffPeriod: Section 7, Section 12, and Section 18.
35.
Governing Law and Jurisdiction. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of California as a contract
made between two parties made in California to be performed and consummated in California.
The sole and exclusive venue for any action brought under this Agreement shall be in a federal
or state court in San Diego County, California, and the parties agree that such courts shall have
jurisdiction.
[Signature Page Follows]
12
ATEC0000021
#:10917
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first set forth above.
ALPHATEC SPINE, INC.
By: __-=~-------------
DirkKuyper
President and Chi
ATEC0000022
#:10918
EXHIBIT A
PRODUCTS AND PRICES
2
ATEC0000023
#:10919
Part#
169011-014
169011-016
169011-018
169011-020
169011-024
69011-026
69: 12-021
169012-03'
169012-040
169012..()43
169012-046
I69C 3-045
169013-048
169013-051
169013--054
I69C 13-057
169013-060
169013-063
I69C 13-066
169013-069
169014--066I69C 14-064
169014-068
69014-07.
69()
~..()?,
69C 1-081
69C 1-08·
690- l-010
1690· l-012
169040-014
169040-616
169040-018
169040-110
169040-112
59040-114
59040-115
30040-116
59040-11
169040-118
69041-010
69C 41-012
69041-014
69041-016
69()41-618
69045-010
69045-012
69045-016
69045-018
69045-110
69045-11
6!1045-1
6!1045-11
045-1
169046-012
169046-014
169046-016
169046-018
69101
69105
69107
69110
69115
169121
169130
2008 List
Price
Description
1EVEA _- 1-LEVEL :ERVICAL PLATE -14MM
:EVEAL -1-LEVEI :ERVICAL PLATE -16MM
EV AL- 1 LEVE :ERV
. PLA :- 18MM
Ell 7>. _- 1 cE
:Rv
LA : - JMM
-- LE
oRV
LA
1M
E\
- - 1- _E
:RVI
-A : - ~M
tEV A · 1-LEV
:RVIC AL LA :- lMM
tEV AI.- 2-L '=V
CERV
cAfE - 28Mrv
tEV 'AL · 2-L :v
CERV
-ATE -31 Mfv
tE\ :AL - 2-L :V
:::ERVI
-ATE - 34Miv
tEV :AL · 2-L
CERV
LATE- 37Mrv
!REVEAL 2-LEVE CERV CA
LATE- 40MM
EVEAI 2-LEV
1VI AL F LATE- 43MM
.EVEAi 2-LEV
M AL LATE - 46MM
.EVEAI 3-LEV
1V
. PLATE - 45MM
EVEAI - 3-LEV
MC ALP LATE- 48MM
EVEAL- 3-LE\/ . CERVICAL PLATE- 51MM
!REVEAL · 3-LEVE CERVICA. PLATE- 54MM
I REVEAL - 3-LEVEL CERVICA. PLATE- 57MM
!REVEAL - 3-LEVEL CERVICAL PLATE- 60MM
EVEAL- 3-LEVEL r-o::clllr-11. PLATE- 63MM
!REVEAL- 3-LEVEL CERVICAL PLATE- 66MM
EVEAL · 3-LEVEL C :RVIC AL PLA : - 69MM
EVEAL · 4-LEVEL CERVICAL LAT :- 60MM
.EVEAL- 4-LEVE . C :RVIC
LA
- 64MM
~EVEAL · 4-LEVEl
RVIr
LA- ; - 68MM
:VEAL- 4-LEVEl CERV ;A
LA'fE 72MM
:\!Ell _- 4-l VE
1V
LA
-7!
EP _- 4-l :v
1V
LA
EP _- 4-l
1V
LA :EV' _-VA
REV'
1(10MM
EVEP _- lA
~G
REWMMX12MM
EV:AL- VA !lA• -E ANGLE SCREW- 4.0MMX14MM
EV::AL''"
:A 'J( LE SCREW .OMMX ~M
EV':AL-VA :IAE .EA
LESCRE'IV .OMMX ~M
EV::AL-SE F-! I
;seRE\ -4. IMX101
~EVEAL- SE .F-DRIL Nl i SCRE>I- 4 C IMX121
!REVEAL''" ; SCREW -4.0MMX14MM
!REVEALF-!
LIN I
~EW- 4.0MMX1~M~
~EA-F-!
LIN!
~EW
·"""' ...
EVEA _F-!
LIN I
~EW- 4. JMMX1 Mrv
!REVEAL-S F-DRILLING
~EW- 4.0MMX1 M~
REVEAI.-FIXED ANGLESCREW-4.0MMX10MM
REVEAl.- FIXEE ANGLE SCREW- 4.0MM (12MM
REVEAL- FIXEE ANGLE SCREW- 4.UMM ,14MM
REVEAl.- FIXED AI JGL :SCREW- 4.0MMX16MM
REVEAl.- FIXED AI JGL ; SCREWREVEAl.- IARIARI AI GLE SCREW 4. 5MMX10MM
REVEAl. -IIARIARI ANGLE SCREW- 4. 5MMX12MM
AI~G
SCREW- 4.5MMX 14MM
'=VEAL- IIA lA
~VEA _I
AI JG . SCREW- 4.5 '" -••·
::VEA.-VA lA _EAI
SCREW,.,
::VEA .-SF
Rll I~
:::REW-4.5Mt :10
R :vEA . c11 JNG >CREW- 4.5MM: :121
R ::VEAL.,, "'r:
:REW- 1.5MMX14Mrv
OVEA . -:
F-E Ril ~C
Rl W- . MMX lAM
:VEA.-.
F-E RIL
W- . MMX
M
:::VEA . INC
'- 4. MX
::VEA
:1;
\NGL
·4
~Xt
REVEAL · FIXEE ~NGLE CREW · 4.5rv MX14rvlt.t
REVEAl.- FIXED ANGLE SCREW- 4.5MMX1BMrv
Discount Price
1 925
l25
___1_925
1.925
1.925
1,925
1,925
2.188
2JM
2,18f
2,18f
2 18f
::v
2,18(l_
2,456
2.456
2.456
__l,_£56_
2,456
2.456
2,456 - $
2.456 - $
2.719 I$
,'719
2 71'
~
394
394
394
~
_4_;&
438
438
438
438
~
438 I $
35C i $
35C $
3_§[)_
350
35C
494
494
494
494
494
n•••' "'•
~
~38
~38
138
138
481
___1!!_1_
$
48_1 $
481 $
855-:-oo
855.0C
855.00
355.00
355.00
!55.60
355.00
855.00
855.01
855.01
855.01
855.
855.01
855.00
960.00
96(
960.00
960.00
960.00
960.00
960.00
96[.
1,062.00
1.062.00
To62.oo062.
.0620[
1,062.00
1,062.00
142.50
142.5[
142.50
142.50
142.50
!.5(
;o
142.
142.5C
142.5(
142.50
142.50
142.50142.50
142.50
142.50
142.50142.50
142.50
142.50
142.5014: .o14:.
14:. :o
14:. •0
142.50
142.50
142.50
REVEAL-F~SCI<EW 4~~~X~11~B·Mi~MII~~~~~~~~~~il~,illllmllllllllllll·$~~~~4~81·$~~~~14~1:2~. 5~c
REVEAL-A~ATEHOUS"ER
$
931 $
192.913REVEAL TEMPORARY FIX riON PIN
REVEAL ·PIN INS I .K K1 :7-. RACTOR
DElATALOC- FIXED ANGLE DRILL GUIDE
DEUAL DC:- VARIABL ANGLE DRILL GUIDE
REVEAL ANTERIOR :::ERVICA PLATE BENDING PLIERS
DELTALOC- QUICK C ONNEC HANDLE
l_j_
$
363 $
1,344
2,269
_1,269
_1,2§3_
388
37.14
75.88
93.58
110.99
837 35
170.94
"CONFIDENTIAL INFORMATION"
Alphate<: Spine, Inc.
2008 Price List
1 of 17
ATEC0000024
#:10920
Part II
69150
69161
69171
_69172
69140-010
69140-012
69140-014
69140-016
69140-018
69170
69191
63001-120
63001-240
63002-500
63005
63003-26
63003-37
63003-60
63008
63009
63010
63011
63014
63015
63012
63013
63035-08
63035-10
63035-12
63035-14
63035-16
63035-18
63035-20
63035-22
63035-24
63035-26
63035-28
63035-30
63035-32
63035-34
63035-36
63035-38
63035-40
63035-42
63035-44
63035-46
63035-48
63035-50
63035-52
63035-54
63035-56
63035-58
63035-60
63040-08
63040-10
63040-12
63040-14
63040-16
63040-18
63040-20
63040-22
63040-24
63040-26
63040-28
63040-30
63040-32
63040-34
63040-36
63040-38
63040-40
63040-42
63040-44
63040-46
63040-48
63040-50
63040-52
2008 List
Price
Description
REVEAL- TAP
REVEAL- TAPERED HEX DRIVER
REVEAL - UNLOCKING TOOL
REVEAL- SINGLE USE LOCKING TOOL
REVEAL- DRILL- 4.0MMX10MM
REVEAL- LOCKING TOOL
REVEAL- CERVICAL PLATE STERILIZATION CASE
'litll!l~Q~G.I!il'f%
'
SOLANAS- Tl CERVICAL ROD- 3.3MMX120MM
SOLANAS- Tl CERVICAL ROD- 3.3MMX240MM
SOLANAS - Tl 3.3MM - 5.5MM TRANSITIONAL ROD - 500MM
SOLANAS -SET SCREW
SOLANAS- Tl 3.3MM LARGE ADJUSTABLE BRIDGE- 26MM
SOLANAS- TI3.3MM LARGE ADJUSTABLE BRIDGE- 37MM
SOLANAS- Tl 3.3MM LARGE ADJUSTABLE BRIDGE- 60MM
SOLANAS- 3.3MM-5.5MM AXIAL ROD CONNECTOR
SOLANAS - 3.3MM-5.5MM PARALLEL ROD CONNECTOR
SOLANAS- 3.3MM-3.3MM PARALLEL ROD CONNECTOR
SOLANAS- 3.3MM-3.3MM AXIAL ROD CONNECTOR
SOLANAS- CLOSED 3.3MM LATERAL CONNECTOR
SOLANAS- OPEN 3.3MM LATERAL CONNECTOR
SOLANAS -CERVICAL HOOK - 6MM
SOLANAS -CERVICAL HOOK - 5MM
SOLAN AS- Tl POLY AXIAL PEDICLE SCREW- 3.5MMX8MM
SOLANAS - Tl POLYAXIAL PEDICLE SCREW- 3.5MMX1 OMM
SOLANAS- Tl POLYAXIAL PEDICLE SCREW- 3.5MMX12MM
SOLANAS - Tl POLYAXIAL PEDICLE SCREW- 3.5MMX16MM
SOLANAS- Tl POLY AXIAL PEDICLE SCREW- 3.5MMX18MM
SOLAN AS - Tl POLY AXIAL PEDICLE SCREW- 3.5MMX22MM
SOLANAS - T1 POLYAXIAL PEDICLE SCREW- 3.5MMX24MM
SOLANAS - Tl POLY AXIAL PEDICLE SCREW- 3.5MMX32MM
SOLAN AS - Tl POLYAXIAL PEDICLE SCREW- 3.5MMX42MM
SOLAN AS - Tl POLY AXIAL PEDICLE SCREW - 3.5MMX60MM
SOLANAS- Tl POLY AXIAL PEDICLE SCREW -4.0MMX8MM
SOLAN AS - Tl POLY AXIAL PEDICLE SCREW- 4.0MMX 14MM
SOLANAS- Tl POLYAXIAL PEDICLE SCREW -4.0MMX18MM
SOLANAS - Tl POLY AXIAL PEDICLE SCREW- 4 OMMX28MM
SOLAN AS - Tl POLYAXIAL PEDICLE SCREW - 4.0MMX32MM
SOLAN AS- Tl POLYAXIAL PEDICLE SCREW- 4.0MMX36MM
SOLANAS - Tl POLYAXIAL PEDICLE SCREW· 4.0MMX42MM
'.
-
'--
-<-'1:
. ~;·
Discount Price
$
$
$
$
$
$
$
$
$
$
$
294
1 288
319
163
394
394
394
394
394
319
1 BOO
$
$
$
$
$
$
$
$
$
$
$
56.52
86.93
23.68
18.66
51.36
83.83
86.70
100.69
118.87
124.48
1 435.69
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
_}
290
469
950
213
1,540
1,540
1,540
1 200
1 200
1 200
1 200
740
740
938
938
1 456
1 456
1 456
1 456
1 456
1 456
1 456
1 456
1,456
1 456
1 456
1 456
1456
1456
1456
1 456
1 456
1,513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
1 513
$
$
$
$
$
$
$
$
$
$
113.00
183.00
371.00
83.00
800.00
800.00
800.00
468.00
468.00
468.00
468.00
289.00
289.00
366.00
366.00
568.00
568.00
568.00
568.00
568.00
568.00
568.00
568.00
568.00
568.00
568.00
568.00
568.00
568.00
568.00
568.00
568.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
•'
··""'"'
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2008 Price List
2 of 17
ATEC0000025
#:10921
Part#
2008 List
Price
Description
63040-54
63040-56
63040-58
63040-60
63043-20
63043-24
63043-28
63043-32
63043-36
63043-40
63043-44
63043-48
63043-50
63135-20
63135-22
63135-24
63135-26
63135-28
63135-30
63135-32
63135-34
63135-36
63135-38
63135-40
63135-42
63135-44
63135-46
63135-48
63135-50
SOLAN AS- Tl POLYAXIAL PEDICLE SCREW- 4.0MMX54MM
SOLANAS - Tl P LYAXIAL PEDICLE SCREW- 4.35MMX24MM
S LAN AS - Tl POLYAXIAL PEDICLE SCREW- 4.35MMX28MM
SOLAN AS - TJ POLYAXIAL PEDICLE SCREW- 4.35MMX44MM
SOLANAS - Tl POLY AXIAL SMOOTH SHANK PEDICLE SCREW- 3.5MMX20MM
SOLAN AS - Tl POLY AXIAL SMOOTH SHANK PEDICLE SCREW- 3.5MMX22MM
SOLAN AS - Tl POLY AXIAL SMOOTH SHANK PEDICLE SCREW- 3.5MMX24MM
SOLANAS- Tl POLYAXIAL SMOOTH SHANK PEDICLE SCREW- 3.5MMX26MM
SOLAN AS - Tl POLYAXIAL SMOOTH SHANK PEDICLE SCREW- 3.5MMX30MM
SOLAN AS- Tl POLY AXIAL SMOOTH SHANK PEDICLE SCREW- 3.5MMX32MM
SOLANAS - Tl POLYAXIAL SMOOTH SHANK PEDICLE SCREW- 3.5MMX34MM
SOLAN AS - Tl POLYAXIAL SMOOTH SHANK PEDICLE SCREW- 3.5MMX36MM
SOLANAS - Tl POLYAXIAL SMOOTH SHANK PEDICLE SCREW- 3.5MMX40MM
SOLANAS- Tl POLY AXIAL SMOOTH SHANK PEDICLE SCREW- 3 5MMX44MM
10603
63901
63903
63905
63907-35
63907-40
63909
63910
63911
63912
63913
63914
63916
63917
63918
63919-01
63919-02
63920
63924-15
63925
63928-10
63928-12
63928-14
63928-16
63928-18
63931
63932
63933
63934
63941
63942
63943
63944
63945
63947
63948
63949
63950
63951
63998
63997
63926
63927
63907-30
63907-43
63928-08
63946-35
SOLANAS- SMALL DEPTH GAUGE
SOLANAS- POL YAXIAL SCREWDRIVER
SOLANAS -SET SCREW INSERTER
SOLANAS ·DRILL GUIDE
SOLANAS- TAP- 3.5MM
SOLANAS- TAP- 4.0MM
SOLANAS • HOOK TRIAL
SOLANAS - HOOK HOLDER
SOLANAS - ROD HOLDER· 3.3MM
SOLANAS- ROD BENDER- 3.3MM
SOLANAS -SCREW HEAD POSITIONER
SOLANAS- SCREW BONE AWL
SOLANAS -ROD CUTIER- 3.3MM
SOLANAS- COMPRESSOR
SOLANAS- DISTRACTOR
SOLANAS - IN SITU BENDER -LEFT
SOLANAS- IN SITU BENDER- RIGHT
SOLANAS- KERRISON ROD PERSUADER
SOLANAS- 3.0MM ROD TEMPLATE 15CM
SOLANAS- BALL TIP PROBE
SOLANAS- FIXED DEPTH DRILL- 2.1MM X 10MM
SOLANAS- FIXED DEPTH DRILL -2.1MM X 12MM
SOLANAS- FIXED DEPTH DRILL- 2.MM1 X 16MM
SOLANAS -UNIVERSAL HANDLE
SOLANAS - ROD PUSHER
SOLANAS -HOOK IMPACTOR
SOLANAS- UNIVERSAL T-HANDLE
SOLANAS- ADJUSTABLE BRIDGE DRIVER
SOLANAS- ADJUSTABLE BRIDGE HOLDER
SOLANAS- TORQUE LIMITING HANDLE- 10 IN-LB
SOLANAS- TORQUE LIMITING HANDLE - 25 IN-LB
SOLANAS- ADJUSTABLE BRIDGE COUNTER TORQUE
SOLANAS -ADJUSTABLE DRILL STOP
SOLANAS- TORQUE LIMITING T-HANDLE- 40 IN-LB
SOLANAS- SET SCREW TORQUE SHAFT
SOLANAS- DOMINO HEX DRIVER
SOLANAS -COUNTER TORQUE
SOLANAS- CERVICAL/THORACIC INSTRUMENT TRAY
SOLANAS- CERVICAL/THORACIC IMPLANT TRAY
SOLANAS- PEDICLE PROBE
SOLANAS - OFFSET CONNECTOR COUNTER TORQUE
SOLANAS- TAP- 3.0MM
SOLANAS- TAP- 4.3MM
SOLANAS- ADJUSTABLE DRILL- 3.5MM X 20-50MM
rt.tta.· ·
Jt!O..
