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Exhibit 1

Case 1:15-cv-00301-KBJ Document 1-1 Filed 03/02/15 of 90

U.S. Department of Justice Office of Information Policy Suite 11050 1425 ,Veer YorkAvenue, ,V IV Washington, DC 20530-0001

Telephone: (202) 514-3642

Patric Hooper, Esq. Hooper, Lundy & Bookman, P.C. Suite 1600 1875 Century Park East Re: Appeal No. AP-2015-00570 Los Angeles, CA 90067-2517 Request No. 145-F01-13433 phoonenii,health-law.com CDT:ADF

VIA: E-Mail

Dear Mr. Hooper:

You appealed from the action of the Civil Division of the United States Department of Justice on your request for access to an audio recording or a transcript of such recording in the case U.S. v. Reliance Medical Systems LLC.

After carefully considering your appeal, I am affirming, on partly modified grounds, the Civil Division's action on your request. The Freedom of Information Act provides for disclosure of many agency records. At the same time, Congress included in the FOIA nine exemptions from disclosure that provide protection for important interests such as personal privacy, privileged communications, and certain law enforcement activities. The Civil Division properly withheld this information in full because it is protected from disclosure under the FOIA pursuant to 5 U.S.C. § 552(b)(7)(A). This provision concerns records or information compiled for law enforcement purposes the release of which could reasonably be expected to interfere with enforcement proceedings.

Please be advised that this Office's decision was made only after a full review of this matter. Your appeal was assigned to an attorney with this Office who thoroughly reviewed and analyzed your appeal, your underlying request, and the action of the Civil Division in response to your request.

If you are dissatisfied with my action on your appeal. the FOIA permits you to file a lawsuit in federal district court in accordance with 5 U.S.C. § 552(a)(4)(B).

For your information, the Office of Government Information Services (OGIS) offers mediation services to resolve disputes between FOIA requesters and Federal agencies as a non-exclusive alternative to litigation. Using OGIS services does not affect your right to pursue litigation. The contact information for OGIS is as follows: Office of Government Information Services, National Archives and Records Administration, Room 2510, 8601 Adelphi Road,


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College Park, Maryland 20740-6001; e-mail at ogisrciThara.gov; telephone at 202-741-5770; toll free at 1-877-684-6448; or facsimile at 202-741-5769.

Sincerely,

X

2/23/2015

Christina D. Troiani, Attorney-Advisor for

Sean O'Neill, Chief, Administrative Appeals Staff

Signed by: CHRISTINA TROIANI


Exhibit 2


PILED CLERK, U.S. DISTRICT COURT

SEP - 8 2014

CENTRAL DISTAKit CF CALFOPNIA FM DclittTY

ase 2:14-cv-06979-DDP-PJW Document 1 Filed 09/08/14 Page 1 of 98 Page IC #:6

STUART F. DELERY Acting Associate Attorney General MICHAEL D. GRANSTON TRACY L. HILMER ARTHUR S. DI DIO DAVID M. FINKELSTEIN U.S Department of Justice Post Office Box 261 Ben Franklin Station Washington, DC 20044 Telephone: (202) 616-2971 David.M.Finkelsteineiusdoj.gov

Attorneys for the United States

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA,

Plaintiff,

vs.

RELIANCE MEDICAL SYSTEMS, LLC, APEX MEDICAL TECHNOLOGIES, LLC, KRONOS SPINAL TECHNOLOGIES, LLC, BRET BERRY, JOHN HOFFMAN, ADAM PIKE, and ARIA 0. SABIT, M.D.

Defendants.

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CV14-6979cgr rk/A

Case No.

UNITED STATES' COMPLAINT

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ase 2:14-cv-06979-DDP-PJW Document 1 Filed 09/08/14 Page 2 of 98 Page I

The United States of America brings this action against Reliance Medical

Systems, LLC, Apex Medical Technologies, LLC, Kronos Spinal Technologies,

LLC, Bret Berry, John Hoffman, Adam Pike, and Aria 0. Sabit, M.D.

NATURE OF ACTION

1. This is an action to recover damages and civil penalties under the

False Claims Act (FCA), 31 U.S.C. §§ 3729-33, and to recover money for common

law or equitable causes of action for payment by mistake and unjust enrichment.

The United States' claims arise out of an illegal scheme by the defendants to

knowingly submit — and cause to be submitted — claims to the Medicare program

or items and services that were tainted by kickbacks, were not reasonable and

necessary, and were otherwise false and fraudulent.

2. At all relevant times, Reliance Medical Systems (Reliance) sold spinal

implants in Southern California through distributorships that it controlled,

ncluding Apex Medical Technologies (Apex) and Kronos Spinal Technologies

(Kronos). Drs. Aria Sabit and Sean Xie were physician-investors in Apex, and

Drs. Gowriharan Thaiyananthan and Ali Mesiwala were physician-investors in

Kronos.

3. The spinal fusion claims of Drs. Sabit, Xie, Thaiyananthan, and

Mesiwala, were tainted by kickbacks that Reliance paid to them through Apex and

Kronos. Consequently, the Medicare claims for spinal fusion surgeries that these

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physicians submitted for the spinal fusion surgeries they performed using Reliance

implants were false and not payable. The Medicare claims submitted by hospitals

for the related hospital services also were tainted by kickbacks and, accordingly,

5 were false and not payable. This action seeks to recover the money Medicare paid

as a result of the false claims that Reliance, Berry, Hoffman, and Pike, through

Apex, and Kronos, caused to be submitted by Drs. Sabit, Xie, Thaiyananthan, and

9 Mesiwala, and by the hospitals where those physicians performed surgeries using 0

1 Reliance implants.

2 4. In addition, certain of the spinal fusion surgeries performed by

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Reliance's physician-investors using Reliance implants were not medically 4

15 necessary or were more extensive than what was necessary. The payments that

16 Reliance made to physician-investors, through Apex and Kronos, caused them to

perform surgeries using Reliance implants that were not medically necessary 18

19 and/or were more extensive than what was necessary. This action also seeks to

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ecover the money Medicare paid as a result of the false claims for medically 21

22 unnecessary surgeries and related hospital services that Reliance, Berry, Hoffman,

23 and Pike, through Apex and Kronos, caused to be submitted by Drs. Xie,

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25 Thaiyanantha and Mesiwala and the hospitals where those physicians performed

26 unnecessary surgeries using Reliance implants. 27

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ase 2:14-cv-06979-DDP-PJW Document 1 Filed 09/08/14 Page 4 of 98 Page

JURISDICTION

5. This action arises under the FCA and under the common law.

6. This Court has subject matter jurisdiction over this action under 28

U.S.C. § 1345 because the United States is the Plaintiff. In addition, the Court has

subject matter jurisdiction over the FCA cause of action under 28 U.S.C. § 1331.

The Court has personal jurisdiction over the defendants pursuant to 31 U.S.C. §

3732(a) because the defendants transact or transacted business in the Central

District of California.

VENUE

7. Venue is proper in the Central District of California under 31 U.S.C. §

3732(a) and 28 U.S.C. § 1391(b) because the defendants conducted business in this

district; Drs. Sabit, Xie, Thaiyananthan, and Mesiwala performed surgeries using

Reliance implants in this district; and many of the events giving rise to these

claims occurred in this district.

