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John R. Fischer, Senior Reporter | March 15, 2023
Stimwave created a faulty device receiver that cost the government millions in fradulent reimbursement claims.
A former Medtech CEO could spent the next 30 years in prison for developing and selling a nonfunctioning dummy medical device that was implanted into patients suffering from chronic pain, and cost federal healthcare programs millions in reimbursement.
Former Stimwave CEO, Laura Perryman, who founded the company in 2010, appeared before the U.S. District Court for the Southern District of Florida after being arrested earlier that day in Delray Beach. She is charged with one count of conspiracy to commit wire fraud and healthcare fraud, and one count of healthcare wire fraud.
A whistleblower informed the government of the scheme in 2018.
Stimwave has signed a nonprosecution agreement, admitting to its role in the scheme, and agreeing to pay a $10,000,000 monetary penalty. For the next three years, it will maintain an adequate compliance program that includes hiring a chief compliance officer, holding regular compliance committee meetings, and cooperating fully with the government.
“Individuals and companies that manufacture and distribute medical devices with nonfunctional components put the health of patients at significant risk. We will continue to pursue and bring to justice those who jeopardize the health of their patients and of the public,” said FDA-OIC special agent in charge Fernando McMillan, in a statement.
A plastic knockoff
Following FDA clearance in 2017, Perryman and Stimwave launched the StimQ PNS System, a neurostimulator for treating chronic pain in the peripheral nerves. It was made up of an implantable electrode array (the lead); an externally worn battery; and a separate, 23-centimeter implantable receiver known as the pink stylet, which contained copper to transmit energy from the battery to the lead.
Soon after, doctors told Perryman that the stylet was too long to implant in certain patients. Unfortunately, the stylet could not be trimmed down, as it would interfere with its functionality.
Stimwave sold each device for approximately $16,000, with doctors able to be reimbursed between approximately $4,000 and $6,000 for the lead, and $16,000 and $18,000 for the Pink stylet from insurers, including Medicare. Knowing that lack of a receiver would cost doctors financially and make it more difficult for the company to sell the device at the $16,000 price tag, Perryman instructed her company to make a white stylet that could be cut to size and fit into smaller anatomical spaces.
Unlike its pink predecessor, the white stylet was made entirely of plastic and had no copper, making it nonconductive and merely an "inert, nonfunctioning" knockoff. Yet, Stimwave, under Perryman's authority, sold it at the same price and did not recommend to doctors not to implant the device or receiver in cases where the pink stylet did not fit comfortably.