$
$
~
..
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Discount Price
'>'<-
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
590.00
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1 513 $
1513 $
1 513 $
1 513 $
1 513 $
1513 $
993
2188
1363
463
531
531
1188
1 225
925
925
988
2019
1 981
825
994
931
931
2 788
200
531
331
331
331
331
331
1 656
988
1 988
750
375
1 000
1875
1 875
1 188
500
1 875
375
375
1188
2 500
2 500
750
1 188
531
531
331
494
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
"..
450.59
523.47
259.13
273.93
114.57
108.81
204.14
344.09
230.81
612.49
155.40
268.96
628.68
1 061.73
514.30
144.01
160.83
892.17
70.21
97.15
77.72
45.79
74.77
68.72
129.25
446.19
276.19
385.01
476.34
136.29
400.00
454.97
454.97
475.00
419.53
626.45
77.36
131.03
483.77
726.70
1 327 04
337.22
438.06
112.29
106.78
143.13
46.21
Alpha tee Spine, Inc.
2008 Price List
3 of 17
ATEC0000026
#:10922
Part#
61001-012
61001-014
61001-016
61001-018
61001-020
61001-022
61001-024
61001-026
61002-024
61002-026
61002-028
61002-030
61002-032
61002-034
61002-037
61002-040
61002-043
61002-046
61003-039
61003-042
61003-045
61003-048
61003-051
61003-054
61003-057
61003-060
61003-063
61003-066
61003-069
61004-060
61004-064
61004-068
61004-072
61004-076
61004-080
61004-084
61005-085
61005-090
61005-095
61005-100
61240-010
61240-011
61240-012
61240-013
61240-014
61240-015
61240-016
61240-017
61240-018
61240-019
61240-020
61340-010
61340-012
61340-014
61340-016
61340-018
61345-010
61345-012
61345-014
61345-016
61345-018
61440-010
61440-012
61440-014
61440-016
61440-018
61540-010
61540-012
61540-014
61540-016
61540-018
61545-010
61545-012
61545-014
61545-016
61545-018
2008 List
Price
Description
.'
'
'
TRESTLE- 1-LEVEL ANTERIOR CERVICAL PLATE- 12MM
TRESTLE- 1-LEVEL ANTERIOR CERVICAL PLATE -16MM
TRESTLE -1-LEVEL ANTERIOR CERVICAL PLATE -18MM
TRESTLE -1-LEVEL ANTERIOR CERVICAL PLATE- 20MM
TRESTLE - 2-LEVEL ANTERIOR CERVICAL PLATE - 46MM
TRESTLE- 3-LEVEL ANTERIOR CERVICAL PLATE - 69MM
TRESTLE- 4-LEVEL ANTERIOR CERVICAL PLATE - 68MM
TRESTLE - 5-LEVEL ANTERIOR CERVICAL PLATE - 85MM
TRESTLE- VARIABLE ANGLE SELF-DRILLING SCREW- 4.0MMX10MM
TRESTLE- VARIABLE ANGLE SELF-TAPPING SCREW- 4.0MMX10MM
TRESTLE- FIXED ANGLE SELF-DRILLING SCREW- 4.0MMX10MM
TRESTLE- FIXED ANGLE SELF-TAPPING SCREW- 4.0MMX10MM
TRESTLE- FIXED ANGLE SELF-TAPPING SCREW -4.0MMX14MM
'
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2 238
2 238
2238
2,238
2 238
2 238
2 238
2 238
2 600
2 600
2600
2 600
2 600
2 600
2 600
2600
2 600
2 600
2 913
2 913
2 913
2 913
2 913
2 913
2 913
2913
2 913
2913
2913
4 225
4 225
4 225
4 225
4 225
4 225
4225
4 563
4,563
4 563
4 563
494
494
494
494
494
494
494
494
494
494
494
456
456
456
456
456
519
519
519
519
519
494
494
494
494
494
456
456
456
456
456
519
519
519
519
519
Discount Price
$
$
$
$
$
$
$
$
$
$
$
I$
'$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
j
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
873.00
8'73.00
873.00
873.00
873.00
873.00
873.00
873.00
1 014.00
1 014.00
1 014.00
1 014.00
1 014.00
1 014.00
1 014.00
1 014.00
1 014.00
1 014.00
1136.00
1136.00
1136.00
1 136.00
1136.00
1136.00
1136.00
1136.00
1136.00
1,136.00
1136.00
1 648.00
1 648.00
1 648.00
1 648.00
1 648.00
1 648.00
1 648.00
1 780.00
1 780.00
1 780.00
1 780.00
193.00
193.00
193.00
193.00
193.00
193.00
193.00
193.00
193.00
193.00
193.00
178.00
178.00
178.00
178.00
178.00
202.00
202.00
202.00
202.00
202.00
193.00
193.00
193.00
193.00
193.00
178.00
178.00
178.00
178.00
178.00
202.00
202.00
202.00
202.00
202.00
2008 Price List
4 of 17
ATEC0000027
#:10923
Part#
2008 List
Price
Description
61340-011
61340-013
61340-015
61340-017
61340-019
61340-020
61345-011
61345-013
61345-015
61345-017
61345-019
61345-020
61440-011
61440-013
61440-015
61440-017
61440-019
61440-020
61540-011
61540-013
61540-015
61540-017
61540-019
61540-020
61545-011
61545-013
61545-015
61545-017
61545-019
61545-020
TRESTLE- VARIABLE ANGLE SELF-TAPPING SCREW- 4.0MMX11 MM
TRESTLE- VARIABLE ANGLE SELF-TAPPING SCREW -4.0MMX17MM
TRI;_STLE- VARIABLE ANGLE SELF-TAPPING SCREW- 4.5MMX11MM
TRESTLE - FIXED ANGLE SELF-DRILLING SCREW- 4.0MMX20MM
TRESTLE- FIXED ANGLE SELF-TAPPING SCREW -4.0MMX11MM
TRESTLE- FIXED ANGLE SELF-TAPPING SCREW- 4.5MMX11 MM
61700
61706
61707
61708
61709
61710
61711
61713-010
61713-011
61713-012
61713-013
61713-014
61713-015
61713-016
61713-017
61713-018
61713-019
61713-020
61715
61717
61718
61719
61720
61721
TRESTLE- ANTERIOR CERVICAL PLATE STERILIZATION SET
TRESTLE- TEMPORARY PIN
TRESTLE- AWL 8MM WITH STOP
TRESTLE -AWL FOR DRILL GUIDE
TRESTLE- HANDLE AWL
TRESTLE- VARIABLE ANGLE DRILL GUIDE
TRESTLE- FIXED ANGLE DRILL GUIDE
TRESTLE- SS FIXED 2.3MM DRILL BIT -10MM
TRESTLE- SS FIXED 2.3MM DRILL BIT- 11 MM
TRESTLE - SS FIXED 2.3MM DRILL BIT- 12MM
TRESTLE- SS FIXED 2.3MM DRILL BIT- 14MM
TRESTLE - 4.0MM TAP 1OMM
TRESTLE- SELF RETAINING SCREWDRIVER
TRESTLE- QUICK CONNECT HANDLE
TRESTLE- CERVICAL PLATE REMOVAL TOOL
TRESTLE- PLATE BENDER CERVICAL PLATE
REs· LE - SLI ER ALIGNMEN. DCL
a· •. ·· !.IXA'IrfO~TEM
ZODIAC- Tl 5.5MM ADJUSTABLE BRIDGE- XX-SMALL
ZODIAC- Tl 5.5MM ADJUSTABLE BRIDGE- X-SMALL
ZODIAC- Tl 5.5MM ADJUSTABLE BRIDGE- SMALL
ZODIAC- Tl 5.5MM ADJUSTABLE BRIDGE- MEDIUM
ZODIAC- Tl 5.5MM ADJUSTABLE BRIDGE- LARGE
ZODIAC- Tl STANDARD SET SCREW
ZODIAC - Tl SET SCREW- 8.5MM
ZODIAC- Tl ALLOY BROACHED ROD - 5.5MMX40MM
ZODIAC - Tl ALLOY BROACHED ROD - 5.5MMX50MM
ZODIAC- Tl ALLOY BROACHED ROD- 5.5MMX60MM
ZODIAC • Tl ALLOY BROACHED ROD- 5.5MMX1 OOMM
,
~
11-2028
11-2037
11-2042
11-2053
11-2075
62005
62005-85
62001-04
62001-05
62001-06
62001-07
62001-08
62001-09
62001-10
62001-11
62001-12
62001-13
62001-15
62001 17
62001-20
62001-25
&AliiJ\f,;.RJO~ll!e~atuJ.!'\lGi:S,Y~NS
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
'Si(:u.'
·-~J~~'
,_
178.00
178.00
178.00
178.00
178.00
178.00
202.00
202.00
202.00
202.00
202.00
202.00
193.00
193.00
193.00
193.00
193.00
193.00
178.00
178.00
178.00
178.00
178.00
178.00
202.00
202.00
202.00
202.00
202.00
202.00
~~:,~~~tf!l
$
',.,.,
456 $
456 $
456 $
456 $
456 I$
456 $
519 $
519 $
519 $
519 $
519 $
519 $
494 $
494 $
494 $
494 $
494 $
494 $
456 $
456 $
456 $
456 $
456 $
456 $
519 $
519 $
519 $
519 $
519 $
519 $
'
$
$
$
$
$
..
Discount Price
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
I~~~F~l~--
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1 869
200
413
413
456
850
850
350
350
350
350
350
350
350
350
350
350
350
350
725
675
1 313
1 500
488
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
:
"'1'
1 988
1 988
1 988
1 988
1 988
288
288
531
531
531
531
531
531
531
531
531
531
531
531
531
531
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
934.38
78.00
74.10
69.94
297.78
394.49
399.29
137.00
137.00
137.00
137.00
137.00
137.00
137.00
137.00
137.00
137.00
137.00
82.54
124.78
290.24
869.61
658.13
139.58
•
~:w·•
775.00
775.00
775.00
775.00
775.00
95.00
95.00
118.75
118.75
118.75
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
Alphatec Spine. Inc.
2008 Price Ust
s of t7
ATEC0000028
#:10924
Part#
62001-50
62002-04
62002-05
62002-06
62002-07
62002-08
62002-09
62002-10
62002-11
62002-12
62002-13
62002-15
62002-17
62002-20
62002-25
62002-30
62002-45
62002-50
62003-04
62003-05
62003-06
62003-07
62003-08
62003-09
62003-10
62003-11
62003-12
62003-13
62003-15
62003-17
62003-20
62004-04
62004-05
62004-06
62004-07
62004-08
62004-09
62004-10
62004-11
62004-12
62004-13
62004-15
62004-17
62004-20
62004-03
62004-035
62004-045
62004-055
62004-065
62004-075
62014-03
62014-04
62014-05
62014-06
62014-07
62014-08
62014-09
62014-10
62014-11
62014-12
62014-13
62014-35
62040-20
62040-25
62040-30
62040-35
62040-40
62040-45
62045-25
62045-30
62045-35
62045-40
62045-45
62045-50
62045-55
62055-25
62055-30
2008 List
Price
Description
ZO lAC- CP Tl BROACHED ROD- 5.5MMX40MM
ZODIAC - CP Tl BROACHED ROD - 5.5MMX50MM
ZODIAC- CP Tl BROACHED ROD - 5.5MMX70MM
ZODIAC- CP Tl BROACHED ROD- 5.5MMX80MM
ODIAC- CP Tl BROACHED ROD- 5.5MMX90MM
ZODIAC- CP Tl B~QACHED ROD- 5.5MMX100MM
ZODIAC- Tl ALLOY PRE CONTOURED BROACHED ROD - 5.5MMX40MM
ZODIAC- Tl ALLOY PRECONTOURED BROACHED ROD- 5.5MMX60MM
ZODIAC- Tl ALLOY PRE CONTOURED BROACHED ROD- 5.5MMX70MM
ZODIAC- Tl ALLOY PRECONTOURED BROACHED ROD - 5.5MMX90MM
ZODIAC- Tl ALLOY PRECONTOURED BROACHED ROD - 5.5MMX200MM
ZODIAC- CP Tl PRE CONTOURED ROD - 5.5MMX40MM
ZODIAC- CP Tl PRECONTOURED ROD - 5.5MMX50MM
ZODIAC· CP Tl PRECONTOURED ROD- 5.5MMX60MM
ZODIAC- CP Tl PRE CONTOURED ROD· 5.5MMX70MM
ZODIAC- CP Tl PRE CONTOURED ROD- 5.5MMX80MM
ZODIAC- CP Tl PRE CONTOURED ROD - 5.5MMX90MM
ZODIAC- CP Tl PRECONTOURED ROD- 5.5MMX100MM
ZODIAC- CP Tl PRECONTOURED ROD - 5.5MMX170MM
ZODIAC - CP Tl BROACHED ROD- 5.5MMX65MM
ZODIAC - CP Tl PRECONTOURED NON-BROACHED ROD - 5.5MMX30MM
ZODIAC- CP Tl PRECONTOURED NON-BROACHED ROD- 5.5MMX40MM
ZODIAC- CP Tl PRECONTOURED NON-BROACHED ROD - 5.5MMX90MM
ZODIAC- CP n PRECONTOURED NON-BROACHED ROD- 5.5MMX100MM
ZODIAC- CP Tl PRECONTOURED NON-BROACHED ROD - 5.5MMX11 OMM
ZODIAC- CP Tl PRE CONTOURED NON-BROACHED ROD - 5.5MMX3.50MM
ZODIAC- Tl POLYAXIAL PEDICLE SCREW- 4.0MMX20MM
ZODIAC- Tl POLYAXIAL PEDICLE SCREW- 4 OMMX25MM
ZODIAC- Tl POLY AXIAL PEDICLE SCREW- 4.0MMX35MM
ZODIAC - Tl POLYAXIAL PEDICLE SCREW- 4.5MMX30MM
ZODIAC - Tl POLY AXIAL PEDICLE SCREW- 4.5MMX45MM
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
~
..
$
$
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
531
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
631
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
Discount Price
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
142.50
118.75
118.75
118.75
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
118.75
118.75
118.75
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
118.75
118.75
118.75
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
118.75
118.75
118.75
118.75
118.75
142.50
118.75
118.75
118.75
118.75
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
2008 Pnce Lisl
Bof 17
ATEC0000029
#:10925
Part#
62055-35
62055-40
62055-45
62055-50
62055-55
62055-60
62065-25
62065-30
62065-35
62065-40
62065-45
62065-50
62065-55
62065-60
62075-25
62075-30
62075-35
62075-40
62075-45
62075-50
62075-55
62075-60
62075-65
62075-70
62075-75
62075-80
62085-25
62085-30
62085-35
62085-40
62085-45
62085-50
62085-55
62085-60
62085-65
62085-70
62085-75
62085-80
62145-25
62145-30
62145-35
62145-40
62145-45
62155-25
62155-30
62155-35
62155-40
62155-45
62155-50
62155-55
62165-25
62165-30
62165-35
62165-40
62165-45
62165-50
62165-55
62165-60
62175-25
62175-30
62175-35
62175-40
62175-45
62175-50
62175-55
62175-60
62345-50
62365-30
62365-35
62365-40
62365-45
62365-50
62365-55
62375-30
62375-35
62375-40
62375-45
2008 List
Price
Description
ZODIAC - Tl POLYAXIAL PEDICLE SCREW - 6.5MMX40MM
ZODIAC- Tl POLYAXIAL PEDICLE SCREW -7.5MMX35MM
ZODIAC- Tl HIGH-TOP POLY AXIAL PEDICLE SCREW- 4.5MMX25MM
ZODIAC- Tl HIGH-TOP POLYAXIAL PEDICLE SCREW- 4.5MMX30MM
ZODIAC - Tl HIGH-TOP POLYAXIAL PEDICLE SCREW- 5.5MMX35MM
ZODIAC- T1 HIGH-TOP POLYAXIAL PEDICLE SCREW- 6.5MMX25MM
ZODIAC - Tl HIGH-TOP POLY AXIAL PEDICLE SCREW- 6.5MMX50MM
ZODIAC- Tl HIGH-TOP POLYAXIAL PEDICLE SCREW -7.5MMX25MM
ZODIAC- Tl HIGH-TOP POLY AXIAL PEDICLE SCREW - 7.5MMX30MM
ZODIAC- Tl HIGH-TOP POLY AXIAL PEDICLE SCREW -7.5MMX35MM
ZODIAC- Tl SACRAL POLYAXIAL PEDICLE SCREW- 4.5MMX50MM
ZODIAC - Tl SACRAL POLY AXIAL PEDICLE SCREW- 6.5MMX35MM
ZODIAC- Tl SACRAL POLY AXIAL PEDICLE SCREW- 6.5MMX50MM
ZODIAC- Tl SACRAL POLY AXIAL PEDICLE SCREW- 7.5MMX30MM
ZODIAC - Tl SACRAL POLY AXIAL PEDICLE SCREW - 7.5MMX40MM
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1 719
1 719
1 719
1 719
1 719
1 719
1719
1 719
1 719
1 719
1 719
1719
1 719
1 719
1719
1 719
1,719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 719
1 981
1 981
1 981
1 981
1981
1 981
1 981
1 981
1 981
1981
1 981
1 981
1 981
1 981
1 981
1 981
1 981
1 981
1 981
1 981
1 981
1 981
1 981
1 981
1 981
1 981
1 981
1 981
2119
2119
2119
2119
2119
2 119
2 119
2119
2119
2 119
2,119
Discount Price
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
712.50
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
773.00
826.00
826.00
826.00
826.00
826.00
826.00
826.00
826.00
826.00
826.00
826.00
Alphalec Spine, Inc.