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PARTIES 2

22 8. The United States of America is the Plaintiff. The United States

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brings this action on behalf of the United States Department of Health and Human 24

25 Services (HHS), including HI-IS's component, the Centers for Medicare and

26 Medicaid Services (CMS), which administers the Medicare and Medicaid 27

Programs. 2B

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9. Defendant Reliance Medical Systems, LLC (Reliance), is a Utah

company. Reliance's mailing address is 1838 East 9800 South, Sandy, Utah,

84092, and its principal place of business is 545 West 500 South, Bountiful, Utah,

84010. At all relevant times, Reliance operated companies that had financial

6 elationships with physicians who arranged for the hospitals in which these

physicians worked to purchase Reliance spinal implants.

9 10. Defendant Apex Medical Technologies, LLC (Apex), is one such 10

Reliance affiliate. Apex is a Florida company, which lists its street address as

12 11313 Mandarin Ridge Lane, Jacksonville, Florida, 32258. Between 2010 and

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2012, Apex's conducted business in Southern California. 14

15 I 1. At all relevant times, Apex derived revenues from the sale of spinal

6 implants to the hospitals in which its two physician-investors — Drs. Aria Sabit and 17

8 Sean Xie — performed surgeries.

19 12. Defendant Kronos Spinal Technologies, LLC (Kronos), is another

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Reliance affiliate. Kronos is a Florida company, which lists its street address as 21

22 11313 Mandarin Ridge Lane, Jacksonville, Florida, 32258. At all relevant times,

23 Kronos' principal place of business in Southern California.

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25 13. At all relevant times, Kronos derived revenues from the sale of spinal

26 implants to the hospitals in which its physician-investors — including Drs. Ali 27

Mesiwala and Gowriharan Thaiyananthan — performed surgeries. 29

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14. Defendant Bret Berry is a resident of the state of Florida. Berry is a

Reliance founder and owner and an investor in approximately twenty companies

that distribute Reliance implants, including Apex and Kronos. His last known

address is 514 Frank Shaw Road, Tallahassee, Florida, 32312.

15. Defendant John Ho man is a resident of the state of Texas. Hoffman

is a distributor for Reliance and an investor in approximately five companies that

distribute Reliance implants, including Apex and Kronos. His last known address

is 6738 Manassas Drive, San Antonio, Texas, 78240.

16. Defendant Adam Pike is a resident of the state of Utah. Pike is a

Reliance founder and owner and an investor in approximately twenty companies

that distribute Reliance implants, including Apex and Kronos. His last known

address is 313 Pheasant Ridge Circle, Bountiful, Utah, 84010.

17. Defendant Aria Sabit, M.D. is a resident of the state of Michigan. Dr.

Sabit was an Apex physician-investor from May 1, 2010, until August 10, 2012.

Between April 2010 and June 2012, Dr. Sabit was an enrolled Medicare physician.

Between June 2009 and December 2010, Dr. Sabit resided in Ventura, California,

where he performed surgeries on Medicare beneficiaries. Dr. Sabit's last known

address is 848 Ann Street, Birmingham, Michigan, 48009.

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C se 2:14-cv-06979-DDP-PJW Document 1 Filed 09/08/14 Page 32 of 98 Page I

V. ADDITIONAL EVIDENCE OF DEFENDANTS' UNLAWFUL PURPOSE

3 134. At all relevant times, Bret Berry, John Hoffman, and Adam Pike were

aware of, possessed, and discussed information about the AKS's prohibitions, 5

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7 to physicians to induce them to generate business.

including the OIG guidance that warned against offering investment opportunities

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135. Reliance's compliance manuals acknowledge the (JIG guidance

0 concerning the prohibition against offering remuneration to physicians to induce

them to generate business. 2

13 136. On April 18, 2008, the law firm Thompson & Knight LLP advised

4 Reliance that "[m]ultiple Federal courts have held that the [AK S] covers any 15

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17 referral of services or to induce further referrals."

18 137. On July 26, 2011, Adam Pike was recorded describing the purpose of

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20 Reliance's PODs as follows: "I always scoff at someone I'm sitting with that says

21 well it's really not about the money ah b***s***, it is about the money. We make a 22

arrangement where one purpose of that arrangement is to obtain money for the

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lot of money." (emphasis added). Bret Berry and John Hoffman were also present

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27 138. Reliance did not allow physicians to become investors unless

28 hospitals in which they performed surgeries agree to purchase Reliance devices.

A. Inducements to Physicians

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C se 2:14-cv-06979-DDP-PJW Document 1 Filed 09/08/14 Page 33 of 98 Page

139. Bret Berry and John Hoffman have stated that Reliance does not offer

2 investment interests to physicians who will not order a high volume of Reliance 3

mplants.

140. On July 26, 2011, John Hoffman was recorded stating that a particular

surgeon — a partner of Dr. Mesiwala — was not invited to become a Kronos investor

because "he's not busy at all." Bret Berry and Adam Pike were also present when

9 Hoffman made this statement. 10

141. Bret Berry, John Hoffman, and Adam Pike expected physician-

12 investors to regularly use Reliance implants.

142. As stated by Adam Pike, Reliance expects physician-investors "to 4

participate aggressively" in Reliance's profitability by regularly using Reliance

16 implants.

143. On July 20, 2011, Dr. Mesiwala was recorded telling a potential

9 Kronos investor that "the expectation is [that you] will be using your own stuff,"

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i.e. Reliance implants. 2

22 144. In this same conversation, Dr. Mesiwala described Kronos as follows:

23 `if you truly are in this to make money and you have a finite time limit to do it, I

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25 don't know a better way to do it."

26 145. On July 26, 2011, Adam Pike was recorded telling a potential Kronos 27

28 physician-investor,

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[what] we've made ranged anywhere from probably the lowest being around thirty, probably thirty grand a month per owner. Uh

2 upwards of eighty uh just depending on the ... business that month. 3 Now, mind you this comes from very dedicated employees ... and it's

our job not to ever sign someone up unless they are that dedicated cause it doesn't work or improve ya understand so that's one of our

5 criteria.

(emphasis added). Bret Berry and John Hoffman were also present when Pike

made this statement.

146. On July 26, 2011, Adam Pike was recorded telling a potential Kronos

physician-investor, "We're interested in you growing ... your practice ... Grow it

is fine. Grow it fine but grow with us. Be dedicated and loyal to your company

here." (emphasis added). Pike added, "We don't share this with everyone

we handpick who we work with." Bret Berry and John Hoffman were also present

when Pike made these statements.

147. On July 26, 2011, John Hoffman was recorded stating that certain

physicians were not invited to invest because they would not be "loyal" to

Reliance. Specifically, Hoffman stated, "Loyalty's a big factor. They ... have ten

companies they work with and they're not gonna change that."

148. On July 26, 2011, Adam Pike was recorded stating that Reliance

insisted on "evaluating" physicians before they could invest. Specifically, Pike

stated: "we always start guys out with an evaluation period. We mandate that."

149. During this same meeting, Adam Pike was recorded stating,

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The evaluation phase is ... for a couple of reasons. It lets you get familiar with the product. It ... lets you get familiar with us as a company and vice-versa. We get familiar with you, we better understand your hospital. We better understand your volume and your commitment to it and then when we all agree and- and the signing date comes then it's we know what we got, everybody knows. There's no the . , question mark.

(emphasis added). Bret Berry and John Hoffman were also present when Pike

made this statement.

150. During this same meeting, Adam Pike and Bret Berry were recorded

making the following statements:

Pike: also [the evaluation period is] a nice buffer time for when the competitors come to you or the hospital staff comes to you and asks about this company you're not an owner.

Berry: You have no finances-

Pike: You don't have to disclose anything. (emphasis added).

