Not all fraudsters start off with the intent to deceive. Sometimes it just happens on the way to achieving success! Laura Perryman, CEO of Stimwave Technologies, created and sold a number of implantable neurostimulation devices including a device meant to treat chronic nerve pain with electrical currents. However, physicians told Perryman that they were having trouble implanting the pink stylet receiver component of the device in certain patients because it was too long. But shortening the device or recalling the device for a redesign did appear to be an option to Perryman. In response to the complaint, Perryman ordered a white version of the stylet made of all plastic, with no copper and therefore no conductivity. A dummy device that she misrepresented to doctors as an alternative to the pink neurostimulation device.
The fraud lasted from about 2017 through 2020. Perryman did resign from her position as CEO in 2019, when her scheme appeared to be unraveling. The U.S. Securities and Exchange commission charged Perryman for defrauding investors out of $41 million. The commission alleged that, from 2018 to 2019, Perryman made misleading statements about the device to investors. Perryman allegedly told investors the device was approved by the U.S. Food and Drug Administration and was the only effective device of its kind on the market.
While Perryman didn’t actively defraud the Medicare program, her instructions to physicians for Medicare was deceitful if not fraudulent. Perryman sold the device, dummy or not, to doctors and medical providers for approximately $16,000. But she instructed them how to bill Medicare for reimbursement at a rate of up to $18,000 per device. Helping them get a profit on a device that may or may not work with taxpayers’ dollars.
Great job by Federal Bureau of Investigation with this case.
Today’s Fraud of The Day is based on article “CEO gets 6-year prison sentence over useless neurostimulator component” published by The Quartz on June 18, 2024.
Laura Perry, founder and former CEO of Stimwave Technologies, was sentenced on Monday to six years in prison after being found guilty of health care fraud. Perryman created and sold a medical device component and told doctors that they could bill Medicare $18,000 for each implantation of the component, according to the U.S. Attorney for the Southern District of New York.
“Laura Perryman callously created a dummy medical device component and told doctors to implant it into patients,” said U.S. Attorney Damian Williams in a press release. “Perryman breached the trust of the doctors who bought her medical device, and more importantly, the patients who were implanted with that piece of plastic.”