2008 Price List
7 ol17
ATEC0000030
#:10926
Part#
62375-50
62375-55
62375-60
62901
62902
62903
62904
62910-45
62910-55
62910-65
62910-75
62914
62915
62916
62917
62918
62919
62921
62922
62923
62926
62927
62979
62928
62929
62931
62932
62933
62935
62936
62938
62940
62941
62942
62943
62944
62945
62948
62951
62952
62953
62954
62956
62957
62958
62959
62963
62989
65458
66426
66446
62911-L55
62911-L65
62911-L75
62911-R55
62911-R65
62911-R75
62930-15
62930-45
62912
62946
62947
62913
62910-85
62924-15
62934
62996
62997
62998
62999
92901
92902
92903-02
92904
92905
92906
2008 List
Price
Description
ZODIAC - Tl SACRAL POLYAXIAL PEDICLE SCREW- 7.5MMX50MM
ZODIAC- Tl SACRAL POLYAXIAL PEDICLE SCREW -7.5MMX60MM
;S'
'·
ZODIAC- STOPPED BONE AWL
ZODIAC- ICE PICK
ZODIAC- CURVED BONE PROBE
ZODIAC -STRAIGHT BONE PROBE
ZODIAC- POLYAXIAL SOLID TAPER TAP 4.5
ZODIAC- POLY AXIAL SOLID TAPER TAP 6.5
ZODIAC- POLY AXIAL HEAD POSITIONER
ZODIAC- POLY AXIAL ROD PUSHER
ZODIAC- POLYAXIAL ROD INSERTER
ZODIAC- LARGE ROD HOLDING FORCEPS
ZODIAC- POLYAXIAL ROD ROTATING WRENCH
ZODIAC -POLYAXIAL INSITU ROD BENDER
ZODIAC· ROD ROCKER
ZODIAC- POLYAXIAL CANNULATED ANITOROUE
ZODIAC- REDUCER
ZODIAC· T-HANDLE RATCHET/ QUICK COUPLE
ZODIAC· CROSSLINK HEX DRIVER
ZODIAC -ADJUSTABLE BRIDGE DRIVER
ZODIAC- POLYAXIAL COMPRESSOR
ZODIAC- POLYAXIAL DISTRACTOR
ZODIAC- POLYAXIAL SET SCREW INSERTER
ZODIAC -BONE MARKER INSERTER
ZODIAC· BRIDGE GAUGE
ZODIAC- MODULAR RATCHETING AXIAL HANDLE
ZODIAC· SCREW MEASUREMENT BLOCK
ZODIAC- SET SCREW REMOVER
ZODIAC - HIGH TOP SCREW BREAKER
ZODIAC - POLYAXIAL SCREW REMOVER
ZODIAC -BRIDGE TORQUE ADAPTER
ZODIAC- ZODIAC MODULAR TORQUE WRENCH- 40 INILB AXIAL HANDLE
ZODIAC- HIGH TOP SCREW INSERTER
ZODIAC- TABLE TOP ROD CUTTER COLLAPSIBLE HANDLE BLACK
ZODIAC - MONOAXIAL SCREWDRIVER
ZODIAC- HOOK PUSHER
ZODIAC· HOOK IMPACTOR
ZODIAC - PEDICLE TRIAL
ZODIAC· LAMINA FINDER
ZODIAC· CURVED HOOK HOLDER
ZODIAC- MODULAR TORQUE WRENCH- 100 INILB 'T' HANDLE
ZODIAC- POINTED THORACIC PEDICLE PROBE
ZODIAC -BLUNT THRACIC PEDICLE PROBE
ZODIAC· HOOK IMPACTOR DRIVER ASSM
ZODIAC- 8.5 CANNULATED ANTITORQUE
MIRAGE -BALL TIP PROBE STRAIGHT
MIRAGE - TT BRIDGE/CLAMP HOLDER
MIRAGE -FRENCH ROD BENDER
ZODIAC -DRILLING BONE MARKER LEFT 5.5MM
ZODIAC - DRILLING BONE MARKER LEFT 6.5MM
ZODIAC- DRILLING BONE MARKER LEFT 7.5MM
ZODIAC- DRILLING BONE MARKER RIGHT 5.5MM
ZODIAC • DRILLING BONE MARKER RIGHT 6.5MM
ZODIAC- DRILLING BONE MARKER RIGHT 7.5MM
ZODIAC- ROD TEMPLATE 15cm LENGTH 5mm DIA
ZODIAC • ROD TEMPLATE 45cm LENGTH 5mm DIA
ZODIAC ·POLY AXIAL SCREW INSERTER
ZODIAC -HIGH TOP POLYAXIAL SCREWDRIVER
ZODIAC - MONOAXIAL SCREWDRIVER
ZODIAC -POLYAXIAL SCREWDRIVER
ZODIAC. POLYAXIAL SOLID TAPER TAP 8.5
ZODIAC. 3.0MM ROD TEMPLATE
ZODIAC- T-HANDLE TORQUE WRENCH
ZODIAC- ADJUSTABLE BRIDGE CADDY
ZODIAC- DEFORMITY CASE
ZODIAC -IMPLANT TRAY
ZODIAC - INSTRUMENT TRAY
ZODIAC - POLY AXIAL SCREW HEAD POSITIONER
ZODIAC- LARGE ROD HOLDER
ZODIAC- IN SITU ROD BENDER- RIGHT
ZODIAC - EXTENDED ROD ROCKER
ZODIAC- PERSUADER-KERRISON STYLE
ZODIAC -PARALLEL COMPRESSOR
.
':•
Discount Price
$
$
$
2119
2119
2119
$
$
$
$
$
$
$
$
$
$
$
$
$
$
813
813
750
750
860
860
860
860
750
688
688
875
688
625
750
813
5 688
1125
563
1 325
1 000
1 000
563
750
250
1148
313
438
438
500
250
938
1 000
2000
813
563
813
563
563
1 063
875
750
750
1 063
563
388
563
1 375
500
500
500
500
500
500
250
250
1 094
750
813
875
860
400
2 000
1 081
2 938
2 938
2688
88
688
313
594
1 719
1 875
$
$
$
$
$
$
$
$
$
826.00
826.00
826.00
'"
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
!_
$
$
$
$
$
$
$
$
$
$
l>
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
_t
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
t
$
$
$
$
$
$
$
$
$
95.72
178.83
245.63
168.39
75.80
54.83
50.74
61.88
91.85
192.63
340.72
380.75
223.04
225.96
295.88
272.19
1131.77
536.31
85.39
213.38
452.20
460.98
127.96
190.47
19.42
509.80
10.38
91.69
212.03
90.99
43.75
676.62
266.19
1 929.57
215.09
298.72
1 012.17
221.25
503.36
222.74
669.81
288.56
156.80
451.72
489.23
35.60
331.59
316.15
34.20
28.15
30.23
32.90
26.94
27.30
44.64
40.75
189.91
444.78
533.51
331.66
66.17
45.49
67491
540.63
1 098.90
897.22
796.38
291.58
507.22
335.79
437.61
1 347.09
1 290.41
'CONFIDENTIAL INFORMATION'
2006 Price list
8 of 17
ATEC0000031
#:10927
Part#
92907
92908
92909
92912
92920
92922
92910-40
92910-45
92910-55
92910-65
92910-75
92910-85
92913
92914
92915
92916
92917
92918
92919
92921-01
92921-02
92923
92925
92927
92933
92938
92943
92953
92954
92958
92959
92981
92983
92984
1641~-008
164113-1)10
,64113~)12
164113~
14
164113- 08
1641~110
164113-112
164113-114
:6411~-008
16< 114-0 10
16< 114-012
16< 114-C 14
16' \H-108
164114-110
11<
,6~
1§-0
'64115-014
6411 i-108
·64· i-11•
6lli i-111_
•64115-114
64116-008
164116-0
164__11§-01_2
6411 i-014
6411 -108
164116-110
,641_1 i-112
ZODIAC -PARALLEL DISTRACTOR
ZODIAC- SET SCREW INSERTER
ZODIAC- FRENCH ROD BENDER
ZODIAC- DEGENERATIVE IMPLANT STERILIZATION CASE
ZODIAC- HOOK HOLDER SIDE HOLDING
ZODIAC- TABLE TO? ROD CUITER
ZODIAC -4.0MM SOLID TAPERED POLYAXIAL TAP
ZODIAC- 4.5MM SOLID TAPERED POLY AXIAL TAP
ZODIAC - 5.5MM SOLID TAPERED POLY AXIAL TAP
ZODIAC -6.5MM SOLID TAPERED POLYAXIAL TAP
ZODIAC- 7.5MM SOLID TAPERED POLYAXIAL TAP
ZODIAC- 8.5MM SOLID TAPERED POLYAXIAL TAP
ZODIAC- DEGENERATIVE INSTRUMENT STERILIZATION CASE 1
ZODIAC -LONGER STRAIGHT HOOK HOLDER SS
ZODIAC -LONGER ANGLED HOOK HOLDER SS
ZODIAC- 4.0MM BLUNT BONE PROBE
ZODIAC- 4.0MM POINTED BONE PROBE
ZODIAC- TRANSVERSE PROCESS HOOK STARTER SS
ZODIAC- HOOK IMPACTOR
ZODIAC -CORONAL ROD BENDER -LEFT
ZODIAC -CORONAL BENDER-RIGHT
ZODIAC -ROD CUTTER
ZODIAC- DEFORMITY INSTRUMENT STERILIZATION CASE
ZODIAC - ROD PUSHER
ZODIAC- DEGENERATIVE INSTRUMENT STERILIZATION CASE 2
ZODIAC- SET SCREW DRIVER
ZODIAC- T-HANDLE TORQUE WRENCH
ZODIAC- PEDICLE HOOK STARTER
ZODIAC- LAMINA HOOK STARTER
ZODIAC- POINTED THORACIC PEDICLE PROBE
ZODIAC- BLUNT THORACIC PEDICLE PROBE
ZODIAC- STOPPED BONE AWL
ZODIAC -CURVED BONE PROBE
ZODIAC -STRAIGHT BONE PROBE
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
}JOVE_ki-CC PEEK MEDIUM SPACER"'" """""''
NOVEL-LCC PEEK MEDiiJM SPACER- 1n
10MM
NOV
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;.ARGE )PACER- 1:
!X?O~ 1X14f\ M
:- OMMX. <;MMXR
;::- OMMX:!5MMX1 MM
lV
:.K
:MM
r.r:-P EKM DIU\11
'A'
:-Int..
NOVEL-LCC-PEEK5
MEDIUMSP~ ::RINOVEL-L ; -PEEK 5 DEGREES MEDIL M SPACER- 11
<X10MM
iNnVEI
:-PEEK 5 DEGREES MEDIL M SPACER- 11
jX12MM
INnV~
r.r:- PE;EK 5 Qf:GRJ:Q MEDIL I SPACER(14MM
IN lVEL-L :-PEEKLARGESPACER- 2MM:
lV :L-L ; -PEEK LARG :SPACER
2MMX2 iMMX101 IM
EL-L :-PEEK ...ARC SPACER- 1?.. •Ax? ~"AX12 11\1
EL-L :- PE;EK LA_8( :SPACER14
~OVEL-LCC-PEEK5DEGREES LARGESPAC
1:
INOVEL-LCC-PEEK5n~r::l'l~
..ARGESPACER- 1:<1\'lM· 5Ml,1X10MM
INOVEL-L :::c:- PEEK 5 DEGREES LARGE SPACER 12MMX25MMX12MM
164116-114 INOVEL-LCC:- PEEK 5
!64005
164060
164061
164Q§!j
164073
1641174
!64091
:641J92
l641m9
2008 List
Price
Description
1 875
1163
1 063
1 094
1 844
1 531
860
860
860
860
860
860
1144
1144
294
519
519
581
731
1 269
1 269
975
1134
263
1138
638
1172
238
519
425
675
131
319
313
Discount Price
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$_
$
$
$
$
$
4,369
1.704.00
.704.0C
1,I01,00
1,704.00
1,704.00
1.704.0C
~9
4,369
4,369
4,369
4.369
4,369
4,369
4.369
4.369
4,369
4,369
4,369
4.369
_1_.1M,OO
1,704.00
1, 704.00
1.704.00
1,704.00
1,704.00
1,704.00
1.70400
~9
4,36Jl
4,369
4,3li9
4,3!19
4.
4,309
4,369
4,369
4,369
4.369
1 292.77
182.85
702.46
756.51
450.58
1 099.89
168.47
286.92
273.83
259.88
274.52
263.58
1 473.55
234.67
106.98
205.98
6.00
418.74
531.67
921.11
728.97
706.80
827.00
241.48
1 072.03
143.33
585.94
439.70
432.69
211.94
301.61
255.39
214.22
209.59
~0
$
$
4,~9
.369
.369
.369
,3§_9
4,369
1,704.()0
1,704. )0
1,704. lO
1,704. lO
1.704.
1.704.00
1,704-QO
1,704.00
1,704.00
1.704.00
1,7()1Jl0
1,704.00
1,704.00
1.704.00
1,70~0
1,704.00
DEGREE~ ...AR_ill: SP6Q_E:8_::~~,X~(1.4MMlBIIE!iaHBIIIi!IIIIIII~$·Bl4~1,,3~69~-·1,,7~041. 0~0
INl lVEL- INSERTER
lA IP- LONG KEI ~RISON
lA IP- STRJ GH- PI"
rARY RC
IP JOWl ANGL
PI" JITAR
JVE_l.__-s· RAIGHT E~ DPLATE
!NOVEL-ANGLED EN[ 'LATE_B.I
INOVEL- STRAIGH' . ADJUSTER
INOVEL- rHREAI
REMOVER
$
1_
$
JGEUR
'RONGEI JR
:ASP
;p_
li'J0Vj:b_:_ST~61QH-
1~3 __$_
_2,900
2,650
2,650
731
'31
_&1
863
663
$
$
996.93
MM7
574.09
575.00
31.