151. Berry, Hoffman, and Pike promised their physician-investors that they

ould be paid their share of profits during their evaluation periods, during which

time they were not technically investors in a Reliance POD.

152. On July 26, 2011, Adam Pike was recorded telling a potential Kronos

physician-investor "if you're the right guy for us and we're right for you then after

you've evaluated for a month and you're like you know what this, I like it and

ant to go forward and we're all agree then there's no revenue loss ... you'll

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capture what you've worked for." (emphasis added). Bret Berry and John Hoffman

were also present when Pike made this statement.

153. On July 26, 2011, Adam Pike was recorded stating that Reliance is

5 interested in recruiting physicians who would "be appreciative of [Reliance] and

6 not take it for granted and do it for years and years and raise those kids with this

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nice income and [in] the first month or two go ahead and buy their college

education ...." (emphasis added). Bret Berry and John Hoffman were also present

when Pike made this statement.

154. On at least one other occasion, in late 2010, Adam Pike promised

potential physician-investors that Reliance would pay them enough to "put their

kids through college."

155. On July 26, 2011, Adam Pike was recorded stating that the amount of

money Reliance pays its physician-investors is "not a supplemental income. It's

likely to make you more money than your practice does." (emphasis added). Bret

Berry and John Hoffman were also present when Pike made this statement.

B. Physician-Investor Buy Outs

156. Bret Berry and Adam Pike discouraged Reliance physician-investors

rom using a competitor's implants in their surgeries. By way of example:

• On May 27, 2008, Larry Sager — a part-owner of certain Reliance PODs —wrote to Berry and Pike to notify them that Dr. Erik Westerlund, who at the time was a Reliance physician-investor, had planned to use a competitor's

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pedicle screws in a scheduled surgery; Berry responded by writing "WTF?!"; and

• On August 4, 2009, Sager wrote to Pike to notify him of "more concern" regarding Dr. Choll Kim, who at the time was a Reliance physician-investor. Sager's "concern" about Dr. Kim was due to his failure to use Reliance interbody cages in one of his scheduled surgeries. In response, Pike instructed Sager "to [bring] this to the attention of the other partners."

157. Both Dr. Westerlund and Dr. Kim surrendered their shares in their

9 respective Reliance PODs shortly after Sager drafted the above-mentioned emails

10 alerting Berry and Pike to his "concerns" about their implant selection.

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2 158. Bret Berry, John Hoffman, and Adam Pike retained the right to

13 repurchase the shares of Reliance's physician-investors. Berry, Hoffman, and Pike 19

15 exercised this right in circumstances where particular physician-investors failed to

6 generate significant profits for their POD.

159. Dr. David Lundin was one such physician who was forced to leave 18

19 Kronos due to his failure to use Reliance implants in a significant number of his

20 surgeries. 21

22 160. Between August 2007 and September 2008, Dr. Mesiwala, the only

23 other physician-owner of Kronos, pressured Dr. Lundin to increase Dr. Lundin's

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volume of spinal fusion surgeries. 25

26 161. Between August 2007 and September 2008, Bret Berry, John

27 Hoffman, and Adam Pike discouraged Dr. Lundin from using implants sold by

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Reliance's competitors, and pressured Dr. Lundin to use a greater percentage of

Reliance's implants in his surgeries.

162. On or about the Summer of 2008, Dr. Lundin announced his intention

to leave Dr. Mesiwala's practice and to move to another geographical area. After

Dr. Lundin announced his intention to leave Dr. Mesiwala's practice, Bret Berry,

John Hoffman, and Adam Pike informed Dr. Lundin that he would be forced to

surrender his shares in Kronos without compensation.

163. Bret Berry, John Hoffman, and Adam Pike also forced Dr.

Gowriharan Thaiyananthan to surrender his shares in Kronos without

compensation.

164. On July 26, 2011, Adam Pike was recorded stating,

There's a plan for [Dr. Thaiyananthan] to get busier ... he's got some options ... in another market a little south of here ... and we'll work on those one of the things that we could do is we could buy Ty [Dr. Thaiyananthan] out and when he re-establishes himself in another market he could buy back in.

Bret Berry and John Hoffman were also present when Pike made this statement.

165. Adam Pike made the statement quoted above after Dr. Thaiyananthan

made what he describes as a "paradigm shift" in his surgical practice, and began

performing significantly fewer surgeries involving Reliance implants.

166. On August 10, 2012, Reliance forced Dr. Thaiyananthan to return his

shares in Kronos.

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167. The document memorializing Reliance's re-acquisition of Dr.

Thaiyananthan's shares characterizes the transaction as a "sale" of "ten

membership units" in exchange for $24,448. However, Kronos had already paid 4

5 its investors $24,448 as a monthly profit distribution for July 2012. Apart for the

profit distribution that each Kronos investor received on July 31, 2012, Reliance

paid Dr. Thaiyananthan no money in exchange for his shares.

9 168. By contrast, approximately one month later, on September 1, 2012, 10

Reliance paid Dr. Ali Mesiwala for $101,789 for ten membership units in Kronos.

12 169. Reliance paid Dr. Mesiwala more than Dr. Thaiyananthan for the

13 same number of Kronos membership units because Dr. Mesiwala was continuing

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15 to generate significant profits for the company by performing surgeries using

16 Reliance implants. 17

18 C. Foreseeability of Physician-Investor Overutilization

9 170, Reliance generated daily reports detailing the number and types of

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surgeries that its physician-investors performed using Reliance implants. Bret 2

22 Berry and Adam Pike carefully reviewed these daily surgery reports.

23 171. Adam Grant, a Reliance employee responsible for generating daily

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25 surgery reports, would regularly celebrate reports indicating that Reliance

26 physician-investors were performing more (and more complicated) surgeries, and 27

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would lament reports indicating that Reliance physician-investors had not

performed the expected number of surgeries using Reliance implants.

172. By way of example:

• on October 31, 2012, Grant's email to Bret Berry and Adam Pike attaching daily surgery reports stated "New record for QSI [Quality Spinal Innovations, a Reliance POD] cases for a day. Woohoo";

• by contrast, on January 18, 2013, Grant's email attaching daily surgery reports stated, "There is a chain I've been hitting myself with, since that is what you'll want to do upon opening the attachment. Sorry."

173. Bret Berry and Adam Pike personally encouraged physician-investors

to perform more (and more complicated) instrumented fusion surgeries. For

example:

• On May 17, 2007, in response to an inquiry from Dr. Erik Westerlund regarding a patient "that would ... consider heroic surgical measures," Ada Pike encouraged Dr. Westerlund to perform "a seven level fusion with interbody using EST [Embassy Spinal Technologies, a Reliance POD]";

• On August 28, 2007, in response to a Reliance distributor's report that a Reliance physician-investor had scheduled a Tl 0-S1 [i.e. an eight-level] fusion, Bret Berry wrote, "That is awesome!! Is he using PEEK as well?"

• On October 18, 2007, in response to a Reliance distributor's report that Dr. David Greenwald "booked 5 cases today ... I LOVE IT!" Adam Pike wrote, "Please tell Dr. Greenwald to slow down. How dare he go crazy like this! PS. We are on it."

• In late-2007, Dr. Erik Westerlund wrote Bret Berry and Adam Pike to complain about "regular and incremental pressure" from Reliance, which "seems to have included subtle effects on my clinical volume."

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174. As stated by Adam Pike, Reliance is "interested in [its physician-

investors] growing [their] practice."

175. After Drs. Sabit, Mesiwala, and Thaiyananthan invested in Apex and

Kronos, the rate at which they billed Medicare for implanting PEEK cages

6 ncreased dramatically.

