Brazilian Insurers Take On ‘Prosthetic Mafia’

WILMINGTON, Del. (CN) – Accusing Boston Scientific and others of operating a “Prosthetic Mafia” in Brazil, a band of private insurers claims in a federal complaint that they are footing the bill for medically unnecessary device implants that are flooding the country.

Though about 75 percent of Brazil relies on the completely free national health care system, private insurers in Brazil say the market for their supplemental services is steadily increasing.

Members of a nonprofit called Abramge, short for Associacao Brasileira de Medicina de Grupo, the insurers filed the suit on Dec. 14 with a federal judge in Delaware.

Their complaint takes aim at Boston Scientific, Arthrex and Zimmer Biomet Holdings, saying the three medical-device manufacturers are at the center of a civil conspiracy.

“It has recently been discovered that, from at least 2006 to the present, defendants, their Brazil-based wholly-owned subsidiaries, and in some cases local Brazilian medical device distributors acting as defendants’ agents, made improper payments and paid kickbacks to Brazilian doctors with the intent of influencing those doctors to use defendants’ devices and products in patients even if those devices were not called for or did not best meet the patients’ medical needs,” the complaint states.

Abramge says the scheme benefits from national regulation that requires Brazilian insurers, including Abramge’s members, to “pay for medical devices, which are implanted based solely on a doctor’s decision during the hospital stay of one of its insureds.”

If a doctor is influenced into implanting a certain device, Abramge says it is the insurer that ultimately bears this cost.

By paying bribes, according to the complaint, device makers ensure that Brazilian doctors treat patients with their products, “even if other devices or products may have been better suited.”

Abramge says the Brazilian version of “60 Minutes” or “20/20,” a program called “Fantastico” raised the curtain on the scheme in January 2015 with “a series of reports showing Brazilian medical device distributors offering secret cash commissions to an undercover reporter posing as a Brazilian surgeon.”

“‘Fantastico’s’ reports included undercover testimony from participants in medical device bribery schemes disclosing extensive bribery, kickbacks and fraud in the sale of medical devices,” the complain states.

“During the television program, representatives for numerous medical device distributors — including distributors used by defendants — offered physicians commission payments of 20 to 30 percent if they used certain medical devices.

“The ‘Fantasticonews program helped spur the Brazilian government into action and, immediately following its airing, the National Congress of Brazil conducted hearings to investigate corruption in the Brazilian medical device market.

Abramge quotes a final report issued by the Brazilian congress, which “found that the improper payments have ‘grown alarmingly’ and that the fraudulent scheme was ‘endangering the lives of patients in favor of the companies’ profit.’”

“The report found that doctors, incentivized by receiving payments from medical device manufacturers like defendants, were scheduling unnecessary surgeries for patients to

implant devices,” according to the complaint.

Accusing Boston Scientific and the others of fraud, Abramge asks for an injunction and punitive damages.

The insurance group is represented by Karen Skomorucha Owens with Ashby & Geddes.

Neither that firm nor spokespeople for Boston Scientific, Arthex or Zimmer Biomet returned requests for comment.

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