241.65
2~ l1
229.53
184.74
2008 Plice List
9of17
ATEC0000032
#:10928
Part#
2008 List
Price
Description
85890
85911
64010-005
64010-006
64010-007
64010-008
64010-009
64010-010
64010-011
64010-012
64010-013
64010-014
64010-015
64030-003
64030-004
64030-005
64030-006
64030-007
64030-008
64030-009
64030-010
64030-011
64030-012
64030-013
64030-014
64030-015
64043-008
64043-010
64043-012
64043-014
64100-01
64100-02
64100-03
64100-04
64193-108
64193-110
64193-112
64193-114
64195-108
64195-110
64195-112
64195-114
64100
NOVEL-TL ·SLAP HAMMER
NOVEL-TL • T-HANOLE
NOVEL· ROTATING DISTRACTOR- SIZE 5
NOVEL- ROT AT NG DISTRACT OR- SIZE 6
NOVEL- ROTATING DISTRACT OR- SIZE 7
NOVEL- ROTATING OISTRACTOR- SIZE 8
NOVEL- ROTATING DISTRACTOR- SIZE 10
NOVEL- ROTATING DISTRACT OR· SIZE 12
NOVEL- ROTATING OISTRACTOR ·SIZE 13
NOVEL- ROTATING DISTRACT OR- SIZE 15
NOVEL- ROTATING SHAVER- SIZE 3
NOVEL- ROTATING SHAVER· SIZE 9
NOVEL- BOX CHISEL -10MMX8MM
NOVEL· BOX CHISEL· 10MMX10MM
NOVEL- BOX CHISEL -10MMX12MM
NOVEL- BOX CHISEL- 10MMX14MM
NOVEL-LCC -CADDY
NOVEL-LCC ·CADDY LID
NOVEL-LCC ·TRIAL CADDY
NOVEL-LCC- TRIAL CADDY-LID
NOVEL-LCC ·MEDIUM 5 DEGREES TRIAL- 6MM
NOVEL-LCC ·MEDIUM 5 DEGREES TRIAL- 110MM
NOVEL-LCC ·MEDIUM 5 DEGREES TRIAL -12MM
NOVEL-LCC- MEDIUM 5 DEGREES TRIAL -14MM
NOVEL-LCC- MEDIUM 5 DEGREES TRIAL- 8MM
NOVEL-LCC- MEDIUM 5 DEGREES TRIAL -10MM
NOVEL-LCC ·STERILIZATION CASE
64813-006
64613-009
64813-010
64813-011
64613-012
64813-013
64613-014
64615-008
64615-009
64815-010
64815-011
64815-012
64815-013
64815-014
64617-008
64617-009
64817-010
64817-011
64817-012
64817-013
64817-014
64835-009
64835-010
64835-011
64835-012
64835-013
64835-014
64835-015
64837-009
64837-010
64837-011
64837-012
64837-013
NOVEL-SO- PEEK SMALL SPACER· 9MMX22MMX8MM
NOVEL-SO- PEEK SMALL SPACER- 9MMX22MMX9MM
NOVEL-SO- PEEK SMALL SPACER· 9MMX22MMX1 OMM
NOVEL-SO -PEEK SMALL SPACER- 9MMX22MMX11 MM
NOVEL-SO - PEEK SMALL SPACER- 9MMX22MMX13MM
NOVEL-SO -PEEK MEDIUM SPACER- 9MMX25MMX6MM
NOVEL-SO -PEEK MEDIUM SPACER- 9MMX25MMX9MM
NOVEL-SO -PEEK MEDIUM SPACER- 9MMX25MMX1 OMM
NOVEL-SO -PEEK MEDIUM SPACER- 9MMX25MMX11 MM
NOVEL-SO- PEEK MEDIUM SPACER- 9MMX25MMX12MM
NOVEL-SO -PEEK LARGE SPACER - 9MMX28MMX8MM
NOVEL-SO -PEEK LARGE SPACER- 9MMX28MMX9MM
NOVEL-SO- PEEK LARGE SPACER- 9MMX28MMX10MM
NOVEL-SO- PEEK LARGE SPACER - 9MMX28MMX14MM
NOVEL-SO- PEEK MEDIUM WIDE SPACER- 9MMX25MMX9MM
NOVEL-SO- PEEK MEDIUM WIDE SPACER· 9MMX25MMX11MM
NOVEL-SO- PEEK LARGE WIDE SPACER- 9MMX28MMX9MM
NOVEL-SO - PEEK LARGE WI DE SPACER- 9MMX28MMX11 MM
NOVEL-SO- PEEK LARGE WIDE SPACER· 9MMX28MMX12MM
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
,£
-
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
531
1 094
781
781
781
781
781
781
781
781
781
781
781
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
531
138
531
138
275
275
275
275
275
275
275
275
2100
4 369
4369
4 369
4 369
4 369
4 369
4 369
4 369
4 369
4369
4 369
4 369
4,369
4 369
5 994
5 994
5 994
5 994
5 994
5 994
5 994
5 994
5 994
5 994
5 994
5 994
5 994
5 994
5 994
5 994
5994
5 994
5 994
Discount Price
$
$
$
$
$
$
$
$
_j_
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$_
$
$
$
$
$
$
$
$
$
$
$
287.43
304.81
150.29
170.38
117.69
138.55
146.85
116.56
116.45
115.42
135.65
130.75
107.10
187.80
145.38
149.15
185.10
111.85
126.47
113.72
136.78
155.57
112.46
146.48
121.73
116.55
445.21
409.55
373.74
438.23
370.57
55.54
277.22
43.45
45.60
57.56
52.99
57.75
54.05
64.55
63.90
59.37
1117.16
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
1 520.00
2008 Price LIS!
10 of 17
ATEC0000033
#:10929
Part#
64837-014
64837-015
64005
l4073
l4o74l409f
l4C l2
64093
[85890
185911
164010-005
[64010-006
[64010-007
[64010-009
[64010-010
[64010-011
l6401(j:Qf2[64010-013
[64010-014
16-4010-015
~.tn'ln..nr
tA"n'>nJin~
164030-006
I64C 30-01
1640:10-01
164
[64043-014
[64800-01
[64895-008
164895-010
[64895-011
164895-012
164895-013
164895-014
2008 List
Price
Description
$
$
[NOVEL · INSERTER
OVEL ·STRAIGHT END PLAT :RASP
OVEL · ANC .ED ENDPLA
~SP
OVEL- s· ~IGH AC us· rEI
OVEL- THF :ADED REMOI/ER
OVEL STF ~IGHT IMPAC OR
[NOVEL
·SLAP HAMMER
'NO\/EL· T-HANbLE
NOVELDISTRA
OR- SIZE 5
[NOVELIAIINI.:i DISTRACT OR- SIZE 6
[NOVEl.- ROTATING DISTRACTOR- SIZE 7
:NQVEj_- ROTA. lNG DISTRACTOR- SIZE 8
'NOVEl.- RC fA lNG DISTRA OR- Sl ~E 9
,NOVEl.- ROTA' lNG DISTRAC fOR- SIZE 10
[NOVEL- ROTA' G Dl. fRACTOR- SIZE 11
!NOVEl- ROT AT G ll~ fRA
OR· SIZE 12
[NOVEL- ROTA'-~~ G DISTRAC' OR· SIZE 13
!NOVEL- ROTA. I~ G DISTRAC OR· SIZE 14
:NOVEL- ROTA 'lNG DISTRACTOR- SIZE 15
OVE.- RC fA 'lNG SHAVER- SIZE 3
NOVE.- ROTA lNG SHAVER- SIZE 4
!NOVEL- ROTA lNG SHAVER- SIZE 5
INOVEL- RC fA lNG SHAVER- SIZE 6
!NOVEL- KUIAIIN~i SHAVER- SIZE
[NOVE.- Kl IAIINI.:i iAVE l- SIZE 8
~OVE
ROTATING
IA\i :- Z:E 9
OVEl ROTA ~G
l: 1C
OVEL RC fATII~G
IA\i i.1
~OVEL ROTATII~G
IA\i :R• 12
[NOVE - RC fATI ~G >HAVER- SIZI. 13
[NOVEL·KliAIIr iSHAVER-SIZ~·14
OVE
IAIIr
SHAVER- SIZE 15
iOV
OX HI! . - 1
OV
OX HI! •• 1 n>AUY1 nu•
OV
lX HI! • -10MMX12MM
INOV
·BOX HI~ . - 10MMX14MM
[NOVE SD- CADDY MEDIUM
I NOVE 3D -CADDY cl[
INO:VE :0- MEDIUM TRIAL- 8MM
INOVE
>D- MEDIUM TRIAL- 9MM
!NOVE [~SD- MEDIUM TRIAL- 10MM
I NOVEL-~ >- MH JM fRIA.- 11MM
INOVEL-!' D- MEDIUM TRIAL- 12MM
[NOVEL-SO- MEDIUM TRIAL- MM
INOVEL-SD -IUMTRIAL- MM
5 994
5 994
$
1 520.00
1 520.00
1:2fr Is
996.93
?~
$
Discount Price
$
$
73
73
86;
66;
1.09- I$
78
78
]13_
78
78
78
287.43
304.81
150.29
1711.38
117.69
138.55
116.56
116.45
115.42
78
78
78
13C.75
107.10
187.80
91
91
9
J)1_
9
T4ITs
9'
91
91
149.15
18~ 10
)5
12€~
11 72
136.78
155.57
.46
11
$
409.
373.74
438.23
375.97
60.72
77.49
-69.60
82.79
71.13
. 80.08
69.52
98.34
801
_1()1
261
26! Is
26! I$
.1ill IS
26! Is
26! I$
26! I$
164612-007 NOVEL-TI.- PEEK SMAL . SPA, :R- 22MMX1 0111 \1X7MM
164612-008 NOVEL-- . -PEEK SMAL . SPA• :R- 22MMX1·
164612-009 NOVEL-T'.- PEEK SMA . SPA• :R- 22MMX· n'-> IXI'lM'->
164612-010 NOVEL-T.- PEEK ;MAL . SPACER- 22MMX10tli \1X10MM
164612-011 NOVEL-l . - P::EK SMALL SPACER- 22Mti.IX10 ~MX1 M
164612-012
DVEL-: .-P::EK SMAI .SPACER-22MfiiiX10 ~MX·
[64612-013 NOVEL-- .-P::EK ;MAl .SI'ACER-Z~Mtli {11 ,MX
16461:~-014
DVEL-- . - P::EK ;MAL SPACER- 22MfiiiX11 ,MX
16461:
DV
.- "EI:K
;MAL iPACER-22MMX1Q
rMM
16461:~-1·
i0\7
.- "E
iAl
"AC i·
16461:1-10!
DV
.::E
iAl
"AC :[64612-11'
NOV
.5
::E
IAl
"AC :IM
0 AC
164612-111 NOVEL-l .-PE
:5DEG :E
Al
~M
164612-112 NOVEL-, .-PEEKS
SMAL .SPAC i_-22
,X12 M
164612-113 NOVEL-' . -PEEK 5 DEGREES SMALL SPACER- 22MMX1 OMMX13MM
[64612-114 NOVEL-- .-PEEK5 JEGREESSMAL .SPACER 22MMX
164614-007 INOVEL-- . -PEEK MEDIUM SPACER- 24MM;
[NOVEL- . -PEEK MEDIUM SPACER- 24MMXI
INOVEL- . -PEEK MEDIUM SPACER- 24MMX1
[64614-010 INOVEL-T .-PEEK MEDIUMS
:ER- 24MMX
164614-011 INOV L-~ . -PEEK MEDIUMS ACER- 24MMX10MMX11 MM
164614-012 INOV L- . -PEEK MEDIUM iPACER- 24MMX10MMX12MM
[64614-013 INOV L-- . -PEEK MEDIUM
ACER- 24MMX10MMX13MM
[64614-01• !NOV L-l
PEEK MEDIUM iPACER- 24MMX10MMX14MM
164614-01. INO\i
. -PEEK MEDI JM ;pp CER- ~4MMX10MMX15MM
INC
. -PEEK MEDI' JM SPP CER- ~4MMX10MMX16MM
164614-01 IN• lV
·PEEK MEDI JM iPP CER- ~4MMX OMMX 7MM
[64614-107 INC
. PEEK 5 DEGREES MEDI' I SPACER- 24MMX OMMX7MM
6,794
6,794
6,794
6,79•
6.79•
_§,79•
6,79•
6
6
$
$
6,
jl,
6,794
6,79•
6,79•
6,851
6.851
6.851
jl,!l§t
6.85(
6.85!
6,85!
6.85(
6,85(
6,85f
6.851
6,85f
.52C 00
1,520.00
1.
1.00
f 1.00
1.
oc
1,
1.00
1,520.00
1. 0.00
1 1.00
i
100
1
1.00
1520.0(
1,520.00
1.520.00
f.52obo
1.520.
.520 00
.520.00
.520 .OC
,520.00
1.520.00
1,520.00
.520.00
1.520.00
.52( 00
.52(.00
1,520.00
2008 Price List
11 of 17
ATEC0000034
#:10930
Part#
2008 List
Price
Descrl ptlon
164614-108
164614-109
16431 -1
1643-{l:f
16431 1-1
16431 1-1
164614-114
164614:115
164614-116
164614-117
164616-007
64616-008
NOVEL- .-PEEK 5 DEGREES MEDIUM SPACER- 24MMX10MMX8MM
NOVEL-" . -PEEK 5 DEGREES MEDIUM SPACER- 24MMA UMMA>lMM
NOVEL-' . 'DEGREE . ME
M SPACER- 14 ~M .10MMX10M
NOVEL-TL"'"'~
.M
:R.1C
NOVI L- . , Ml
oR.1C
<t
NOVI L- . EGREE , Ml
:R.1C
(1:
INOVEL-- . -PEEK 5 EGREE ' Ml liU~
:R - 24MT\, 1C IX14 VIM
MEDIUM iPACER- 24MMX10MMX15MM
INOVEL- . -PEEK 5 n~ "'"'~
MEDIUM PACE ~- 24MMX10MMX16MM
INOVEL- . -PEEK 5
!NOVEL-! .-PEEK5DEGREESMEDIUM PACE :-24M
17MM
INOVEl . -PEEK LARGE SPACER- 28M ~X10T\,IMX7MM
INOVEl-Tl ·PEEK _AI ~GE SPACER · 28MI1J<.ll
INOVEL
. PEEK _AI .GE SPACER · 28MMX
64616-010 INOVEL-TL ·PEEK _AI GE SPACER- 28MMX10MMX10MT\,
64616-011 INOVEL-TL ·PEEK _AI GE SPACER · 28MMX10MMX11 MM
'6• lfs:o1
INOVEL-TL 'EEK _ARGE SPACER 28MMX10MMX12MM
1EI
OV
_A tGE iPA :ER · 28MMX10MMX13MM
l16-01
1EI
l16-C
'JV
.A
PA
· 28
IX .OMMX
16-01
34616-016
64616-017
16-10
16-1
l16-10
16•1616-1
164616-11
64•l16-11
64•l16-11
64•)16-11
164616-115
i64if't6-116
164616-1
i64618-007
164618-008
164618-009
164618-010
164618-011
164618-012
164618-013
f64B18-C 14
164618-015
164618l64il"18- J1
164 18164618164618-020
164618-107
16461 1-108
~
6,
6,
6,
6,
$
156
>6
>6
)6
__fhll.~
6,856
6,856
6,856
~
_6,90_Q $
6,900
6,900
6,9C
6,900
~
6 900
$
1.52000
1.520.00
f.520.00
.520.0C
.520.0C
1,520.00
1.520.00
1.520.00
.520 OC
1,520.00
1.520.00
1 520.01
520.
1 520.
1 520.01
1.520.00
1.520.00
1
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1
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NOVEL-T.- EEK 5
"'"'~
Jl !G )PACER- 28MMX nMMX M'-'
EEK 5 DEGREES Jl
)PACER- 28MMX10MMXou•.
NOVEl
NOVEL
EEK 5 DEGREE:
~G
)PACER- 28MMX10MMX OMM
INOVEl-T
EEK5 )FC':RFP Jl ~G )PACER-28M ~X JMMX MM
INOVEL-T.- PEEK 5 DEGREE; LARGE iPACER- 28MM: .10MMX12MM
INOVEL . -PEEK 5 DEGREE -ARGE SPACER- 28MM.. 10MMX131VM
INOVEL . -PEEK 5 DEGREE .AFtGE SPACER- 28MM: :1c
INOVEL-TL ·PEEK 5 DEGREE _ARGE SPA :ER- 28M :10MMX151V
'JV L-TL-PEI :5
LARGESPACER-28MMX10MMX161VM
OV L:TL. PEl :5
.ut< ,:; .ARGE SPACER· 28MMX10MMX17MM
OV L. PEl X-LARGE SPACER·
OV
• -PEl X-LARGE SPACER·
INOVEL-T •• PEEK X-LARGE SPACER- 30MMX1nMMXAM~
INOVEL-T.- P~: X-LARGE iPA• :ER- 30MMX1m X1 OMM
:X-LARGE iPA• :ER- 30MMX10~ X11MM
INOVEL- . - P
:X-LARGE ;p :ER- 30MMX 0~ K12MM
INOVEL-L- P
INOVEL-L- PEEK X ARC:F iPA• :ER- 30MMX10~ 1X13MM
INOVEL-TL- PEEK X-LARGE SPA• :ER- 30MMX10MMX14MM
INOVEL- _-PEEK K-LARGE SPA• :ER- 30MMX10MMX15MM
INOVEL-TL- PEEK X-LARGE SPA :ER- 30MMX OMMX16~1M
INOV
•K-LARGE S 'ACER- 30MMX1011MX17~1M
INOV
.K-LAR
:E :-30 IMX1C IIV
INOV
.K-LAR
:E :.K-LAR
:E :INOV
INOVEL . - P :E ; DEG
LA
:!NOVEL • -PEEK 5 DEC El ; X-LAR<
:-3
164618-1 2 NOVEL-l . •
:5
164618-1 3 NOVEL-TI.- PEEK 5 JEGREE
164618-114 NOVEL-TI.- PEEK 5 DEGREES
64618-1 5 NOVEL-TI.- PEEK 5 DEGREES
64618-116 NOVEL-TL- PEEK 5 JEGREE
64618-117 NOVEL-TI.- PEEK 5 DEGREES
64618-118 NOVEL- TL- PEEK 5 DEGREE
64618-119 NOVEL-l . -PEEK 5 JEGREE
164618-120 !NOVEL-l . -PEEK 5 DEGREE
64010-005
64010-006
64010-0
64010-008
164010-009
164010-010
164010-011
1640 0-012
164010-013
164010-014
164 10-015
l64l20-03
164620-04
164620-05
164626-06
164620=07
Ji
Discount Price
-ARC SPACER- 30M"X OMM;(12MM
.ARC SPACER ·30M' IX10MM; :13MM
X-LARC SPACER- 30M' IX10MM; :14MM
X-LARGE SPACEF:- 30MMX10MM; :15MM
<-LARGE SPACEF:- 30MMX OMM; :16MM
X-LARGE SPA' :EF:- 30MMX: OMM; 17MM
X-LARGE SPACEF.- 30MMX10MM>:18MM
X-LARGE SPACER- 30MMX10MMX19MM
X-~SPACER · 30MMX·
iJlQI
6,900
6,900
,9C
_j,QQQ_
6,90C
6,900
6,90(
6.90C
_MQQ_
6,90Q_
6,956
6,956
~
6,956_
6,9: I$
I$
I$
_§.Jl: §_
6,956
6,956
6,956
~
1,956
6.9
6,956
6,956
6,956
6.956
6,956
6,956
$
$
$
$
$
6,956_
6,956 $
781
78'
78
78
_lll1
781
78
78
'JR- Sl; . 5
NOVEL- ROTAliNG JISTRA
NOVEL- ROTA' lNG DISTRA :TOR- SIZE 6
NOV . 1A IINu 01: TRACTOR· iiZE 7
NOV . I A Nu
iRAC OR.8
NOV . I
Dl: "RA< OR:9
INOV
OTA' lNG Dl: ~RACTOR. 1C
INOVEL- ROTA lNG DIS''RACTOR- SIZ . 11
INOVEL- ROTATING Dl!iT~A :TOR- SIZE 12
INOVEl.- RC rA' INu
~ACTOR- SIZE 13
INOVEL- ROTA' lNG
~A
OR- SIZE 14
OVEL- ROT. lNG Dl!iTRA :TOR- SIZE 15
OVEL- . )(
-iAVER- 3MM
OVEL-l . -iAVER- 4MM
OVEL-~ . -iAVER- iMM
!NOVEL-- . -iAVER- iMM
!NOVEL- . -DISC SHAVER- 'MM
781
781
61C
610
$
$
610
610
$
$
1
1,520.00
1.520.00
1.520.00
.52C OC
1.520.0C
1.520.00
1.520.00
1.52C.