176. The seven months before Dr. Sabit agreed to invest in Apex, he billed

Medicare for fifteen procedures involving the implantation of PEEK cages. By 10

11 contrast, during the seven months after Dr. Sabit entered into a financial

12 relationship with Reliance, he billed Medicare for forty-three such procedures, an

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increase of 287%. 14

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VI. ADDITIONAL EVIDENCE OF DEFENDANTS' WILLFULNESS 6

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177. Bret Berry, John Hoffman, and Adam Pike were each personally

19 aware of the AKS — and of OIG's guidance concerning the AKS — when they

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formed Reliance and each of its distributorships, including Apex and Kronos. 21

22 178. On July 26, 2011, Adam Pike was recorded stating that he and Berry

2 founded Reliance as part of a plan to "get around" the AKS. Specifically, Pike

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25 stated, "Bret and I started this coming out of MBA school together. We were we

26 were aware of Stark and Anti-Kickback and we knew those existed and we devised

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a plan around those." (emphasis added). Bret Berry and John Hoffman were

present when Adam Pike made this statement.

A. Concealment

179. Reliance attempted to "get around" the AKS by structuring its

operations in a way that enabled it to hide its financial relationships with its

physician-investors.

180. On multiple occasions, Reliance, Berry, Hoffman, and Pike were

advised by their attorneys that they should notify patients that physician-investors

had a financial interest in Reliance's distributorships.


• On October 25, 2006, Reliance's principal attorney, John S. Bradley, Esq., advised Adam Pike: "I think you would want to notify the patients that the Dr. has a financial interest in the manufacturer of the device and that they may request another device be used if they desire."

• On April 17, 2007, Bradley wrote again to advise Reliance to "[d]isclose the physician investor's financial interest in writing at the time that the referral ... is sought and advise all patients ... of other available alternatives that are comparable and competitive to the manufactured devices and supplies which the physicians have an ownership interest in...."

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3 182. In spite of this advice, Reliance, Berry, Hoffman, and Pike did not

24 disclose their financial relationships with physician-investors to patients, nor did

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they require physician-investors to disclose these relationships to their patients. 26

27 183. As explained by Bret Berry, Reliance's principals did not want

78 anyone to know who its physician-investors were. Specifically, on July 26, 2011,

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Berry was recorded telling a potential physician-investor, "Our job is ... to let

everybody outside ... of our group think that you're just using this product ... We

don't want anyone to know that you're an owner." (emphasis added). 4

184. During this same meeting, Adam Pike was recorded telling the

potential physician-investor, "so hypothetically ... you start u-utilizing Kronos

products here and you're evaluating it and we arrive to a point where we wanna

sign you up and everyone's happy urn the hospital doesn't need to know that. The 10

11 community doesn't need to know that ... No one knows but our own circle."

12 (emphasis added).

13 185. Reliance made a series of false statements to hospitals that inquired

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5 about Reliance's financial relationships with its particular physicians, including

16 hospitals where Apex and Kronos physician-investors performed surgeries. 17

18 186. In September 2012, in response to an inquiry from a California

19 hospital, Laurann Turner, Reliance's Vice President of Operations, wrote that Dr.

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Ali Mesiwala, "is not a distributor for Kronos Spinal Technologies, nor has he 2

22 received any payments or remunerations from Kronos Spinal Technologies as a

23 consultant or investor" (emphasis added). This statement was false because,

24

25 through Kronos, Reliance had paid Dr. Mesiwala more than $3 million at the time

26 it wrote this letter. 27

28

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27

28

C se 2:14-cv-06979-DDP-PJW Document 1 Filed 09/08/14 Page 44 of 98 Pagel

187. On November 2011 and May 2012, Reliance certified to Detroit

2

Medical Center that no "physicians licensed to practice medicine ... own all or part

of [Apex]." At the time Reliance submitted these certifications, Dr. Sabit, who 4

was on the hospital's surgical staff, owned 20 percent of Apex.

188. On multiple other occasions, Reliance submitted false or materially 7

ncomplete and misleading statements to hospitals concerning its relationships with

particular physicians. Dates on which Reliance submitted false certifications to 10

11 hospitals include:

12 • 11/4/09 (national certification to Hospital Corporation of America);

13

• 6/7/10 (certification to Intermountain Health, in Salt Lake City, Utah); 4

15 • 10/13/10 (certification to St. Joseph Health System, in Los Angeles, California);

16

17 • 11/18/10 (national certification to Tenet Healthcare Corporation); 8

• 6/22/11 (certification to Mary Black Health System, in Spartanburg, South Carolina);

• 11/1/11 (national certification to Sharp HealthCare);

• 11/1/11 (certification to St. Bernadine Hospital, in Los Angeles, California);

• 12/2/11 (certification to Our Lady of the Lake Hospital, in Baton Rouge, Louisiana).

44


Case 2:14-cv-06979-DDP-PJW Document 1 Filed 09/08/14 Page 45 of 98 Page I

189. Adam Pike has also repeatedly made a series of false verbal

2 statements to hospitals that inquired about Reliance's relationships with particular

physicians.

190. In a further effort to avoid disclosing their payments to physicians,

Bret Berry and Adam Pike elected to buy-out Reliance's physician-investors in late

2012.

191. In December 2011, CMS announced proposed regulations 0

implementing the Transparency Reports and Reporting of Physician Ownership or 1

12 Investment Interests (the "Sunshine Act") section of the Patient Protection and

13

Affordable Care Act. 76 Fed. Reg. 78,742 (Dec. 19, 2011). The regulations 4

15 implementing the Sunshine Act require device manufacturers, including PODs, to

16 eport annually to CMS information regarding payments, ownership, investment 17

interests, and other transfers of value to physicians. Id. at 78,751-52; cf. 78 Fed. 8

9 Reg. 9,458, 9,493 (Feb. 8, 2013) (final rule).

20

192. Reliance sought legal advice from John Bradley concerning the 2

22 Sunshine Act.

2 193. In an August 31, 2012 email between Bret Berry and Adam Pike,

24

25 Berry acknowledged that, "[t]he whole point of looking at this [physician-

26 employee] model was to avoid the sunshine act." 27

28

45



B. Minimal or Non-Existent Capital Contributions

194. Reliance, Berry, Hoffman, and Pike were aware of, possessed, and

discussed the OIG guidance stating that an investment may be deemed suspect

under the AKS where the amount of capital that participants invest is

disproportionately small in comparison to the return-on-investment.

195. On multiple occasions, Reliance, Berry, Hoffman, and Pike were

advised by attorneys that their physician-investors should be required to make

substantial capital contributions in exchange for their ownership interest in a

Reliance POD.


• On August 6, 2007, Yee-Yoong Yong, Esq., advised Dr. James Hamada, a Reliance physician-investor, that his capital contribution must "be[] meaningful in terms of an investment risk." Dr. Hamada circulated this advice to Reliance.

• On April 18, 2008, Catherine M. Greaves, Esq., advised Reliance that "the Company should attempt to structure any investment by physicians to meet the requirements of the safe harbor for investments in small entities.... The features to avoid include ... allowing physicians to invest without true risk."

