Senators Request Investigation into the Legality of PODs

Five U.S. senators requested an investigation by the Inspector General of the Department of Health and Human Services (“HHS”) into the legality of physician-owned distributorships (“PODs”). The legality of the PODs is being questioned under the federal Anti-kickback Statute and other fraud and abuse laws.

Distributorships act as a link between medical device manufacturers and hospitals. In return for marketing and stocking medical devices, distributorships receive commission. In the case of PODs, this commission flows to the physicians. As a result, the POD arrangement may provide some physicians with revenue for medical devices they use on their patients.

The request for an investigation was accompanied by the Senate Finance Committee report on POD proliferation. PODs currently exist in at least twenty states and may raise the possibility of medically unnecessary surgeries, the report warns. As its evidence, the report cites some specific cases of patients undergoing multiple risky operations and increased pre-operation rates in one hospital following the creation of a POD in the area.

The senators requested that the Inspector General provide an initial report on the findings by August 12.

For more information on how to avoid becoming a target by law enforcement, please contact Robert S. Iwrey, Esq., and for more information on Anti-kickback and other fraud and abuse analysis, please contact Adrienne Dresevic, Esq. or Carey F. Kalmowitz, Esq., at (248) 996-8510 or (212) 734-0128, or visit the Stark and Anti-Kickback specialty page on the HLP website.