1.52(.00
1,520.00
.520.0
.520.0
.52(
.520.0
1,520.00
1.520.00
1.52C.OO
1,520.00
1.520.00
1.520.00
1.S20.66
1,520.00
1.520.00
1.520.00
.520.00
1. i20.0C
1.520.00
1.520.00
1.52C.
1,520.00
1.520.00
1.520.00
1,520.00
1.520.00
1.520.00
150.29
170.38
11".69
138.55
146.85
116.56
116.45
115.42
135.65
130.75
107.10
153.
153.0(
153.00
153.00
153.00
2008 Price List
12 of 17
ATEC0000035
#:10931
Part#
64620-08
64620-09
64620-10
64620-11
64620-12
64620-13
64620-14
64620-15
64620-16
64620-17
64621
64622-01
64622-02
64630-01
64630-02
64634-02
64634-01
64639
64640-01
64640-02
64641
64630-03
64640-03
64640-04
64600
85889
85890
85901
85911
85912
2008 list
Price
Description
NOVEL-TL- DISC SHAVER- 8MM
NOVEL-TL- DISC SHAVER -10MM
NOVEL-TL- STRAIGHT ENDPLATE RASP
NOVEL-TL- LEFT CURVED RASP
NOVEL-TL -RIGHT CURVED RASP
NOVEL-TL- STRAIGHT TAMP
NOVEL-TL- CURVED TAMP
NOVEL-TL- 30 DEGREEES INSERTER
NOVEL-TL- STRAIGHT INSERTER
NOVEL-TL- BONE GRAFT PACKING BLOCK
NOVEL-TL- SMALL BONE GRAFT TAMP
NOVEL-TL- MEDIUM BONE GRAFT TAMP
NOVEL-TL- IMPLANT RETRIEVER
NOVEL-TL- BAYONETED TAMP
NOVEL-TL- LARGE BONE GRAFT TAMP
NOVEL-TL- XLARGE BONE GRAFT TAMP
NOVEL-TL- STERILIZATION CASE
NOVEL-TL- IMPACT HAMMER
NOVEL-TL- SLAP HAMMER
NOVEL-TL- MEDIUM QUICK CONNECT HANDLE
NOVEL-TL- T-HANDLE
NOVEL-TL- LARGE QUICK CONNECT HANDLE
[6431
>V L-\7 ; ~~~=-t~~~;:--:-;,-
K lMil
lPA
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
:- 26MM.
131
34311-016
164311-018
IM"311-10S
164311-11
164311-112
164311-114
164311 116
164311-118
164313-008
164313-010
164313-012
164313-014
164313-016
64313-018
64313-108
64313-110
64313-112
64313-114
64313-116
64313-118
64313-244
64313-2413
64313-248
64313-250
64315-008
643' 5-010
64: 5~012
64: 15-014
64: 15-016
64:115-018
.64315-108
!64:315-110
!64315-112
164315-114
[64315-116
164315-118
PA
:IM
PA
:L-' ; PA
:)(1
INOV L-' ; PA
(1
INOVEL-V;- PEEK )MJl
PACER(1€ I~
rN6VEL-V;- PEEK DEGREES SMALL :>PACE t- 26MM;<. oMMX8M~
INOVEL-V;-PEEK DEGREESSMAl 5PACE:-26MMX16MMX10MM
INOVEL-V ·PEEK 5 DE3REES SMA
5PACE :v1~M
INOVEL-V;- PEEK 5 m R~ ; SMALl 5PACER- 26MMX16MMX14MM
INOVEL-VC:- PEEK 5 DEGREES SMALL SPACER- 26MMX16MMX16MM
INOVEL-V;- PEEK 5 DEGREES SMA . SPACER18MM
INOVEL-V ; -PEEK ~E )IUM 'ACERINOVEL-V ; -PEEK MEDIUM lPACER- 32MMX20~ IX10MM
INOVEL-V ; -PEEK MEDIUM lPACER- 32MMX20~ l1?U~
OVEL-V ; -PEEK MH IUM lPA ;E :14MM
INOVEL-V ; -PEEK MEDIUM lPACE :- 32MMX20~ (16MM
INOVEL-V;- PEEK MEDIUM SPACER- -.?~mx?r lAMX18MM
INOVEL-V :-PEEK 5 >EGREES MEDII JM >PACE :- 32MMX.?mA~AXAI
INOVEL-V :-PEEKS )EGREESMEDIIJM >PACE:IX10MM
"r"~
:-PEEK5DEGREESMEDIUM >PACE:1)(12MM
: 5 DEGREE: , MEDIUM >PACER- 32MMX20~ IX14MM
INOVEL-V ; - P
INOVEL-V : -P
:5 )EGREE:, MEDIUM )PACER<16MM
11\Jf"l\/r: -" :- p:
:5 )EGREE:. MEDIUM lPACER- ::1:
<18MM
"'"~
: 8 DEGREE: MEDIUM lPACE_R- ::\?Mtu
INOV
~ )II
)PACE :- .,.
tlC?OMMlC4fl~A~A
Nl
>ll
:l?n~AMX. l<1A~.
1NOV
lll
:1X20MMX50MM
INOV
:!NOVEL
. -PEl :K _ARI
'AC ::10
INOVEL-VC;- PEEK LARI lE 'ACERM
!NOVEL-VI:- f :EK LARGE )PACER- 38MMX24 MX14MM
INOVEl-Vi:- F EEK LARGE SPACER- 'A>AUX? 1MX16MM
INOVEL-VI:- :EK -ARGE SPACER"'18MM
"''llr:
:- f :EK 5 DEGREES -ARGE SPACER· 38MMX2•
'JVEL-VC- "EEK 5 DEGREES LARGE SPACER · 38MMX24MMX10MM
"".- "EEK 5 DEGREES LARGE SPACE :(12MM
'JVEL-VC- "EEK 5 DEGREES LARGE SPACE ~14MM
'JV L-VC- PEEK 5 DEGREES LARGE SPAI :E · 381
(16MM
'JVEL-VC:- PEEK 5 'JEGREES -ARGE SPACE · 381
(18MM
'641 )5
64( f3
641 74
i641 ~1
164092
INOVEL- INSERTER
INOVEL~AI _,,. . ENDPLATE RASP
rNOVEL- M GLED ENDPLATE RASP
INOVEL-s· RAIGHT ADJUSTER
INOVELREADE[' REMOVER
I$
I$
Discount Price
610 $
610 $
610 $
610 $
610 $
610 $
610 $
610 $
763 $
763 $
785 $
925 $
925 $
585 $
585 $
1 600 $
1 600 $
425 $
510 $
510 $
1 250 $
731 $
638 $
638 $
2250 $
385 $
531 $
900 $
1 094 $
900 $
7,281
',281
7,281
_U§_1
_7,f_8_1
7,281
',281
1,281
$
$
$
$
7,~8_1
7,281
',281
~.281
7,~
7,281
'.281
7,281
',28'
',28'
_7,28
7,281
7,281
'.28
$
$
$
$
2.50 l.OO
2.50 '
2.50 '
2,50 ).00
2.500.0(
2.500.00
2.50(.0(
2.50( oc
2,500.00
2.500.00
2.50(.0(
2.500.0(
2.500.0(
2.500.00
2.50C .OC
2,500.0(
2,500.0(
2.500.00
2.500.00
2,500.00
2,500.00
2.500.00
2.500 00
2.500 00
2.500.00
!.50 1.00
$
2,
2.500.00
2.500.00
2.500.00
2.500 00
2.500.00
2.500.00
2.500.00
2,500.00
2.500.00
2,500.00
1.263 $
_ll1 $
731 $
731 $
863 $
996.93
181.71
241.65
256.01
229.53
_7,_g§j
7,Z8
7,28'
7,28'
_l,281
_7,28
7,281
_L281
7,281
',281
.1.
153.00
153.00
153.00
153.00
153.00
153.00
153.00
153.00
153.00
153.00
217.15
217.77
219.12
448.92
525.69
986.86
811.04
223.11
165.64
189.50
475.00
500.73
214.70
200.86
1125.00
476.83
287.43
405.30
304.81
390.87
$
"CONFIDENTIAL INFORMATIOW
2008 Price Usl
13 of 17
ATEC0000036
#:10932
Part#
2008 List
Price
Description
64093
64098
85890
85911
64010-D05
64010-D06
64010-D07
64010-D08
64010-009
64010-D10
64010-D11
64010-012
64010-D13
64010-D14
64010-D15
64025-D08
64025-D10
64025-D12
64025-D14
64027-D08
64027-D10
64027-012
64027-D14
64029-D08
64029-DlO
64029-D12
64029-D14
64030-003
64030-D04
64030-D05
64030-D06
64030-007
64030-008
64030-009
64030-D10
64030-D11
64030-D12
64030-D13
64030-014
64030-D15
64098-101
64098-102
64098-301
64098-302
64098-501
64098-502
64300-D1
64300-02
64300-D3
64300-04
64391-108
64391-110
64391-112
64391-114
64393-108
64393-110
64393-112
64393-114
64395-108
64395-110
64395-112
64395-114
64300
NOVEL -STRAIGHT IMPACTOR
NOVEL-VC- MODULAR SPINE DISTRACTOR
NOVEL-TL- SLAP HAMME~
NOVEL-TL- T-HANDLE
NOVEL- ROTAT NG DISTRACTOR- SIZE 8
NOVEL· ROTATING DISTRACTOR- SIZE 10
NOVEL- MODULAR CHISEL- 26mmX8MM
NOVEL- MODULAR CHISEL- 26mmX14\MM
NOVEL- MODULAR CHISEL- 32MMX8MM
NOVEL-VC- SMALL RIGHT MODULAR DISTRACTOR TIP
NOVEL-VC- SMALL LEFT MODULAR DISTRACTOR TIP
NOVEL-VC -MEDIUM RIGHT MODULAR DISTRACTOR TIP
NOVEL-VC- MEDIUM LEFT MODULAR DISTRACTOR TIP
NOVEL-VC- LARGE RIGHT MODULAR DISTRACTOR TIP
NOVEL-VC- LARGE LEFT MODULAR DISTRACTOR TIP
NOVEL-VC- CADDY
NOVEL-VC- CADDY LID
NOVEL-LCC- TRIAL CADDY
NOVEL-VC- TRIAL CADDY LID
NOVEL-VC- SMALLS DEGREES TRIAL- 8MM
NOVEL-VC- SMALL 5 DEGREES TRIAL- 10MM
NOVEL-VC- SMALL 5 DEGREES TRIAL -12MM
NOVEL-VC- SMALL 5 DEGREES TRIAL- 14MM
NOVEL-VC- MEDIUM 5 DEGREES TRIAL- 8MM
NOVEL-VC- MEDIUM 5 DEGREES TRIAL -10MM
NOVEL-VC- MEDIUM 5 DEGREES TRIAL -12MM
NOVEL-VC- MEDIUM 5 DEGREES TRIAL- 14MM
NOVEL-VC- LARGE 5 DEGREES TRIAL- 8MM
NOVEL-VC- LARGE 5 DEGREES TRIAL- 1OMM
NOVEL-VC- STERILIZATION CASE
64703-104
64703-105
64713-004
64713-DOS
64713-006
64713-D07
64713-D08
64713-D09
64713-104
64713-105
64713-106
64713-107
64713-108
NOVEL-XS- PEEK
NOVEL-XS- PEEK
NOVEL-XS- PEEK
NOVEL-XS- PEEK
NOVEL-XS- PEEK
NOVEL-XS- PEEK
NOVEL-XS- PEEK
NOVEL-XS- PEEK
NOVEL-XS- PEEK
NOVEL-XS- PEEK
NOVEL-XS -PEEK
NOVEL-XS- PEEK
NOVEL-XS- PEEK
•i'
.21
'.
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Jj
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
T>S'
bllil.E
5 DEGREES SMALL SPACER- 14MMX12MMX4MM
SMALL SPACER- 14MMX12MMX4MM
SMALL SPACER -14MMX12MMX6MM
SMALL SPACER -14MMX12MMX8MM
5 DEGREES SMALL SPACER -14MMX12MMX4MM
5 DEGREES SMALL SPACER - 14MMX12MMX6MM
5 DEGREES SMALL SPACER -14MMX12MMX8MM
"
'
:Jt'
663
3 844
531
1 094
781
781
781
781
781
781
781
781
781
781
781
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
913
531
531
531
531
531
531
531
200
400
200
269
269
269
269
269
269
269
269
269
269
269
269
2100
$
$
$
$
$
$
$
$
$
$
$
$
184.74
1 404.97
287.43
304.81
150.29
170.38
117.69
138.55
146.85
116.56
116.45
115.42
135.65
130.75
107.10
167.58
209.50
128.02
119.63
226.80
118.71
132.38
154.73
103.08
130.98
167.48
151.08
187.80
145.38
149.15
185.10
111.85
126.47
113.72
136.78
155.57
112.46
146.48
121.73
116.55
128.54
134.34
160.79
190.62
134.98
167.66
617.76
184.47
403.72
45.70
104.92
75.47
81.38
90.00
230.75
79.28
82.09
111.63
73.93
88.17
79.83
102.07
966.57
2644
2 644
2644
2644
2 644
2644
2644
2644
2644
2644
2644
2644
2 644
$
$
$
$
$
$
$
$
$
$
$
$
$
1,140.00
1140.00
1140.00
1140.00
1140.00
1140.00
1140.00
1140.00
1140.00
1 140.00
1140.00
1140.00
1,140.00
.,~
$
$
$
$
$
$
$
$
$
$
$
$
$
Discount Price
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
.,
AJphatec Spine, Inc.
2008 Price List
14 of 17
ATEC0000037
#:10933
Part#
2008 List
Price
Description
164713-109 :NOVEL-X! .p EK5
)MAL SPACER-14MMX
15-664 NOVi
.p EKMEDIUM 'A
14MIIi :1:
1
15-005
)VI
· P EK MEDIUM
A
· 14MIIi
MMX!iM~
15-006
OVI L-;
. P :K MEDIUM 'A
i- 14MIIi
?MMXR~
15-007 NOVi L-) ·PEEK MEDIUM 'A<
i -14MM) ~JYIMAIMM
164715-00S NOVEL-XS · PE K MEDIUM SPACER -14MMX1?UMXR~A~,
164715.:009 NOVEL-X: · PE K MEDIUM SPACER- 14MMXP•
164715-104
)VI -X:;- PE
5 JEGREES 1EDIUM SPACER- 14MMX
OVI L-X:i-PE K5DEGREE iMEDIUMSPA•:ER-14MMX12MMX5MM
164715-105
164715-106 NOVE
, - PE :K 5 DEGREE; MEDIUM SPACER -14MMX12MMX6MM
164715-1
OVEl
. PE :K 5 DEGREE MEDIUM SPACER- 14MMX 12MMX7MI
164715-108 NOVEL ; - PE :K 5 DEGREE MEDIUM SPACER -14MMX12MMX8MM
164715-109 NOVEL ; -PEEK 5 DEGREE; MEDIUM SPACER -14MMX1
LA K
iPACER-20MMX1
-717-004 NOVEL-X1>-717-005 NOVEL-X1
.A
~AC:EF · 20MMX11"A>Al(
-71 7-006 NOVEL-X:
.A
~AC:EF:- 20MI\I (1.