• On May 8, 2008, Greaves wrote Reliance again to reiterate that "investors must make a substantial capital investmentw." (emphasis added)

• On January 23, 2010, business partners of Bret Berry and Adam Pike commissioned a "risk memorandum" seeking to assure potential Reliance physician-investors that their investments would be lawful because, "Each investor will be required to pay $45,000, to purchase a block of 10 Units.... This amount is very typical of the amounts commonly required." (emphasis added)

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Cylse 2:14-cv-06979-DDP-PJW Document 1 Filed 09/08/14 Page 47 of 98 Page

II 197. Adam Pike has acknowledged the legal advice referenced above, 1

2 stating that, "[i]t's true that most legal counsel would like to see money invested." 3 II

Further, Pike has been recorded telling a potential physician-investor that attorneys 4

s have told him that, "they [attorneys] want your skin in the game."

6

198. In spite of this, on July 26, 2011, Adam Pike was recorded stating 7

8 Reliance's investment requirements were "just for perception's sake." Pike

9 further stated that each Reliance physician-investor's initial capital contribution is 10 II

11

"arbitrary to us. We don't really care ... I mean the money's going to be good

12 regardless."

13

199. Thirteen of Reliance's thirty-five physician-investors, including Dr. 14

15 Mesiwala, paid nothing in exchange for their shares in Reliance PODs.

16 200. Ten of Reliance's physician-investors, including Drs. Sabit and Xie, 17

18 made a capital contribution of $10,000 or less.

19 201. Of the twenty-two Reliance physician-investors that were required to

20

make a capital contribution, twenty were paid more in the first month than what 21

22 they had invested.

23 202. On July 26, 2011, Adam Pike was recorded describing Reliance's

24

25 II capital contribution requirement as follows: "I mean it's silly. But ... we did that

26 Ilto satisfy ... any legal perception so if and when we're ever audited by any ya 27 II

know branch of government or any authoritative force, they can see that as a 28

47


C•se 2:14-cv-06979-DDP-PJW Document 1 Filed 09/08/14 Page 48 of 98 Page I

surgeon you didn't just sign up and all the sudden get a fifty or eighty thousand

2 dollar pay check...."

3

C. Hospital Coercion

203. Reliance expects its physician-investors to help Reliance obtain

approval to sell its implants in the hospitals at which the physicians perform 7

surgeries.

9 204. In or about May 2010, Reliance, Berry, Hoffman, and Pike shared a 10

legal opinion memo that counseled a company named Big Mountain Medical LLC

12 that "Any effort by surgeons to overcome [hospital] reluctance through 'arm

13

twisting' in one form [or] another would increase the legal risk, and it is critical 4

15 that surgeons not threaten to take their cases elsewhere if a hospital will not

16 contract with their Distributor." (emphasis added). 7

18

205. Reliance, however, regularly encouraged its physician-investors to

19 threaten to take their surgeries elsewhere in situations where the hospital where the

20

surgery was initially scheduled was initially unwilling to purchase Reliance 21

22 implants.

23 206. As explained by Bret Berry, John Hoffman, and Adam Pike, Reliance

24

25 expected its physician-investors to act as "champions" on behalf of Reliance withi

26 heir hospitals. 2

28

48


C se 2:14-cv-06979-DDP-P3W Document 1 Filed 09/08/14 Page 49 of 98 Page I

207. With Bret Berry, Adam Pike, and John Hoffman's encouragement,

Reliance physician-investors pressured their hospitals to pay above-market prices

for Reliance implants.


• On August 10, 2007, Adam Pike reported approvingly that Reliance's "surgeon champions" were "fight[ing] battles on our behalf against Scripps [Hospitals]";

• On October 10, 2007, Dr. Erik Westerlund notified Reliance that he had threatened to "promptly withdraw [his] support from the Scripps system" unless Scripps discontinued its efforts to obtain "even lower pricing from [Reliance]";

• On April 8, 2010, John Hoffman notified Bret Berry and Adam Pike that an administrator at Good Samaritan Hospital in Los Angeles, California was upset that "Dr. [Sean] Xie came into his office mad and upset with the hospital that they would not negotiate prices (kudos to Sean)";

• On August 30, 2010, Larry Sager, a Reliance distributor, noted that Westlake Medical Center in Austin, Texas was trying to renegotiate paymen terms with Reliance; Adam Pike responded "Time for [Dr. Robert] Josey to step in." Later, Pike wrote, "[t]he best message is for Josey to move [previously scheduled surgeries,] then [Westlake] will likely keep their promise and pay their bills in the future so long as he remains willing to move cases."; and

• On May 9, 2012, both Bret Berry and Adam Pike encouraged Dr. Raed Ali to "support" Reliance's efforts to keep its pricing above the pricing of other vendor's at Saint Joseph's Hospital, in Orange, California.

49

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:55

D. Other Instances Where Reliance Ignored Legal Advice

209. Reliance, Berry, Hoffman, and Pike disregarded the legal advice they

eceived concerning the requirements and prohibitions of the AKS in multiple

9 increased legal scrutiny given that the government believes they create inherent 10

physician self-referral and conflict of interest issues.... In sum, physician-owned 1

2 distributors, while not per se illegal, pose substantial legal risk for those

3

participating in such ventures." (emphasis added). 19

15 211. On February 11, 2010, Adam Pike wrote Bret Berry to advise him that

16 Pike had been told that, "[W. Bradley] Tully, the attny that basically wrote 17

16 legislation regarding surgeon ownership, is claiming [Reliance's PODs] to be too

9 risky for the hospital." On February 24, 2010, Ramin Raidzdeh, a Reliance

20

physician-investor, wrote Berry and Pike to remind them that, "Tully is not coming 2

22 hru, and is suggesting several road blocks."

23

212. Bret Berry wrote Adam Pike, stating, "I do want to know what Tully 24

25 s saying about our venture ... if he has concern over our model, let's look into

26 [this.]" Pike rejected Berry's request, stating, "I see this as more fees regardless. 27

28

5 other ways.

210. On October 19, 2010, Reliance circulated within the company a legal

opinion letter that counseled that "physician-owned distributorships will face

50


C se 2:14-cv-06979-DDP-PJW Document 1 Filed 09/08/14 Page 51. of 98 Page I

And we already know the answers. We would be paying 2 attorneys at this point.

I am sick of paying attorneys,"

213. On December 11, 2012, David W. Hirshfeld, Esq., warned Reliance

about its plan to buy-out physician-investors and to invite many of the former

investors to become salaried employees of the Reliance distributorship whose

implants they used. Hirshfeld wrote:

The proposed compensation arrangements you supplied might not withstand regulatory scrutiny ... given the totality of the circumstances, I cannot opine with certainty that the physician relationship will be respected as a bona fide employment arrangement.... I am concerned that regulators will consider the employment agreement as an attempt to disguise distributions of profit

214. In spite of Hirshfeld's advice, Reliance hired seventeen of its former

physician-investors, including Dr. Mesiwala, paying them an average of

approximately $45,000 per month for work that had no real value to Reliance. In

exchange for these payments, Dr. Mesiwala reported an average of approximately

68 hours of work per month for Kronos between January 2014 and October 2014.

Dr. Mesiwala allegedly -performed this work in addition to his full-time surgical

practice.

E. Berry, Hoffman, and Pike's Domination and Control of Reliance, Apex, and Kronos

215. Bret Berry, John Hoffman, and Adam Pike have each benefited

personally from their ownership and operation of Reliance's distributorships,

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including Apex and Kronos. Berry and Pike paid themselves approximately $36

2 million between June 2007 and December 2012. Hoffman, who had an ownership 3

interest in several Reliance PODs but not in Reliance itself; was paid 4

approximately $7 million during this period.

