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This Medical Implant Did Nothing, Except Enrich a CEO
The implant — a piece of plastic that performed no medical function — was marketed as the “receiver” of a neurostimulation device. The CEO of the medical device firm has been indicted and faces a potential sentence of 30 years in prison.
March 15, 2023
4 Min Read
ATU Images/The Image Bank via Getty Images
Patients seeking a non-opioid method to treat chronic pain were heartened when a neurostimulation device, the StimQ PNS system, came on the market in late 2016. The medical device may have worked, but it turned out that the manufacturer was also working the system.
Developed by Stimwave LLC, a medical device company founded in Florida in 2010 by CEO Laura Perryman, the StimQ PNS received 510(k) clearance from the FDA in March 2016. At the time, Stimwave said, "Thanks to our revolutionary wireless device, we are the only neuromodulation company cleared by the FDA to help patients with reducing their chronic neuropathic pain at most locations throughout the body." The device included a receiver that had to be surgically implanted to transmit energy from an externally worn battery to the neurostimulator. It turned out, however, that a second iteration of the receiver was made entirely of non-conductive plastic. Its sole function was to bilk Medicare and private insurers out of more than $16,000 for each procedure.
Last week, Perryman was indicted by the US Department of Justice for conspiracy to commit wire and healthcare fraud, which carry a combined maximum potential sentence of 30 years in prison, reports the International Consortium of Investigative Journalists (ICIJ).
Just a piece of plastic
“As alleged, at the direction of its founder and CEO Laura Perryman, Stimwave created a dummy medical device component — made entirely of plastic — designed to be implanted in patients for the sole purpose of causing doctors to unwittingly bill Medicare and private insurance companies more than $16,000 for each implantation of the piece of plastic,” said US Attorney for the Southern District of New York Damian Williams in a release issued by the DOJ on March 9, when Perryman was arrested. “The defendant and Stimwave did this so that they could charge medical providers many thousands of dollars for purchasing their medical device. Our office will continue to do everything in its power to bring to justice anyone responsible for perpetuating healthcare fraud, which in this case led to patients being used as nothing more than tools for financial enrichment.”
Stimwave filed for bankruptcy on June 15, 2022. A non-prosecution agreement entered into on Oct. 29, 2022, was also unsealed last week. Under the terms of the agreement, Stimwave accepted responsibility for its conduct. It was fined $10 million and will be required to maintain a compliance program overseen by a Chief Compliance Officer for three years.
In the beginning
Perryman didn’t start out with the intention to commit fraud, as the timeline laid out by the DOJ shows. When the device was initially brought to market, it contained three components — an implantable electrode array, the lead, which stimulates the nerve; a battery worn externally; and an implantable receiver that transmits energy from the battery to the lead. Called the Pink Stylet, because of its distinctive pink handle, this receiver was fit for purpose, but it had to be a certain length to work. After it was introduced, physicians told the company they were having problems implanting the stylet in some patients because of its length. Stimwave addressed their concerns by developing the White Stylet, which, the company said, could be cut to size. The only problem, which Stimwave failed to disclose to doctors, was that the White Stylet was a “dummy component made entirely of plastic that served no medical purpose,” in the words of the DOJ.
So why did Perryman do this? Follow the money.
Stimwave sold the device to medical providers for approximately $16,000. As the DOJ explains in its news release: “Medical insurance providers, including Medicare, would reimburse medical practitioners for implanting the device into patients through two separate reimbursement codes, one for implantation of the lead and a second for implantation of the Pink Stylet. The billing code for implanting the lead provided for reimbursement at a rate of between approximately $4,000 and $6,000, while the billing code for implanting a receiver, like the Pink Stylet, provided for reimbursement at a rate of between approximately $16,000 and $18,000.”
It would have been next-to-impossible to sell the device at the list price without reimbursement for implanting the receiver since the medical provider would have been losing money with each procedure. So, Stimwave kept selling its device with the White Stylet while submitting “fraudulent reimbursement claims for implantation . . . to Medicare, resulting in millions of dollars in losses to the federal government,” said the DOJ.
The FBI conducted investigative work in the case and the FDA provided assistance.
In addition to the indictment by the DOJ, Stimwave faces a civil lawsuit.
And maybe one day Pennyman and Elizabeth Holmes will be roommates.
About the Author(s)
Editor in chief of PlasticsToday since 2015, Norbert Sparrow has more than 30 years of editorial experience in business-to-business media. He studied journalism at the Centre Universitaire d'Etudes du Journalisme in Strasbourg, France, where he earned a master's degree. Reach him at [email protected].
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