-717-0C
NOVEL-X1;.A K
~AC:EF:- 20MI\I <181111MX
164717-008 NOVEL-X1,- :EK LARGE ~AC:EF:- 20MM (1.
164717-<
)V~
>iPACER- 20MI\I
'64717M
;i LARGI >PACER- 20MMX'"
JV~
;LARG >PACER- 2C
64717-·
M
;.p
LARG )PA:ER164717-·
IV~
, -PEEK 5
R~
LARGI )PACER- 20MMX18
164717-107
f64713:110
164713-112
164713-114
l64713-f11
164713-113
164713-115
164713-1 H3
164713-117
164713-118
164713-119
164713-120
164713-121
164713-122
164713-123
164733-124
164733-125
164733-126
164733-12
164733-128
164733-129
1647 3-13(
164733-131
164733-132
64'733-133
64733-134
64733-135
64733-136
647 -1:
64: 1-1:
64:
64: 1-1·
64753-141
647:~-1-12
64: ~-1·
647!
14
647! ~-1· 15
,64753-146
164753-147
164753-148
'64753-149
INOV~
':5 DEGREES Sill
>PACE ·14MMX12MMX10MM
'-PEEK 5 lEGREES Sill
iPACE : -14MMX12MMX12MM
INOVE
'-PEEK 5 DEGREES Sill
>PAC
·14MMX12MMX14MM
INOV~
•- PEEK 5 ut
Sill
>PACE · 14MMX12MMX11MM
INOVEL-Cf•- PEEK 5 DEG :EES SMAL iPACER · 14MMX12MMX13MM
INOVEL-C '-PEEK 5 lEC :ES SMAL iPACER · 14MMX12MMX15MM
INOVEL-C;t•- PEEK 5 DEG :ES SMAL iPACER ·14MMX12MMX16MM
INOVEL-CP -PEEK 5 n< O::R~ i SMAL iPACER ·14MMX12MMX17MM
INOVEL-CP- PEEK 5 lEGREES SMALL SPACER -14MMX12MMX18MM
INOVEL-CP- PEEK 5 DEGREES SMA . SPACER- 14MMX12MMX19MM
INOVEL-CP PEEK 5 DEGREES SMAL . SPACER: 14MMX1
IN0\1
CP PE :5 EC REES SMAL . SPACER ·14MMX12MMX21MM
PEE :5 EC REES )MAL . SPACER -14MMX1
INO\/
IN0\1
PEE :5 EC REES lMA . S >ACER ·14MMX1
INO\/
Cf>- PEE
EC REES iMA . SPACER ·14MMX1
K?4M~
INOVEL-Cf•- PEEK
EGREES )MAL . SPACER ·14~ AX12 1X25M~
'-PEEK
EGREES )MAL . SPA• :ER · 14~ v1X12MMX26MM
INOVEL-Cf>- PEEK DEGREES )MAL . SPA :ER · 14~ AX1
INOVEL-CP- PEEK 5 DEGREES SMA . SPA :ER: 14~ v1X1
INOVEL
:EK 5 DEGREES SMAL . SPA :ER -14MMX1
INOVEL
:EK 5 lEG (EE: i SMAL . SPACER- 14MMX12~ MX30MM
!NOVEL
:EK5 lEC (EE::SMAL.SPACER-14MMX1
INOVEL
'EEK 5 DEC lEE:: SMA . SPACER -14MMX121
OVEL
PEEK 5 DE< lEE:: SMALL SPACER -14MMX1?~ IX~~~
OVEL-CP ! 1 5
MALLSPACER-14
(12M IX34MM
OVEL-CP
5 IE< iREE~ MALL )PACER -14
<12M IX35fo,JM
OVEL-CP
5 DE< iREE~ MAl
iPACEI:<1:
mJ
r<
C iREE~ MAL iPACEf:<12M <37~1M
OVE
, SMALL )PACER -14
IX1?MMX1RI\,
OVE
;~
CER- 14
IX12
:39MIIi
OVE
CEI:<1:
:40
OVE
K
::EI:-14
(1:
:41
NOVEL
EEK5DEGI
:EI:-14MM<1'
NOVEL-<·-: ::K
EC !EES )~\A
CEii-14MM<1'
•::K
EC lEES iM
PAGEl :- 14111 IX' 21
(44Mfv
NOV L-<
::K
EC lEES iM
R- 141\1
<45
NOV
'- PE ::K
r=c IFF~ iM
R- 14111
X46
NOVI CP- PEEK 5 DEGREES >M
R- 141\1
<47
NOVEL-CP-- PEEK 5 DEGREES SMALLS
R -14MMX12
IX48
OV~ L-CP . PEEK 5 lEGREES SMALL SPACER- 14MM> t ?~~~AXdOM'->
164753-150 INOVEL-CP . PEEK 5 DEGREES SMAL . SPACER164715-110
164715-112
164715-114
164715-111
164715-113
164715-115
164715-116
164715-117
164715-118
NOVEL-XS- PEEK 5
NOVEL-XS- PEEK 5
)VEL-XS-- PEEK 5
N•)VEL-XS. PEEK 5
'"" -"<;-PEEK 5
nil< .YC,- PEEK 5
ll\lnl/1=1 .x ; -PEEK 5
1\lnll~ -"C.- PEEK 5
"n11o .YC,- PEEK 5
ut "'"
2,644 $
~ $
_1,644 $
_l"~ ~4_
2,6 14
2, 14
2, 14
2,644
_l&1:1_
2,644
2,644
2.644
~1_
344
344
344
344
~
~
2,644
2,644
2,644
~
I$
9,84( I$
9,840
9,84C
9,84C
jl,840
9,840
9,84C
~
9,84C
9,840
9,84(
9.84C
_!l,M(
9,840
9,84C
9,84(
___!l_.MQ_
9,840
9,84C
9,84(
___fl_,§1C
10,197
10,197
10,197
10,197
~
10,19
10,19
10,19
10.19
...11_,llZ_
11,227
1',227
1',227
_1.1_,227
11,m $
11 127
127
1' 127
_1j_ 127
1,140.00
1,140.00
1.140.00
.140. )0
.14C.
.140.
.140. JO
1,140.00
1.140.00
.140.
.140.00
1,140.00
1.140.00
1.14 DO
.14
.14
1,14 DO
1,140.00
1,140.00
-1.146.00
1 140.0(
1140.0(
1,140.00
3.838.00
3.838.00
3.838.0(
3.838.0(
3,838.00
3.838.00
3.838
3,838.00
3.838.00
3.838.00
3.838.0C
3,838.00
3.838.00
3.838.00
3.838.0(
3,838.00
3,838.00
- 3.838.00
3.838.0(
3.838.0C
3,838.00
'.00
'.OC
00
OC
3,9 '.00
3.9 .00
3.9 00
3.9 DC
3,9 .00
4.379.00
4.379.00
4.379.0C
4.379.0C
4,379.00
4,379.00
4.379.00
4.379.0C
4.379.0C
4,379.00
14M~ ~ij1Xij<'5.0MM~~~gm;;··~~~~~~~--~$·1-1,~222iij·7~$·4~,,,3~79.0~0
. ME[ IUM SPACER- 14MMXi2MMX10MM
. MEDIUM
m r-R~
. MEDIUM
DEGREES MEDIUM
DEGREES MEDIUM
. MEDIUM
DEGREE: MEDIUM
ut '-""
MEDIUM
n~ r!R<
. MEDIUM
Discount Price
SPACER -1'1:MMX12MMX12MM
SPACER -14MMX12MMX14MM
SPACER- 14MMX12MMX11MM
SPACER- 14MMX12MMX13MM
SPACER- 14MMX12MMX 7MM
9,840 S
9,84C $
9,840 $
9,84Q_
9,840
9,84C
~,84()_
9,840
9,840
3.838.00
3.838.00
3,838.00
3,838.00
3.838.00
3,838.00
3,838.00
3.838.00
3,838.00
Alphatec Spina, Inc.
2008 Price Ust
15 of 17
ATEC0000038
#:10934
Part#
64715-119
64715-120
64715-121
64' 15-122
164715-123
16473! -1
164 73!
164736-1
[6473ii-1
164735-128
164735-129
164735-13C
64735-131
64735-132
64735-133
64735-134
64/35-135
164735-136
164735-137
164735-138
164755-140
164755-141
164755-143
164755-144
164755-145
164755-146
164755-14'
164755-148
164755-149
164755-15(
164006
16400
164096
164097-01
164097-02
IS-4 793-104
164793-105
164793-106
164793-H
164793-108
164793-109
164795-104
164795-105
[64795-106
34795-107
34795-109
34797-104
64797-106
64797-109
[64060
164061
164065
164063
'"-nRn-001
1640 l5
1640
164051-002
164051-004
14nc;: ·..nn4
[64054-002
2008 List
Price
Description
Discount Price
NOVEL-XS ·PEEK 5 m r.R~
MEDIUM SPACER -14MMX12MMX19
$
~
3,838.00
NOVEL-XS .·
:5
r.R~
MEDIUM SPAI
·14MMX1:
_l
9,840
3.838.00
:5 JEGREES MEDIUM SPAI ;;......:·1;.:;;:;4M;:;M1X&<1~2M;:;M1e;:X<2~1fi-------------t-l:-~9~,8~40tf--~3?-;
. 8~:18~. ~
NOVEL-XS ·PI
OVEl-XS- PI
:5 lEGREES MEDIUM SPAI
t· 14MMX12MMX22
9,840
3.8: I.OC
NOVE
·PI K
EGR :ES MEDIUM SPAI :R -14MMX·
IX;
9.840
3.8c oc
·N, )VE
::G
M
M PA
IX·
~Q_
3,838.00
JVE 1
PA
I- 1
9,840
3.838.00
lVEI
PA
I- 1
•,8·
3.8:
INOVEl
PA
:27
•,8•
3.
OC
INOVEL-CP ·PEEK 5
M
PA
t -17MMX1'iM~ (?P
·.8•
3.
oc
!NOVEL ;p i l K 5 DEGREES MEDI JM )PACE :- M IX1e
X2S
,8•
3,838.00
IN< lVEL ;p
K 5 DEGREES M
:E:1e
<3C
~
3.838.00
INOVEL ;p
:5 JEGREES M I
:EI:M
10,197
3.977.00
!NOVEL ;p- PEEK 5 DEGREES M I
:EI:(::!?MM
19~
3.9~ OC
INOVEL-CP-• .5 C EGREES M I
:EI: · 17MMX15MMX33MM
~
3,977.00
INOVEL-CP:5 DEGREES MEDIUM )PACER- 7MMX
1M
.1Q,_Uli
3,977.00
INOVEL-CP. 5 EGREESMEDIUM >PACER- 7MMX15~ 1X35~
1 ,197
3.977.00
10,197
3.977.00
INOVEL-CP ·PEEK 5 C EGREESMEoiUM SPACER· 17MMX1
INOVEL-CP- PEEK 5 DEGREES MEDIUM SPACER- 17MMX15MMX37MM
1 19:
3.977.0C
INOVEL-CP- PEEK 5 DEGREES MEDIUM SPACER· 17MMX1
.J.Q,1!!I
3,977.00
10,197
3.977.00
INOVEL-CP- PEEK 5 DEGREES MEDIUM SPACER- 7MMX
11,227
4.379.0C
INOVEL-CP ·PEEK 5 m ".:RI=I=S MEDIUM 5PACER_ 0 _17MMX1
INOVEL-CP- PEEK 5 m r::R< i MEDIUM )PACER· 17MMX15MMX41MM
11.22:
4.379.00
1M
11,227
4.379.00
INOVEL-CP- PEEK 5 DEGREES MEDIUM >PACER -17MMX1
INOVEL-CP- PEEK 5 DEGREES MEDIUM 5PACER-17MMX1
11,22
4.379~00
INOVEL-CP- PI K 5
i MEDIUM )PACER· 17MMX1
1 ,22
4.379.0C
INOVEL-CP- PI :K 5 m r::RI
; MEDIL I SPACER· 17MMX1
1 .22
4.379 oo
INOVEL-CP- PI
.5
MEDIUII SPACER· 17M~IX1
~
4,379.00
INOVEL-CP- PI
~ 5 DEGRI
MEDIL SPACER ·17M~ ~1
K47N
11,227
4.37 l 00
INOVEL-CP-PI oK5r><r::RI
MEDIL I SPACER -17M~ ~1
$
11,227
4.37 OC
INOVEL-CP- PEEK 5
MEDIUII SPACER- 17MMX1
$
11,227
4.37
i:oo
OVEL-CP. PEEK 5
i MEDIUM SPACER -1.7M~All1c;~A~Allc;·gj~~~~~~~~~~~~~~~~~-··~$·~-1,2.27"i'iil~4~i
. 3~70~0
INOVEL-XS- SMALL THREAC INSER"ER
INOVEL-XS- LARGE rHREAI INS
rE
INI"ll/l=t .llc:: . BONE GRAF. P :;K
BlOCK
Nnll< _){ i · MEDIUM/LARGI BON rAMP
)VI
>-SMAL.BONETAMP
)VI
>• Cfl DOY
JVI
;DOY
JVI
i ·SMA . 5
TRIAL· 4MM
TRIAL- 5MM
INOVEL-XS- SMAL . 5 ut -:>Kt
INOVEL-XS- SMAL . 5
r::R<
TRIAL- 6MM
INOVEL-XS- SMA . 5
:GREES TRIAL- 7MM
INOVEL-XS- SMA . 5
GREES TRIAL- 8MM
INOVEL-XS- SMAl • 5
r::R< =c:: TRIAl · 9MM
INOVEL-XS- MEDIUM 5
TRIA.· 4MM
INOVEL-XS. MEDIUM 5
TRIA.· 5MM
INOVEL-XS ·MEDIUM 5 ut -:>Kt
TRIA.· 6MM
NOVEL-X: :·ME Utv 5
TRIAL· 7MM
NOVEL-X: , • ME
Jtv
AL M
NOVEL-X:;- ME
Jtv
AL •
NOVEL-X: :-LA ;ES
I .-41
NOVEL-XS -LARGE 5 EGF
. -51
NOVEL-XS- LARGE 5 DEGREES TRIAL- 6MM
NOVEL-XS- LARGE 5 >EGREES TRIAL- 7MM
NOVEL-XS - .ARGE 5 >EGREES "RIAl.- 8MM
$
$
Li_
,010
.010
~
425
425
32<
160
_§:3Q_
530
53(
53(
-~
530
53<
_§:3Q_
530
530
530
530
~
$
$
$
$
530
530 $
530 $
530 $
381.22
292.81
119.11
169.27
193.fi
488.23
6' 16
261.00
259.72
208.62
294.24
223.69
249.95
72.18
238.00
223.93
226.61
235.93
261.30
202.61
255.16
247.27
186.43
269.89
"RIAl.--~·-~~~--·MIIIIIIII~--~~~~·$·--~-~~Q_·$·-~
216~. 6~5
NOVEL-XS- LARGE 5 Ul: Kt
IADP • LONG KERRISON
IADP- STRAIGHT PITUITARY RONGEUR
lAo¢>. DOWN ANGLEC• PITUITARY RONGEUR
IADP- JP ANGLE II PI' UITARY RONGEUR
IADP ·NERVE ROOT RETRA. JR- 1MM
IADP- NERVE ROC . RETRATOR- 2MM
IADP- STRAIGH"
1t::'
JMt
IADP • CURVEC
~E
IADP • STRAIGHRE'
:- 2MM
'· ;TRAIGH"'C RE'
:-4MM
'- 1NGLED CUF IE · 2MM
•. 1NGLEC 8UF
TE · 4MM
'- liGHT ANGL
URE' rE - 2MM
IADP- RIGHT ANGL I C JRET rE- 4MM
IADP • LEF. ANGLED CURE rE- 2MM
IADP - .EF 'ANGLED CURE rE • 4MM
IADP • STRAIGH' . RING CURE' rE - 2MM
IADP- STRAIGHT RING URE rE - 4MM
..!_
~
$
2,650
2,650
2,650
_§19_
538
794
794
813
813
813
813
_ill]_
~1_:!_
$
j
813
813
813
~
646.87
574.09
575.
573.90
156.41
188.48
263:43
305.71
290.57
291.89
293.90
293.66
292.07
257.95
295.49
29:'.9C
290.54
288.35
Alphalec Spine, Inc.
2006 Price List
16 of 17
ATEC0000039
#:10935
Part#
64056-002
64056-004
64057-002
64057-004
64058-004
64900
2008 List
Price
Description
ADP- ANGLED RING CURETTE - 2MM
ADP- ANGLED RING CURETTE- 4MM
ADP -LATERAL ANGLED RING CURETTE- 2MM
ADP- LATERAL ANGLED RING CURETTE- 4MM
ADP - TOOTHED CURETTE - 4MM
ADP- STERILIZATJON CASE
$
$
$
$
$
$
813
813
813
813
850
1 394
Discount Price
$
$
$
$
$
$
295.15
294.93
293.93
295.44
353.47
730.15
2008 Price List
17 of 17
ATEC0000040
#:10936
EXHIBIT B
TERRITORY
As of the Effective Date, the Territory shall be as follows:
Pacific Hospital of Long Beach in Long Beach, CA
Tustin Hospital*
Tri-Cities Hawaiian Gardens*
Southcoast Hospital*
* The parties
agree that the Distributor shall have non-exclusive rights to distribute the Products
in the hospitals marked with an asterik.