216. At all relevant times, Bret Berry and Adam Pike have exercised total 7

control over the management of Reliance. At all relevant times, John Hoffman,

along with Berry and Pike, controlled the management of Apex and Kronos. 10

11

217. Apex and Kronos distribute all of their profits to investors — including

12 Bret Berry, John Hoffman, and Adam Pike — on a monthly basis.

3

218. On July 26, 2011, Adam Pike was recorded telling a potential investor 14

5 that no one can "come after" Reliance because "there's no money in the account."

219. Bret Berry, John Hoffman, and Adam Pike formed six different

8 companies through which they own their shares in Apex and Kronos, and other

19 Reliance PODs. The sole purpose of these companies is to receive profit

20

distributions from Reliance PODs, and to pass the profits on to Berry, Hoffman, 21

22 and Pike,

23 220. Reliance and its distributorships do not maintain corporate records.

24

25 221. Reliance conducts business from its owners' personal email accounts,

26 and Bret Berry and Adam Pike routinely delete emails concerning Reliance and its 27

PODs from these accounts. 28

52


Exhibit 3


United States Pursues Claims Against Neurosurgeon, Spinal tropism Company Physteien... Page 1 or 2

R.) TICE NEWS

Department of Justice

Office of Public Affairs

FOR IMMEDIATE RELEASE Monday. September 8, 2014

United States Pursues Claims Against Neurosurgeon, Spinal Implant Company, Physician-Owned

Distributorships and Their Non-Physician Owners for Alleged Kickbacks and Medically

Unnecessary Surgeries

The United States has filed two complaints under the False Claims Act againsi Michigan neurosurgeon Dr

Aria Sabit. spinal implant company Reliance Medical Systems. two Reliance distributorships—Apex Medical

Technologies and Kronos Spinal Technologies—and the companies' owners, Brett Berry, John Hoffman

and Adam Pike, the Justice Department announced today. The complaints allege that Apex Medical and

Kronos Spinal paid physicians. including Sabit, to induce tnem to use Reliance spinal implants in the

surgeries they performed.

"Improper payments to physicians can alter a'physician's judgment about patients! true health care needs

and drive up health care costs for everyone said Assistant Attorney General Stuart F Delery for the

Justice Department's Civil Division. "The Justice Department is committed to enforcing the laws that

prohibit such payments "

Seery and Pike founded Reliance in 2008, and subsequently created more than 12 physician-owned

distributorships that sold Reliance devices. Each of Reliance's distributorships sold spinal implants ordered

by their physician-owners for use In procedures the physician-owners performed on their own patients. The

complaints allege that Reliance used one of its distributorships, Apex Medical, to funnel improper payments

to Sabit for using Reliance spinal implants in his surgeries. According to the complaints. Sabit began using

Reliance implants on his patients only after he acquired an ownership interest in Apex and started receiving

payments from lho sale of Reliance's spinal implants. Apex allegedly paid Sabit $438.570 between May

2010 and July 2012. during which time Sabit used Reliance implants in approximately 90 percent of his

spinal fusion surgeries The government also alleges that these payments caused Sabit to perform

medically unnecessary or excessive surgeries on certain patients who did nut need the spinal implants

The government further alleges that Reliance operated a second distributor, Kronos. Lri southern. California

which made improper payments to two other physicians. Ors Ali Mesiwala and Gowriharan Thaiyananthan

Allegedly, Reliance's owners were recorded telling a potential Kronos investor that Reliance was formed as

part of a plan to 'get around' the federal Anti-Kickback Statute, which prohibits such improper payments.

and that Reliance pays its physician-investors enough in the first month or two to "put their kids through

college "

httpWwww.justice.goviopaiprhinited-states-pursues-claims-against-neurosurgeOn-spingl-i.. 10/6/20 I 4


United Slat ursues C'leiirls Against Neurosurgeon. Spinal implant Camp ny, Physician. PagePage20

The allegations that Sabit performed medically unnecessary or excessive surgeries were raised in a

separate lawsuit filed by Dr. Cary Savitch and Dr. Gary Proffett under the out tam, or whistleblowei,

provisions of the False Claims Act The act allows private citizens with knowledge of fraud to bring civil

actions on behalf of the government and to share in any recovery. The act also permits the government to

intervene in the whIstleblowers' lawsuit. In this case, the government has both intervened in the

whialteblowers' medical necessity claims and filed a separate lawsuit containing kickback claims against

both Sabi% and the Reliance defendants.

These lawsuits illustrate illustrates the government's emphasis on combating health care Maud and marks

another achievement for the Health Care Fraud Prevention end Enforcement Action Team (HEAT) initiative,

which was announced in May 2009 by the Attorney General and the Secretary of Health and Human

Services. The partnership between the two departments has focused efforts to reduce and prevent

Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in

this effort is the False Claims Act. Since January 2009. the Justice Department has recovered a total or

more than $22 4 billion through False Claims Act cases, with more than $14.2 billion of that amount

recovered in cases involving fraud against federal health care programs

This investigation was a coordinated effort among the Commercial Litigation Branch of tne department's

Civil Division and the U.S Department of Health and Human gervices-Office at the Inspectoi General The

lawsuits were filed in the Central District of California (Los Angeles), and are captioned [Inked States ex ret

Corey Savitch M.D. and Cary Proffelt, M.D. v. Ana Sabit. M.D., Moustapha Abou-Samra M D arta

Community Memorial Health System. Case No. 13.3363, and United States .v RalialOCO Medical Systems,

Apex Medical Technologies, Kronos Spinal Technologies. Bret Barry. John Hoffman. Adam Pike. and Ane

Saba, M C.

The claims asserted by the government are allegations only. and there has been no oeterintnation of

liability

14-949 gytPtviston

http 1/www,j ustice.gov/ope/prhinited-states-pursues-claims-againsi-nourcsurgeon-spi nal- i I0/6!2014


Exhibit 4


October 2, 2014

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HOOPER, LUNDY 6, BOOKMAN, P.C. HEALTH CARE LAWYERS & ADVISORS

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VIA EMAIL Civihrou tin g.FO IA(iliusdoj.gov

James M. Kovakas Freedom of Information/Privacy Act Office Civil Division, Department of Justice Room 8020 1100 L Street, NW Washington, D.C. 20035

Re: July 26, 2011 tape recorded conversations of Adam Pike and Bret Berry United States of America v. Reliance Medical Stysterns, LLC et al, CV14-6979 United States District Court for the Central District of California

Dear Mr. Kovakas:

I represent Bret Berry and Adam Pike, and others, in connection with a Department of Justice ("DOJ") investigation, which has been ongoing for some time now and recently resulted in the filing of the above referenced civil action against my clients. This letter is their request for certain specific information required to be produced under the Freedom of Information Act ("FOCA"). Copies of their completed Forms D0,1-361 are enclosed.

For your convenience, 1 am also attaching a copy of the filed complaint. According to the complaint, at paragraphs 137, 140, 145, 146, 147, 148, 149, 150, 152, 153, 155, 164, 178, 183, 184, 197, and 202, Mr. Berry and Mr. Pike were tape recorded during a July 26, 2011 conversation with an unidentified person. The taped conversation apparently occurred in California. Any such recording was done without Mr. Pike's or Mr. Berry's knowledge or consent. Since such an unconsented-to recorded conversation is a crime under California law,

1171687 I


HOOPER, LUNDY 5, BOOKMAN, P.C. 1111ALTII CARE LAWYERS

James M. Kovakas October 2, 2014 Page 2

we must assume for now that this recording was done under the direction of federal law enforcement officials and in accordance with federal and state law.

