“An off-balance sheet agreement that says [physicians] don’t have to pay [MiMedx] unless [physicians] have been paid” breaks Anti-kickback law. It’s easy to see why it’s illegal because it allows MiMedx to gain market share while the physician takes no risk.
Crossing this line means MiMedx could receive what’s known as “the death penalty” for medical product manufacturers because “Violation of the Anti-Kickback Statute may also lead to exclusion from Federal health care programs.”
See page 139-140 of the deposition posted yesterday:
Q. So there was a document that you produced. And that is an invoice that you received from MiMedx?
A. After, it looks like, 90 days after the use of the product.
Q. You seem to be focusing on that. What’s the — what is your meaning of pointing that piece of information out?
A. Because usually it takes 90 days to get paid after we use the product. So this invoice was generated 90 days after the use of it. So somebody went to the little freezer, pulled out the product, had the procedure. The invoice was not generated for 90 days. Which is inconsistent with the letter from Pete Petit below the Anti-kickback statements that state in exhibit — wherever — that we only had 30-day terms.
Please click here for the full “Spreadsheet Evidence of [MiMedx] breaking anti-kickback.”
Why wouldn’t the CFO send a letter, why Petite Parker? Because Petite Parker knows MDXG is breaking the law and trying to snuff this guy out from making it a bigger issue through a form of polite intimidation. If the invoices need to be paid then why suddenly extend terms from net 30 to net 60?
Q. Well, tell me about the conversation that y’all had.
A. I still was uncomfortable. It seems very strange. And I said to them, I said, you — it seems very strange. We have an agreement for however many years in the way we do business. A controller shows up and says that agreement never existed.
Within 24 hours the CEO of a public company sends me a letter reiterating that that never existed. Extends the terms. It just — it was just — it made me very nervous. Because I have been doing this for awhile. It just didn’t make sense.
And then we had dinner. And I contacted the doctor, I said, hey, if this all — how many patients — again, it all comes down to the patients. It this stuff stops, how bad are the patient outcomes? Because, again, I can’t mess with the patients. That’s our job to care.
And the doctor said, hey, let’s try to quell your nervousness and we had dinner with the sales guys. And I explained to them. And their response was, geez, I wish the letter never — no, there’s nothing to it and la-da-da, whatever.
And still my instincts tell me it just seems very odd that we would have a normal course of business and then — in fact, it just seems very odd that on the second visit they still totally deny that this whole methodology exists. And a letter comes from the CEO, not the CFO, but the CEO saying it never existed. And, oh, by the way, Anti-kickback and all this. The facts are the facts.
How could MiMedx have 60 days of receivables with unpaid balances from 2013? None of these options are good, and “the real answer” is the worst:
A. So I asked him [Mr Cranston]. I said, well, one of three things is happening. One, you are really bad at your job and you just don’t know how to collect because these are 2013 invoices. It’s 2016, and we owe you a boatload of money.
Two, you are just gouging the heck out of us and you don’t care whether we pay or not.
Or, three, there is an off-balance sheet agreement that says we don’t have to pay unless we have been paid. Which is the real answer. But there’s no way that he’s going to say that. So when he says, Answer Number 1, I’m really bad at my job. I’ve got patients out there scheduled for surgery. And I figure we are going to — if I say, current with regards to the monies owed. Now, we do owe money. I will tell you that we owe money. Because even though once we pay when we get paid, the margins on this were still upside-down.
Whistleblowers have been flooding in to corroborate:
What Village Podiatry is saying is absolutely how Mimedx operated. Consignment inventory was sent in, reps would run the insurance verification, the product was applied, reps would work will the billers to ensure it was coded and billed correctly, we’d check the eob when it came back to ensure it was fully reimbursed. Only at that point did we enter the implant information into Salesforce, which generated the invoice, which had the 30-day payment terms. If the insurance denied payment, the reps would just change the consignment product to “no charge evaluation” [i.e. SG&A expense] units so the doctor and patient weren’t out the money. We were told by managers that this was legal because as long as the insurance company didn’t reimburse the product, it wasn’t fraud.
But since Petite Parker knows it is indeed fraud, knowingly ordering his managers to carry it out would mean MiMedx is systematically breaking the law.
Note: Even though the exhibits above are public court documents, we blocked out the patients’ names because we care about them. Evidently, MiMedx does not.