The parties agree that this Exhibit B may only be amended upon the written agreement of the
parties.
3
ATEC0000041
#:10937
EXHIBITC
FORM OF PURCHASE ORDER
Purchase Order Number - - - - - - To:
From:
International Implants, LLC
Date:
Re:
Purchase Order
Part Name
Part Number
Size
Quantity
Per Unit
Cost
Total Cost
(including
discounts)
Total Cost: _ _ _ __
Submitted by International Implants, LLC
By: _ _ _ _ _ _ _ _ __
Name:
Title:
----------
-----------
ATEC0000042
#:10938
AMENDMENT TO
This Amendment to the Distribution Agreement (this "Amendment") is made as of
, 2008 between International Implants, LLC, (the "Distributor") and Alphatec Spine,
Inc. (the "Company"). Capitalized terms undefined herein shall have the meaning ascribed them
in the Agreement.
October~\
RECITALS
Reference is made to that certain Distribution Agreement dated July 10, 2008 (the
"Effective Date"), between the parties to this Amendment (the "Agreement").
The Parties desire to amend the Agreement as set forth herein.
Now, therefore, in consideration of the mutual promises set forth herein and for other
good and valuable consideration, the receipt and sufficiency of which is acknowledged by the
Parties hereto, the Parties hereto agree as follows:
1.
AMENDMENTS
Amendment to Exhibit A - Products and Prices. Exhibit A of the Agreement
1.1
is hereby amended to include the following:
"As of the Effective Date, the Products listed below shall be subject to the prices
indicated in this Amendment.
Part No.
Description
64100-01
64100-02
64100-03
64100-04
64113-008
64113-010
64113-012
64113-014
64193-008
64193-010
64193-012
64193-014
64100-01
64100-02
64100-03
64100-04
64115-008
NOVEL-LCC- CADDY
NOVEL-LCC -CADDY LID
NOVEL-LCC -TRIAL CADDY
NOVEL-LCC - PEEK MEDIUM SPACER - 1OMMX20MMX8MM
NOVEL-LCC- PEEK MEDIUM SPACER- 10MMX20MMX10MM
NOVEL LCC TRIAL 20M, 8MM NON LORDOTIC
NOVEL-LCC -CADDY
NOVEL-LCC -TRIAL CADDY-LID
NOVEL-LCC -PEEK MEDIUM SPACER- 10MMX25MMX8MM
Price
No Charge
No Charge
No Charge
No Charge
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
$ 1,250.00
ATEC0000043
#:10939
Part No.
Description
64115-010
64115-012
64115-014
64195-008
64195-010
64195-012
64195-014
64100-01
64100-02
64100-03
64100-04
64113-108
64113-110
64113-112
64113-114
64193-108
64193-110
64193-112
64193-114
64100-01
64100-02
64100-03
64100-04
64115-108
64115-110
64115-112
64115-114
64195-108
64195-110
64195-112
64195-114
NOVEL-LCC -PEEK MEDIUM SPACER- 10MMX25MMX12MM
NOVEL LCC TRIAL 25M-5, 10MM NON LORDOTIC
NOVEL-LCC -CADDY
NOVEL-LCC -PEEK 5 DEGREES MEDIUM SPACER- 10MMX20MMX8MM
NOVEL-LCC -MEDIUM 5 DEGREES TRIAL- 8MM
NOVEL-LCC -CADDY
NOVEL-SD - CADDY MEDIUM
NOVEL-SD - CADDY LID
NOVEL-SD - PEEK SMALL SPACER - 9MMX22MMX8MM
NOVEL-SD - PEEK SMALL SPACER- 9MMX22MMX9MM
NOVEL-SD- PEEK SMALL SPACER- 9MMX22MMX10MM
NOVEL-SD - PEEK SMALL SPACER - 9MMX22MMX11MM
NOVEL-SD - PEEK SMALL SPACER- 9MMX22MMX13MM
SD CAGE TRIAL, SMALL, 8MM
SD CAGE TRIAL, SMALL, 1OMM
64800-01
64800-02
64813-008
64813-009
64813-010
64813-011
64813-012
64813-013
64813-014
64893-008
64893-009
64893-010
64893-011
64893-012
64893-013
Price
$ 1,250.00
$ 1,250.00
$ 1,250.00
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
2
ATEC0000044
#:10940
Part No.
Description
64893-014
64800-01
64800-02
64815-008
64815-009
64815-010
64815-011
64815-012
64815-013
64815-014
64895-008
64895-009
64895-010
64895-011
64895-012
64895-013
64895-014
64614-007
64614-008
64614-009
64614-010
64614-011
64614-012
64614-013
64614-014
64601-0103
64636-007
64636-008
64636-009
64636-010
64636-011
64636-012
64636-013
64636-014
64614-107
64614-108
64614-109
64614-110
64614-111
64614-112
64614-113
64614-114
64601-0104
64636-107
64636-108
NOVEL-SD - CADDY MEDIUM
NOVEL-SD - CADDY LID
NOVEL-SD - PEEK MEDIUM SPACER- 9MMX25MMX8MM
NOVEL-SD - PEEK MEDIUM SPACER- 9MMX25MMX9MM
NOVEL-SD- PEEK MEDIUM SPACER- 9MMX25MMX10MM
NOVEL-SD - MEDIUM TRIAL - 8MM
NOVEL-SD- MEDIUM TRIAL- 10MM
NOVEL-SD- MEDIUM TRIAL- 12MM
NOVEL-SD -MEDIUM TRIAL- 14MM
NOVEL-TL- PEEK MEDIUM SPACER- 24MMX10MMX7MM
NOVEL-TL - PEEK MEDIUM SPACER- 24MMX1 OMMX9MM
NOVEL TL MEDIUM NON LORDOTIC IMPLANTS, CADDY ASSY
Price
TRIAL 7MM MEDIUM NON-LORDOTIC
TRIAL 8MM MEDIUM NON-LORDOTIC
TRIAL 9MM MEDIUM-NON-LORDOTIC
NOVEL-TL- PEEK 5 DEGREES MEDIUM SPACER- 24MMX10MMX7MM
NOVEL-TL- PEEK 5 DEGREES MEDIUM SPACER- 24MMX10MMXIOMM
NOVEL-TL- PEEK 5 DEGREES MEDIUM SPACER- 24MMX1 OMMX11MM
NOVEL TL MEDIUM-5 IMPLANTS, CADDY ASSY
No Charge
No Charge
No Charge
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
No Charge
No Charge
No Charge
TRIAL 7MM MEDIUM-5
TRIAL 8MM MEDIUM-5
3
ATEC0000045
#:10941
Part No.
Description
Price
64636-109
64636-110
64636-111
64636-112
64636-113
64636-114
64700-07
64700-08
64713-104
64713-105
64713-106
64713-107
64713-108
64713-109
64715-104
64715-105
64715-106
64715-107
64715-108
64715-109
64717-104
64717-105
64717-106
64717-107
64717-108
64717-109
64006
64007
64096
64097-01
64097-02
64793-104
64793-105
64793-106
64793-107
64793-108
64793-109
64795-104
64795-105
64795-106
64795-107
64795-108
64795-109
64797-104
64797-105
64797-106
TRIAL 9MM MEDIUM-5
TRIAL 1OMM MEDIUM-5
TRIAL 11MM MEDIUM-5
TRIAL 12MM MEDIUM-5
TRIAL 13MM MEDIUM-5
TRIAL 14MM MEDIUM-5
NOVEL-XS - CADDY
NOVEL-XS - CADDY LID
NOVEL-XS- PEEK 5 DEGREES SMALL SPACER- 14MMX12MMX4MM
NOVEL-XS- PEEK 5 DEGREES SMALL SPACER -14MMX12MMX8MM
NOVEL-XS- PEEK 5 DEGREES MEDIUM SPACER- 14MMX12MMX4MM
NOVEL-XS- PEEK 5 DEGREES MEDIUM SPACER -14MMX12MMX9MM
NOVEL-XS- PEEK 5 DEGREES LARGE SPACER- 20MMX18MMX4MM
NOVEL-XS- SMALL THREAD INSERTER
NOVEL-XS- LARGE THREAD INSERTER
NOVEL-XS- BONE GRAFT PACKING BLOCK
NOVEL-XS- MEDIUM/LARGE BONE TAMP
NOVEL-XS- SMALL BONE TAMP
NOVEL-XS - SMALL 5 DEGREES TRIAL - 4MM
NOVEL-XS - SMALL 5 DEGREES TRIAL - 5MM
NOVEL-XS - SMALL 5 DEGREES TRIAL- 6MM
NOVEL-XS- MEDIUM 5 DEGREES TRIAL- 4MM
NOVEL-XS -MEDIUM 5 DEGREES TRIAL- 7MM
NOVEL-XS -LARGE 5 DEGREES TRIAL- 4MM
NOVEL-XS -LARGE 5 DEGREES TRIAL- 5MM
NOVEL-XS - LARGE 5 DEGREES TRIAL- 6MM
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
$ 875.00
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
4
ATEC0000046
#:10942
Part No.
Description
64797-107
64797-108
64797-109
64700
NOVEL XS STERILIZATION CASE
STRAIGHT, OSTEOTOME
CURVED, OSTEOTOME
PITUITARY STRAIGHT, POSTERIOR, NARROW
PITUITARY UP BITE, POSTERIOR, NARROW
PITUITARY DOWN BITE, POSTERIOR, NARROW
PITUITARY CURVED, POSTERIOR, NARROW
PUSH DOWN STRAIGHT, CURETTE, SIZE 2
PUSH DOWN STRAIGHT, CURETTE, SIZE 4
CURETTE, OFFSET DOWN PUSHING, SIZE 2
CURETTE, OFFSET DOWN PUSHING, SIZE 4
STRAIGHT, RING CURETTE, "TEARDROP SHAPE", SIZE 2
STRAIGHT, RING CURETTE, "TEARDROP SHAPE", SIZE 4
CURETTE, ANGLED RING "TEARDROP", SIZE 2
CURETTE, ANGLED RING "TEARDROP", SIZE 4
CURETTE, STRAIGHT CUP, SIZE 2
CURETTE, STRAIGHT CUP, SIZE 4
CURETTE, RIGHT ANGLED, SIZE 2 (ASSEMBLY)
CURETTE, RIGHT ANGLED, SIZE 4 (ASSEMBLY)
64623
64624
64642-01
64642-02
64642-03
64642-04
64625-02
64625-04
64643-02
64643-04
64626-02
64626-04
64627-02
64627-04
64644-02
64644-04
64651-02
64651-04
64652-02
64652-04
64645-01
64645-02
64645-03
64650-01
64650-02
64602
64647
64648
64620-03
64620-04
64620-05
64620-06
64620-07
64620-08
64620-09
64620-10
64620-11
64620-12
64620-13
64620-14
64620-15
64621
Price
CURETTE, LEFT ANGLED, SIZE 2 (ASSEMBLY)
CURETTE, LEFT ANGLED, SIZE 4 (ASSEMBLY)
NERVE RETRACTOR, 45° SHORT, ASSEMBLY
NERVE RETRACTOR, 45° LONG, ASSEMBLY
NERVE RETRACTOR, 90° SHORT, ASSEMBLY
TAMP, STRAIGHT, BONE GRAFT (ASSEMBLY)
TAMP, WIDE TIP, BONE GRAFT (ASSEMBLY)
STERILIZATION CASE, NOVEL PDP
DISTRACTOR, LAMINA
DISTRACTOR, ENDPLATE
NOVEL-TL- DISC SHAVER - 5MM
NOVEL-TL-DISC SHAVER-10MM
NOVEL-TL- STRAIGHT ENDPLATE RASP
No
No
No
No
charge
charge
charge
charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
5
ATEC0000047
#:10943
Price
Part No.
Description
64622-01
64622-02
85911
85901
NOVEL-TL- LEFT CURVED RASP
NOVEL-TL- RIGHT CURVED RASP
NOVEL-TL- T-HANDLE
NOVEL-TL - MEDIUM QUICK CONNECT HANDLE
NOVEL-TL- LARGE QUICK CONNECT HANDLE
NOVEL-TL - 30 DEGREEES INSERTER
NOVEL-TL- STRAIGHT INSERTER
NOVEL-TL- STRAIGHT TAMP
NOVEL-TL- CURVED TAMP
NOVEL-TL - BAYONETED TAMP
NOVEL-TL - SLAP HAMMER
NOVEL-TL - IMPACT HAMMER
NOVEL-TL - BONE GRAFT PACKING BLOCK
NOVEL-TL - SMALL BONE GRAFT TAMP
NOVEL-TL - MEDIUM BONE GRAFT TAMP
NOVEL-TL- LARGE BONE GRAFT TAMP
NOVEL-TL - XLARGE BONE GRAFT TAMP
NOVEL- THREADED REMOVER
NOVEL-TL - IMPLANT RETRIEVER
STERILIZATION CASE, NOVEL TL, DISC PREP TRAY
STERILIZATION CASE, NOVEL TL, IMPLANT TRAY
STERILIZATION CASE, NOVEL TL, LID
STERILIZATION CASE, NOVEL TL, INSTRUMENT CASE
NOVEL-TL- PEEK LARGE SPACER- 28MMX10MMX7MM
NOVEL TL LARGE IMPLANTS, CADDY ASSY NON LORDOTIC
85912
64634-02
64634-01
64630-01
64630-02
64630-03
85890
85889
64639
64640-01
64640-02
64640-03
64640-04
64092
64641
64600-01
64600-02
64600-03
64600-04
64616-007
64616-008
64616-009
64616-010
64616-011
64616-012
64616-013
64616-014
64601-0101
64637-007
64637-008
64637-009
64637-010
64637-011
64637-012
64637-013
64637-014
64616-107
64616-108
64616-109
64616-110
64616-111
64616-112
TRIAL 7MM LARGE NON-LORDOTIC
NOVEL-TL- PEEK 5 DEGREES LARGE SPACER- 28MMX10MMX7MM
NOVEL-TL - PEEK 5 DEGREES LARGE SPACER- 28MMX1 OMMX11MM
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
$ 1,250.00
6
ATEC0000048
#:10944
Part No.
Description
Price
64616-113
64616-114
64601-0102
64637-107
64637-108
64637-109
64637-110
64637-111
64637-112
64637-113
64637-114
NOVEL TL LARGE IMPLANTS, CADDY ASSY LORDOTIC
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
No Charge
TRIAL 7MM LARGE LORDOTIC
":'Part Nri: " ' ·. ···n~s(!(iiftion (NOVEL ~j:; :P,EEI(;IMPLAN'I'S),.:f
64311-208
64311-210
64311-212
64311-214
64311-216
64311-218
64313-208
64313-210
64313-212
64313-214
64313-216
64313-218
64315-208
64315-210
64315-212
64315-214
64315-216
64315-218
Part No~
64311-408
64311-410
64311-412
64311-414
64311-416
64311-418
64313-408
64313-410
64313-412
64313-414
64313-416
64313-418
64315-408
64315-410
64315-412
64315-414
$ 1,250.00
$ 1,250.00
.;
;• . '1
· tx> ;~, /;.;;
1; ..
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
SM - 8MM - 8 DEG
SM- 10MM- 8 DEG
SM- 12MM- 8 DEG
SM -14MM- 8 DEG
SM- 14MM- 8 DEG
SM -14MM- 8 DEG
MD - 8MM - 8 DEG
MD-10MM-8DEG
MD- 12MM- 8 DEG
MD -14MM- 8 DEG
MD - 16MM - 8 DEG
MD- 18MM- 8 DEG
LG - 8MM - 8 DEG
LG -10MM- 8 DEG
LG- 12MM- 8 DEG
LG -14MM- 8 DEG
LG -16MM- 8 DEG
LG - 18MM - 8 DEG
. DI:S$RIPTION(NOVl?,L.;}'C PEEK I~L~$1 .
.. •}3~1'l1
;
:;
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
SM-8MM-12DEG
SM -10MM- 12 DEG
SM- 12MM- 12 DEG
SM -14MM- 12 DEG
SM -14MM- 12 DEG
SM- 14MM -12 DEG
MD - 8MM - 12 DEG
MD- 8MM -12 DEG
MD- 8MM -12 DEG
MD- 8MM- 12 DEG
MD- 8MM- 12 DEG
MD- 8MM- 12 DEG
LG- 8MM- 12 DEG
LG- 10MM- 12 DEG
LG- 12MM- 12 DEG
LG -14MM -12 DEG
.... /S©: ~~
Priccifrs;
,,..,,,
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
···l?d~··
t ·~· ·
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
1,900.00
7
ATEC0000049
#:10945
Other than as set forth in this amended price list, all other products and pricing provided in the
Agreement shall remain in full force and effect."
