Spinal implant maker Reliance Medical Systems has lost a bid to dismiss a lawsuit by the U.S. government accusing it of paying kickbacks to its physician-investors on the grounds that the government relied on an unconstitutional delegation of Congressional lawmaking authority.
Utah-based Reliance's argument that Congress had improperly empowered the Department of Health and Human Services' Office of Inspector General to determine what conduct violates the Anti-Kickback Statute.
The government's 2014 lawsuit alleged that the pre-2012 business model amounted to paying doctors to use its products. According to the suit, Reliance offered interest in the company to doctors who already used Reliance products, and in some cases asked them to put up very little money to invest. Pregerson, denying the motion, noted that the Supreme Court had found that a delegation of authority unconstitutional only twice. As long as Congress provides an agency with a "guiding principle" in how to apply a law, the delegation is allowed, he said.
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