In any event, a copy of the recording and presumably a written transcript of it are now in the possession of, or accessible to, the Civil Division of DOJ ("Main Justice") since it is referred to throughout the accompanying civil complaint. The case is being handled by Main Justice out of Washington D.C.

We have repeatedly demanded production of the tape recording and/or a transcript thereof on several occasions over the past several months and before. My most recent request is contained in my letter of September 25, 2014 (copy enclosed). DOJ's counsel (most recently by letter dated September 30, 2014, copy enclosed) have refused immediate production on the grounds that they will eventually give us a copy after discovery begins in the lawsuit which will not occur until after a pending motion to dismiss is resolved and until after a discovery conference is held with the court. This could take many, many months.

In the meantime, my clients are suffering substantial hams to their reputations, their businesses, and their emotional well being because DOJ has made its chtu•acterizations of the content of the tape recording public through the filing of the complaint and a September S. 2014 press release.

As mentioned in my September 25 letter, the television (CBS), radio (NPR), internet (various publications), and newspaper (Wall Street Journal) media have had a field day with the allegations in the complaint, especially those pertaining to the taped conversation of July 26, 2011, resulting in my clients being characterized as greedy [roadsters, and being treated as pariahs in the health care industry and beyond.

Most unfortunately, all of this has occurred without my clients being given the recording or even a transcript of it so that they can verify the context of what was supposedly said and be able to respond accordingly. Indeed, they believe they will be able to refute DOD's characterizations of their discussion in the complaint. They further question the integrity of the investigation and the resulting allegations against them.

Under the controlling law, 5 U.S.C. § 552, and DOJ FOR guidelines, this request for a copy of the recording and any transcript should be expedited because of the denial of due process to my clients and because of question about the integrity of investigation giving rise to the filing of the complaint.

Because of the attachments, locating the requested information should take far less than two hours. You simply need to contact Mr. Finkelstein or Mr. Di Dio, whom I am copying on this letter, Thus, we doubt if any fee will be required. However, if a (be is required, please let us

171652.1


HOOPER. LUNDY & BOOKrAAN, P.C. IlEALI II CAKI: I AV,YkRS


know the amount as soon as possible. We hope to receive the information requested herein as soon as possible and certainly within the 20 working days allowed by law.

Thank you very much. If you have any questions, please contact me.

Very truly yours,

Patric blooper

P11/1311 cc: David Finkelstein via email

Arthur Di Dio via email

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David M. Finkelstein Arthur S. Di Dio United States Department ofJustice 601 D Street, NW Washington D.C. 20004

Re: United States v. Reliynce Medical Systems, vt ul

Dear David and Arthur:

Thank you for your letter today in response to my email of September 22 that you characterize as being a "(threat] to seek sanctions against the United States." You further state "this threat is part of a pattern of troubling conduct that began almost immediately after" I was retained in July 2014. You then discuss what you believe to be "a pattern of baseless accusations" by me. Before responding to these charges, let me please provide some context once again to the current situation.

Perhaps you had the opportunity to view today's episode of -Ct3S This Morning- in which Dal's lawsuit against my clients is highlighted to a national TV audience. This publication and many others, including articles in the Wall Street Journal and health industry media, and radio broadcasts, completely demonize my clients based in large part, if not wholly, on the allegations published by DOJ in its recent press release and in the body of the complaint in this case. The alleged tape recorded conversations or July 2011 and your characterization of their contents provide the primary fodder for the media's woefully inaccurate "description" of my clients and their conduct.

117117.1 1


HOOPER, LUNDY & BOOKMAN, P.C. PIDALTII CARL LAV."1 fi

David M. Finkelstein September 25, 2014 Page 2

As you know, the media crusade against my clients did not begin with the filing of your lawsuit. Rather, the persecution began once your investigation started and was fueled by leaks to the media regarding the investigation. Moreover, as you obviously know, the conducting of the investigation, itself, was extremely detrimental to the reputation or my clients and (heir ability to earn a living and pursue an occupation. It requires no speculation to conclude that when a hospital or a doctor learns that DOJ is investigating someone who is engaged in doing business with the hospital or doctor, the hospital or doctor will be inclined to terminate the relationship to avoid being tainted by the investigation. This is especially so when counsel for DOJ essentially tell the hospitals that my clients' activities are illegal.

Here, since the filing of the action and well before then, hospitals and doctors have stopped doing business with my clients for fear of retribution and retaliation by DOJ and damage to their own reputations. Not surprisingly, my clients' competitors and some self-proclaimed medical "ethicists" are quite pleased by this result. The bad facts being bantered about also sell more newspapers than a more nuanced and truthful story, My clients have become pariahs in the health care industry due solely to your investigation and the charges you have made against

them.

As you know, I am very familiar with the Federal Rules or Civil Procedure to which you refer in your letter regarding discovery and other procedural aspects of False Claims Act cases and are obviously prepared to proceed pursuant to such rules. However, as lawyers, especially government lawyers (and 1 was one many years ago), we are required to do justice as opposed to trying to win a case at any costs. Also, as you know. Constitutional provisions trump the Federal Rules of Procedure.

Here, fundamental fairness and due process ()tine law require that my clients be given timely notice of the evidence against them. Dal has now possessed and selectively used the July 2011 tape recordings against my clients for more than three years. In fact. you used your characterization of their content to question my clients extensively about them under oath in March 2013 without ever giving them copies or even a transcript to review before, during, or

after their testimony.

Now, your one-sided and agenda-driven characterization of their content is included in the juiciest parts of your complaint -- the parts that were obviously intended primarily for the media's consumption and publication. Yet, you still refuse to make the recordings available to me under any circumstances and instead argue that I will get them in due course under the Federal Rules ol'Civil Procedure — i.e.. months from now - even though my clients' liberty and property interests are continuing to be damaged and have been damaged for some time 11UVv.

I am certain you must know that Due Process of the Law prohibits the government from depriving a person of property or liberty absent timely notice and an opportunity to be heard regarding charges of the type here. DOD's contentions bused on the tapes have been destroying

1171174i


HOOPER, LUNDY 6. BOOKMAN, P.C. CARE LAWYERS


my clients' businesses and reputations for a long time now without the content being made known to my clients. Even "enemy combatants" are entitled to due process rights greater than that which have been given my clients under the circumstances here See Ham& r. Ruin*Ici, 542 U.S. 507 (2004) where the Court determined the rights of enemy combatants under Due Process Clause olthe Fifth Amendment, among other laws. We once again demand to see the tapes immediately.'

As to my "baseless accusations," please let me remind you that my earlier speculation was correct about the pendency of a gui tarn action even though I was mistaken about the relator, Moreover, it is apparent that you did not need any further information from my clients in July 2014 to complete your investigation confirming that my position rejecting your request for information (in addition to the 168,000 pages of documents already produced) was correct.

As to the allegations in paragraph 91 of the complaint, please produce the evidence in your possession that you contend supports them since my clients deny the truth of the allegations. I am trying to avoid tiling a Rule I I motion. Finally, I continue to stand by my other "accusations."2

Very truly yours,

Patric Hooper

PH/PH Jonathan Frank (via email)

I As you know, under California Law, Penal Code Section 632 and others. tape recording a confidential conversation without the consent of all parties is a crime. and the content of such a recording is inadmissible in any court proceeding. We know there is an exception for law enforcement and assume that there was duly authorized involvement of law enforcement here but are beginning to question that assumption in light of your continued withholding of the tape

recordings.