1.2
Amendment to Section 5.3. Section 5.3 of the Agreement is hereby amended
and restated in its entirety as follows:
"5.3
Consigned Inventory and No-Charge Inventory.
5.3.1 Consigned Inventory. From time to time, the Company may
consign certain Products or related instrumentation to the Distributor. The
Company will retain all right, title and interest in and to such Products and
instrumentation (the "Consigned Inventory"). The Distributor will hold said
Consigned Inventory in a fiduciary capacity. If any Consigned Inventory is lost,
missing, stolen, or damaged beyond usability, then the Company shall invoice
Distributor for the price set forth on Exhibit A for such Consigned Inventory. If a
price for such Consigned Inventory is not set forth on Exhibit A, then the
Company shall invoice the Distributor 100% of the Company's then-current list
price for such Consigned Inventory. Upon the termination or expiration of this
Agreement, or upon the request of the Company, the Distributor shall
immediately, and at its own expense, return all Consigned Inventory in its
possession or control to the Company. The Company shall be entitled to access
the Distributor's facilities at least once per month to audit the Consigned
Inventory following at least five business days' notice. Distributor shall make
payment in accordance with Section 6.2 for any inventory that is deemed to be
lost, damaged or missing as a result of such audit. The Distributor agrees and
acknowledges that all Consignment Inventory designated by the Company in its
sole discretion to be loaner inventory shall be subject to the Company's thencurrent Loaner Inventory Policy.
5.3.2 No Charge Inventory. Both Distributor and Company agree that
certain of the Products listed on Exhibit A do not have a purchase price (the "NoCharge Inventory"). Such No-Charge Inventory shall not be included within the
Consigned Inventory. Upon the termination or expiration of this Agreement, the
Distributor shall immediately, and at its own expense, return all No-Charge
Inventory in its possession or control to the Company. The Company shall be
entitled to access the Distributor's facilities at least once per month to audit the
No-Charge Inventory following at least five business days' notice."
1.3
Section 5.5:
Amendment to Section 5.5. The following language shall be added to the end of
8
ATEC0000050
#:10946
"All purchases shall be submitted on the Company's then-current form of
purchase order. The party's further agree that any modification to the terms and
conditions on such purchase order shall be of no force or effect unless such
modification is agreed to in writing by the parties."
1.4
Addition of Section 5.6.
Agreement as Section 5.6:
The following language shall be added to the
"As of October 31, 2008, Distributor shall have the right, once every fiscal quarter
during the term of this Agreement, to request that the Company allow Distributor
to exchange Products the Company with a total value of up to fifteen percent
( 15%) of the Products paid for by the Distributor during the prior 90-day period
for Products of the same type (i.e., polyaxiallumbar screws for poly axial lumbar
screws, cervical plates for cervical plates); and the Company shall use
commercially reasonable efforts (which shall be determined in the company's sole
discretion) to accommodate such exchange request. Each request for an exchange
of Products must be made not less than 45 days before the end of a fiscal quarter.
Custom implants or implants that are not a part of the Company's regular price
list shall not be subject exchange pursuant to this Section 5.6"
2.
MISCELLANEOUS
In the event of any conflict between the provisions of this Amendment and the
Agreement, the provisions of this Amendment shall prevail. Capitalized terms not defined in this
Amendment shall have the meaning ascribed to such terms in the Agreement. Other than as set
forth in this Amendment, the remainder of the Agreement shall remain in full force and effect.
9
ATEC0000051
#:10947
IN WITNESS WHEREOF, the parties have executed this Amendment to the Agreement
on the date set forth above.
Dirk Kuyper
President and Chie
xecutive Officer
INTERNATIONAL IMPLANTS, LLC
-
Name:
Title:
10
ATEC0000052
#:10948
SECOND AMENDMENT TO
This Second Amendment to. the Distribution Agreement (this "Second Amendmenf') is
made as of February 3. 2009, between Intemational Implants, LLC, (the "Distributor") and
Alphatec Spine, Inc. (the "Company"), Capitalized terms undefined herein shall have the
meaning ascribed them in the Agreement.
RECITALS
Reference is made to that certain Distribution Agreement dated July 10, 2008, as
amended, (the ~'Effective Date"). ·between the parties to this Second Amendment (the
"Agreement~').
Parties hereto, the Parties hereto agree as follows:·
1.
AMENDMENTS
1.1
Amendment to Exhibit A- Products and Prices. Exhibit A of the Agreement
"As of the Effective Date, the Pta ducts listed below shall be subject to the prices
indicated in this Second Amendment.
ATEC0000053
#:10949
2
ATEC0000054
#:10950
/
Other than as set forth in this amended price list, all other products and pricing provided
in the Agreement shall remain in full force and effect. 'l
2.
MISCELLANEOUS
In the event of any conflict between the provisions ofthis Second Amendment and the
Agreement, the provisions of this Second Amendment shall prevail. Capitalized terms not
defined in this Second Amendment shall have the meaning ascribed to such terms ill the
Agreement. Other than as set forth in this Second Amendment, the remainder of the Agreement
shall remain in full force and effect.
3
ATEC0000055
#:10951
IN WITNESS WHEREOF, the parties have executed this Second Amendment to the
Agreement on the date set forth above.
President and
· Executive Officer
4
ATEC0000056
#:10952
THIRD AMENDMENT TO
----~--~--~~~~~~~~DIB~RIBBTI0N~AGREENlEN~~~~~~~~~~~~~--~
This Third Amendment to the Distribution Agreement (this "Third Amendment'') is made
of
February
4, 2010, between International Implants, LLC, (the "Distributor") and Alphatec
as
Spine, Inc. (the "Company"). Capitalized terms undefined herein shall have the meaning
ascribed them in the Agreement.
RECITALS
Reference is made to that certain Distribution Agreement dated July 10, 2008, as
amended, (the "Effective Date'), between the parties to this Third Amendment (the
"Agreement").
Parties hereto, the Parties hereto agree as follows:
1.
AMENDMENTS
1.1
Amendment to Exhibit A - Products and Prices. Exhibit A of the Agreement
"As of the Effective Date, the Products listed below shall be subject to the prices
indicated in this Third Amendment.
f"_:,_ ~-,'·:---~------~
-- ~Ef3~ir
MJ§
il-:-_--:-------.-~- __ __._ ~----!1-----~1_Jl!!L~ _~ Mtit
___ ___ _____ __ ~i¥~~-~if¥-~-~~,,;u
, _@ :ji ~ __ _ Xi-;n
!: ht:.'_
__ ____ __ _ •
·r-:"'-
--~ ~~~i-
22015
SETSCREW
73845-30
CANNULATED POLYAXIAL SCREW 4.5MM X 30MM
73845-35
73845-40
$
$
$
$
73845-45
$
800.00
73845-50
CANNULATED POLY AXIAL SCREW 4.5MM X 50MM
$
$
$
$
$
$
$
$
$
$
$
800.00
73845-55
73845-60
CANNULA TED POLYAXIAL SCREW 4.5MM X 60MM
73855-30
73855-35
73855-40
73855-45
73855-50
73855-55
73855-60
73865-30
-'~1
_
95.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
ATEC0000057
#:10953
.( ·t: ~~ ~fv .,~ ·· · ... --·f.1 '~·!«@J1l ;R~ :~·~k, · ,.tiM.,·-.· .... · ·.· ~·- ·;~ -- ·::l·---- JillJ ·<~; ~· 1
I·-~~·. '·....'· ·-.·,. .~-·.....:\-.. ._..J!H~
§L. dll¥3.~1:11~ r~,.,, " -. f .~ .. tL -~ ...J1~L ~ ...
Jlli . -._
...- ..
c . . .-
<
··--·-··
--
... 13860-35-
. ~Cfl\t'J t'J tl LAIEitFlOLYAX!fl\LSCREW=6~5rvl rvi'A3"5rvlrvl
73865-40
73865-45
73865-50
73865-55
73865-60
73875-30
73875-35
73875-40
73875-45
73875-50
73875-55
73875-60
73955-30
SACRAL CANNULATED POLYAXIAL SCREW 5.5MM X 30MM
73955-35
73955-40
SACRAL CANNULATED POL YAXIAL SCREW 5.5MM X 40MM
73955-45
SACRAL CANNULATED POL YAXIAL SCREW 5.5MM X 45MM
73955-50
73965-30
73965-35
73965-40
73965-45
73965-50
SACRAL CANNULATED POLYAXIAL SCREW6.5MM X 50MM
73975-30
73975-35
73975-40
73975-45
73975-50
SACRAL CANNULATED POLY AXIAL SCREW 8.5MM X 50MM
73600-030
PRE-CONTOURED I CP Tl ROD 5.5MM X 3CM
73600-035
PRE-CONTOURED I CP Tl ROD 5.5MM X 3.5CM
73600-040
73600-045
73600-050
73600-055
73600-060
73600-065
73600-070
73600-075
73600-080
PRE-CONTOURED I CP Tl ROD 5.5MM X SCM
73600-090
73600-100
73601-030
STRAIGHT CP Tl ROD - 5.5MM X 30MM
73601-040
STRAIGHT CP Tl ROD- 5.5MM X 40MM
73601-050
73601-060
.
,_
·-
$
....
mro~oo
j
..
$ 800.00
$ 800.00
$ 800.00
$ 800.00
$ 800.00
$ 800.00
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
800.00
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
142.50
2
ATEC0000058
#:10954
Other than as set forth in this amended price list, all other products and pricing provided
in the Agreement shall remain in full force and effect."
2.
MISCELLANEOUS
In the event of any conflict between the provisions of this Third Amendment and the
Agreement, the provisions of this Third Amendment shall prevail. Capitalized terms not defined
in this Third Amendment shall have the meaning ascribed to such terms in the Agreement. Other
than as set forth in this Third Amendment, the remainder of the Agreement shall remain in full
force and effect.
** Signature Page Follows **
3
ATEC0000059
#:10955
IN WITNESS WHEREOF, the parties have executed this Third Amendment to the
Agreement on the date set forth above.
~.;~
Title:
(!,E;:c:::>
4
ATEC0000060
#:10956
EXHIBIT 1-C
TO THIRD AMENDED
COMPLAINT
0.0
Case
Document281-4
593-2 Filed
Filed11/17/14
05/16/15 Page
Page2209
of 5ofPage
221 ID
Page
#:5383
ID
#:10957
Case
Document281-4
593-2 Filed
Filed11/17/14
05/16/15 Page
Page3210
of 5ofPage
221 ID
Page
#:5384
ID
#:10958
Case
Document281-4
593-2 Filed
Filed11/17/14
05/16/15 Page
Page4211
of 5ofPage
221 ID
Page
#:5385
ID
#:10959
Case
Document281-4
593-2 Filed
Filed11/17/14
05/16/15 Page
Page5212
of 5ofPage
221 ID
Page
#:5386
ID
#:10960
#:10961
EXHIBIT 1-D
TO THIRD AMENDED
COMPLAINT
0.0
Case
Document281-5
593-2 Filed
Filed11/17/14
05/16/15 Page
Page2214
of 7ofPage
221 ID
Page
#:5388
ID
#:10962
Case
Document281-5
593-2 Filed
Filed11/17/14
05/16/15 Page
Page3215
of 7ofPage
221 ID
Page
#:5389
ID
#:10963
Case
Document281-5
593-2 Filed
Filed11/17/14
05/16/15 Page
Page4216
of 7ofPage
221 ID
Page
#:5390
ID
#:10964
Case
Document281-5
593-2 Filed
Filed11/17/14
05/16/15 Page
Page5217
of 7ofPage
221 ID
Page
#:5391
ID
#:10965
Case
Document281-5
593-2 Filed
Filed11/17/14
05/16/15 Page
Page6218
of 7ofPage
221 ID
Page
#:5392
ID
#:10966
Case
Document281-5
593-2 Filed
Filed11/17/14
05/16/15 Page
Page7219
of 7ofPage
221 ID
Page
#:5393
ID
#:10967
#:10968
EXHIBIT 2
TO THIRD AMENDED
COMPLAINT
0.0
#:10969
Surgeon
Beg Date of Service
End Date of Service
Amount Paid to Hospital by Amount Paid to Surgeon by State Fund
State Fund
Billing Entity ‐ Hospital Billing Entity ‐ Surgeon
PACIFIC HOSPITAL OF LONG BEACH
KHALID B AHMED MD A PROFESSION
Ahmed, Khalid
11/15/2008
11/18/2008
$51,116
$7,064
PACIFIC HOSP OF LONG BEACH
AHMED, KHALID B
Ahmed, Khalid
10/18/2008
10/22/2008
$70,001
$6,957
Akmakjian, Jack
9/13/2010
9/17/2010
$131,646
$9,007
JACK H AKMAKJIAN MD INC
AKMAKJIAN SPINE & GENERAL ORTHOPAEDICS C
FULLERTON ORTHOPAEDIC SURGERY
HAIDER SPINE CENTER MEDICAL GR
IAN I T ARMSTRONG MD INC
10/12/2012
10/16/2012
$170,510
$6,979
Alexander, Gerald
12/19/2012
12/23/2012
$108,382
$24,217
Alexander, Gerald
3/31/2011
4/4/2011
$67,142
$10,910
Armstrong, Ian
1/9/2012
1/13/2012
$119,754
$8,943
IAN ARMSTRONG MD
Armstrong, Ian
5/9/2011
5/13/2011
$90,916
$7,277
DANIEL A CAPEN MD
Capen, Daniel
3/24/2012
3/27/2012
$70,979
$9,377
HEALTHSMART PACIFIC INC
DANIEL CAPEN MD
Capen, Daniel
5/19/2011
5/23/2011
$97,313
$13,797
PACIFC HOSP LONG BEACH
MITCHELL G COHEN M D
Cohen, Mitchell
9/14/2011
10/6/2011
$111,779
$7,088
PACIFIC HOSP LONG BEACH
MITCHELL G COHEN MD INC
Cohen, Mitchell
2/15/2010
2/20/2010
$141,533
$12,192
ISRAEL P CHAMBI
Chambi, Israel
2/11/2011
2/13/2011
$61,437
$9,779
ISRAEL P CHAMBI
Chambi, Israel
3/2/2011
3/5/2011
$45,484
$10,172
CATALINO D DUREZA MD
MMG CATALINO DUREZA/CATALINO D DUREZA MD
Dureza, Catalino
Akmakjian, Jack
1/15/2009
1/20/2009
$90,587
$9,902
4/15/2009
4/21/2009
$119,410
$17,795
Haider, Thomas
5/6/2010
5/11/2010
$164,903
$19,782
Haider, Thomas
5/27/2010
5/31/2010
$74,247
$10,371
JOHN LARSEN MD
Larsen, John
3/8/2011
3/13/2011
$77,135
$7,029
JOHN M LARSEN/JOHN LARSEN MD
Larsen, John
10/23/2008
10/27/2008
$99,108
$15,927
NELSON SPINE INSTITUTE
Nelson, Russell
1/9/2007
1/13/2007
$85,924
$9,050
Nelson, Russell
10/3/2006
10/11/2006
$97,041
$27,907
NELSON SPINE INSTITUTE
A MICHAEL MOHEIMANI MD IN/COAST SPINE AND SPORTS MEDICINE
Moheimani, Assad
2/28/2011
3/4/2011
$86,966
$8,837
COAST SPINE AND SPORT MEDICINE
Moheimani, Assad
10/1/2011
10/6/2011
$179,686
$11,788
RICHARD L MULVANIA INC
Mulvania, Richard
1/19/2010
1/23/2010
$100,287
$15,358
RICHARD MULVANIA MD
Mulvania, Richard
11/3/2009
11/6/2009
$100,640
$19,612
JARMINSKI, ANDREW R
Jarminski, Andrew (Asst)
5/22/2010
5/25/2010
$47,507
$2,051
ANDREW JARMINSKI
Jarminski, Andrew (Asst)
9/1/2010
9/9/2010
$115,976
$3,127
SERGE OBUKHOFF MD PH D INC/
Obukhoff, Serge
5/2/2011
5/6/2011
$93,737
$12,565
SERGE OBUKHOFF
Obukhoff, Serge
4/22/2011
5/5/2011
$77,944
$8,858
PACIFIC HOSP LONG BEACH
DAVID PAYNE
Payne, David
1/21/2009
1/24/2009
$82,726
$14,672
PAYNE, DAVID H
COASTAL NEUROSURGERY & SPINE ASSOCIATES
COASTAL NEUROSURGERY & SPINE ASSOCIATES
Payne, David
11/4/2009
11/7/2009
$66,132
$6,935
4/4/2012
4/4/2012
$73,215
$8,549
3/13/2012
3/19/2012
$103,057
$11,970
Dureza, Catalino
Tantuwaya, Lokesh
Tantuwaya, Lokesh
ORTHOPAEDIC MEDICAL GROUP OF R
Uppal, Gurvinder
10/6/2012
10/11/2012
$136,985
$16,777
ORTHOPAEDIC MEDICAL GROUP OF R
Uppal, Gurvinder
12/21/2012
12/25/2012
$132,090
$16,934

HUESTON HENNIGAN LLP

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