Dive Brief:
- A jury on Wednesday found the former CEO of Stimwave Technologies guilty of committing healthcare fraud for her role in creating and marketing an implantable neurostimulation device that contained a non-functioning component.
- Laura Perryman, the former Stimwave CEO and co-founder, was convicted of one count of healthcare fraud and one count of conspiracy to commit healthcare fraud and wire fraud, the U.S. Attorney for the Southern District of New York said. The count of healthcare fraud carries a maximum penalty of 10 years, and the count of conspiracy to commit healthcare and wire fraud carries a maximum sentence of 20 years in prison.
- The neurostimulator was designed to treat chronic pain by providing electrical currents to peripheral nerves. When physicians told Stimwave a receiver component of the system did not fit in certain patients, the company produced a dummy receiver component as an alternative, the U.S. Attorney said in a statement.
Dive Insight:
Concern over the size of the receiver implant arose soon after Stimwave’s StimQ peripheral nerve stimulation device, cleared by the Food and Drug Administration in August 2017, was released to the market.
Physicians told Stimwave they were having trouble implanting a pink stylet receiver component of the device in certain patients because it was too long. Perryman then ordered the creation of a white version of the stylet made of all plastic, with no copper and therefore no conductivity, and misrepresented it to doctors as an alternative to the pink stylet, according to the indictment.
The white plastic stylet, falsely marketed as a receiver of radiofrequency energy, could be cut to size by the doctor for use in smaller anatomical spaces. Perryman directed Stimwave employees to vouch for the efficacy of the white stylet as a receiver and oversaw training for doctors suggesting the component was functional, the U.S. Attorney said.
Billing codes provided for reimbursement of about $4,000 to $6,000 for implanting the device’s lead and about $16,000 to $18,000 for the receiver portion. Stimwave caused healthcare providers to implant the device in patients and submit reimbursement claims to insurers including Medicare using the two codes.
“Laura Perryman brazenly created a dummy medical device component – made entirely out of plastic – to be implanted into patients. She did this so that she could entice doctors to buy her device for many thousands of dollars. Perryman recklessly used patients as tools for financial gain,” U.S. Attorney Damian Williams said in a statement.
The fraud lasted from about 2017 through 2020. Perryman, who was arrested in March 2023, resigned from her position as CEO in November 2019. After Perryman’s scheme unraveled, Stimwave recalled the device and eventually filed for bankruptcy. In December, the U.S. Securities and Exchange Commission charged Perryman with defrauding investors out of about $41 million.
The jury’s unanimous verdict followed an 11-day trial.