SIOUX FALLS, S.D. — Sanford Health will pay millions of dollars to settle a lawsuit over claims it knew a top neurosurgeon was defrauding the federal government through kickbacks and medically unnecessary surgeries, according to court documents filed Monday, Oct. 28.

Under the terms of the settlement with the federal government, Sanford will pay $20.25 million to settle the lawsuit brought against itself and Dr. Wilson Asfora, who until last month was employed by Sanford.

Sanford initially defended Asfora but fired him on Sept. 24. Sanford has also prohibited its physicians from profiting from the use of their medical devices at Sanford, the Department of Justice said Monday in a news release.

Sanford does not admit to any wrongdoing in the settlement, which also protects Sanford from being suspended from involvement in government health care programs such as Medicare.

Crucially, the settlement does not include Asfora. The settlement hints the federal government intends to pursue further legal action against Asfora and some related companies.

Two Sanford surgeons, Dustin Bechtold and Bryan Wellman, first filed suit against Sanford and Asfora in 2016, but the lawsuit was only unsealed this summer, and first reported by the Argus Leader newspaper in Sioux Falls. The federal government intervened in the case in July, throwing its weight behind the doctors and their claims. The complaint included 50 pages of accounts detailing times Asfora was alleged to have performed unnecessary surgeries.

The two doctors said Asfora was illegally profiting from a kickback scheme related to his use of devices distributed by Medical Designs LLC and Aegis Spine Inc., and that Asfora was conducting medically unnecessary surgeries to profit from use of the devices. Sanford, the lawsuit alleged, knew of the kickback scheme and still allowed claims to be made through government programs such as Medicaid and Medicare.

“Kickbacks can compromise a physician’s medical judgment, result in unnecessary procedures, and increase healthcare costs for everyone,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division, in a Monday news release. “We will continue to hold healthcare providers accountable when they violate the rules intended to safeguard the integrity of federal healthcare programs and the welfare of their beneficiaries.”

Under the terms of the False Claims Act, the two Sanford surgeons who served as whistleblowers in the matter will get $3.4 million of the settlement.

Under the terms of the settlement, Sanford will also enter into what’s known as a corporate integrity agreement. The agreement requires Sanford maintain a compliance program, implement a risk assessment program and hire and independent review organization to review Medicare and Medicaid claims at Sanford Medical Center. The agreement also requires Sanford Medical Center’s board and key executives obtain compliance-related certifications.

In an emailed statement, Matt Hocks, Sanford Health chief operating officer, emphasized the health care provider denied any liability or wrongdoing in the settlement.

“We chose to settle because the amount is far less than the unnecessary costs and operational disruption that would have persisted for multiple years,” he said. “We continue to stand behind the medical care that Dr. Wilson Asfora, who was a Sanford physician from 2007 to 2019, provided to his patients.”

The settlement brings Sanford in to assist the Department of Justice in further legal action. Under the terms of the settlement, Sanford will turn over documents related to Asfora, Medical Devices LLC and another medical device company, Sicage LLC., and make current and former Sanford executives and employees available for interviews by federal investigators.

On Monday, Asfora’s attorney asked for a 60-day extension from the time the government files a complaint against his client.

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