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The wheels of justice, true to form, moved slowly but we learned last week that Laura Perryman, the founder and former CEO of medical device company Stimwave, was convicted of conspiracy to commit healthcare fraud and wire fraud. The convictions carry a maximum sentence of 10 years in prison for healthcare fraud and 20 years for healthcare and wire fraud. The sentencing will be determined by the judge at a later date, said a news release from the US Attorney for the Southern District of New York on the US Department of Justice (DOJ) website.

The case of the white stylet

As we reported in March of last year, Stimwave developed an implantable neurostimulation device to treat chronic pain, the StimQ PNS system, that came on the market in late 2016 after receiving clearance from FDA. “The device included a component containing electrodes (the ‘Lead’) and a receiver component that acted as an antenna, transmitting energy from an external power source to the Lead (the ‘Pink Stylet’),” writes US Attorney for the Southern District of New York Damian Williams. “From at least in or about 2017 up to and including 2020, Perryman, as Stimwave’s CEO, engaged in a multi-year scheme to design, create, manufacture, and market an inert, non-functioning component of the Device — called the ‘White Stylet.’ The White Stylet was marketed as a receiver of radiofrequency energy, but it was made of plastic and could not function as a receiver.”

It takes two . . . billing codes

The stylet switch came about because physicians complained that the original pink device did not fit in certain patients. A second iteration of the receiver, the so-called white stylet, could be cut to size. Problem solved, except for one small detail — the stylet was a dummy part made entirely of plastic that served no medical purpose, according to the DOJ. It did, however, ensure that practitioners could continue billing medical insurance providers, including Medicare, through two separate reimbursement codes, one for implantation of the stimulator part of the lead and another for implantation of the receiver.

Perpetuating the lie

“The White Stylet . . . was created solely so that doctors and medical providers would continue to purchase the Device for use in those scenarios and continue to bill for the implantation of a receiver component,” writes Williams. “To perpetuate the lie that the White Stylet was functional, Perryman oversaw training that suggested to doctors that the White Stylet was a ‘receiver,’ when in fact it was made entirely of plastic, contained no copper, and therefore had no conductivity. In addition, Perryman directed other Stimwave employees to vouch for the efficacy of the White Stylet as a receiver, when she knew that the White Stylet could not function as a receiver,” added Williams.

“Perryman recklessly used patients as tools for financial gain, and this jury’s unanimous verdict sends a resounding message that individuals who defraud healthcare programs will be held criminally accountable,” said Williams.