I abide by the Central District's "Civility and Professionalism Guidelines." In my

opinion ex parts. discussions with other counsel in this case, such as your recent discussion with Mr Frank, and your refusal to disclose the tape recordings until the federal rules purportedly require them to be disclosed are inconsistent with these guidelines.

1171174 I


U.S. Deportment of Justice

Civil Division

MDO:TI.1-1:DMPInlculutoin 46-77-752

Wathington, DC 20530

September 30, 2014

VIA ELECIWOIVIC MAIL

Patric Hooper Floopor, Lundy & Bookman, P.C. 105 Century Pork ELM, Suite 1600 Los An9030,lifornio 90067-2517

Re, United States v. Reliance Medical aysiems, et al.

Dear Patric:

Your most recent letter asserts and repeats unfounded accusations that merit no further response. Your letter also repeats your demand for premature discovery from the Covernment.

This time, you base your demand on an appeal to "fundamental fairness and due process of the law." We disagree that due process entitles your clients to pro-discovery access to the contents of the Government's investigative files. The Federal Rules of Civil Procedure afford your clients the full measure of the due process to which they are entitled. We have followed the Rules of Civil Procedure, and will continue to do so, Further exchange of letters on this issue would not

be productive.

Regards,

David M. Finkelstein Trial Attorney Civil Division

cc: Kevin Berry


U.S Department of Janie° Certification of identity

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Pull Name of Requester I Bret Michael Bony

Citizenship Status ) U.S. Social Security Number 2 593-44-9115

Current Address 514 Frank Shaw Road. Tallahassee, FL 32312

Date of Binh Cicbb5"5. 1976 Place of Birth Tallahassee, Leon County, Florida, USA

OPTIONAL: Authorization to Release Information to Another Person

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individual sot:m.00111g it 'Ohtani under the Privacy Act of 1974 must be either "a citizen or the linked Stevie or an alien Ittwailly

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identification of records relating to you. Withollt your social security number, the Department may be unable to locate an> or all records

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Exhibit 5


U.S. Department of Justice

Civil Division

JMK:jsulc#145-1701-13433

Patric Hooper Health Care Lawyers 84 Advisors 1875 Century Park East, Suite 1600 Los Angeles, CA 90067

Dear Mr. Hooper,

Washington DC 20530

October 6, 2014

This is the initial. response of the Civil Division, Department of Justice (Dal) to your Freedom of Information Act (FOIA) request for a copy of a specific audio recording or a transcript of such recording in the case U.S. v. Reliance Medical Systems LLC' et al. Your request was received in this office on October 2, 2014 and assigned control number 145-F01. 13433. You also requested expedited processing.

After reviewing your request for expedited processing, T determined that there is no threatened loss of due process and no question as to the integrity of the Department of Justice in this :natter. 'Therefore, the request for expedited processing is denied.

With regard to processing fees relating to your request., I believe that you have a commercial interest in the requested record and it is my estimate that the cost to process your request will be $275. Please advise me if you agree to be hound for tees up to $275 by writing to roc at; U.S, Deportment of Justice, Civil Division, c/o James M. Kovakas, Room 8020 1 100 L Street, N.W., Washington, D,C. 20530. You may also provide your agreement to be bound for fees electronically at civil,routing.folausilej.um

If 1 do not receive your agreement to be bound for fees by October 16, 2014 ! will assume that you do not wish to proceed with your request and I will close my file on your request. If you have any questions regarding the processing of your request in my office you may contact me at 202 514.3319,

For your information, Congress excluded three discrete categories of law enforcement and national security records from the requirements of the FO1A. See 5 U.S,C, 552(c) (2006 & Stipp, IV 2010). This response is limited to those records that are subject to the requirements of the FOR, This is a standard notification that is given to all our requesters and should not he taken as an indication that excluded records do, or do not, exist.

If you are not satisfied with my response to this request, you may administratively appeal by writing to the Director, Office of Information Policy, United States Department of Justice, Suite 11050, 1425 New York Avenue, NW, Washington, DC 20530-0001, or you may submit an appeal through the ePOIA portal at Intp://www.fustioesov/oipiefoia-portal.html,


4 •

Your appeal must be received within sixty days from die date of this letter. If you submit your appeal by mall, both the letter and the envelope should he clearly marked "Freedom of Information Act Appeal,"

Sincerely,

James M. Kovaka5 Senior Supervisory FOIA Counsel

FOI/PA Unit, Civil Division


U.S. Depa totem of Justice

Civil Division

Weohitimion. DC' „OM

JrvlIC:

115-F0i-134:13 October 6, 2014

Mr. Patric Hooper Health Care Lawyers & Advisors 1825 Century Park East, Suite 1600 Los Angeles, CA 90067

Dear Mr. Hooper:

111k ;5 ;v:ktinwlf,dge receipt of your Freedom of Information .A.:1 request doted

October 2, 2014 and received by this Office on October 2, 2014 in which you requested records on

Reliance Medical Systems. This Office has assigned your request the following tracking

number: 145-1701-13433.

The records you seek require a search in another Office in the Division, and so your request presents "unusual circumstances" under the FOIA. See 5 U.S.C. 552 §(r)(6)(13)(0. Because of these unusual circumstances, we need to extend the time limit to respond to your request beyond the ten additional days provided by the stature. The time needed to complete our processing of your request will depend on the complexity of our records search and on the volume and complexity of any records located For your Information, this Office assigns requests to one of three tracks: simple, complex, or expedited. Each request is then handled on a first-in, first-out basis in relation to other requests in the same track. Due to current budget constraints, simple requests usually receive a response in about six months; complex requests necessarily take longer. At this time, your request has been assigned to the complex track, In an effort to speed up our records search, you may wish to narrow the scope of your request to limit the number of potentially responsive records or agree to an alternative time frame for processing, should records be located; or you may wish to await the completion of OW records search to discuss either of these options.

I regret the necessity of this delay, but I assure you that your request will be processed as soon as possible. If you have any questions or wish to discuss reformulation or an alternative time frame 11:n the processing, or your request, You 'nay contact ore by telephone at (202) 5144-33i; or iuu likiy NA I to; to dtc

at the Freedom of Information/Privacy Act Office, Civil Division, Department offiustice, Room 8020, 1100 L Street NW, Washington, DC 20035.

Sincerely,

James M. Kovakas Senior Supervisory FOIA Counsel

FOUPA Unit, Civil Division


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VIA EMAIL

James M. Kovakus Senior Supervisor FOIA Counsel U.S. Department of Justice Civil Division 1100 L Street, N, W. Room 8020 Washington D.C. 20530

Re: Control No. 145-MI-13433 (Hooper) Agreement to be Bound for Fees

Dear Mr. Kovukas:

Thank you very much for your response to my recent FOR request to which you have assigned the above referenced control number,

While, we respectfully disagree with your determination concerning expediting the request. we nevertheless agree to be bound for tees up to $275.00.

Given the fact that we have specifically identified the location of the requested information and that the information requested consists solely of a tape recording and any transcript thereof• we cannot imagine it will take more than the 20 working da)s required by law for you to produce the information.

Furthermore, because the custodians of the requested information (Mr. Finkelstein and Mr. Di Dia) have not indicated any objection to the production of the information, other than an unjustified delay in the date for producing the information, we expect that no objection will be

asserted to this FOIA request.

1171901 1


HOOPER, LUNDY & BOOKMAN, P.C. cAm I. AWYHiN

James M. Kovakas October 6, 2014

Page 2

We continue to point out that the July 26. 2011 tape recording has been in existence for more than three years and has been the source of serious and very damaging allegations of

\\ rongdoing on the part of my clients appearing most recently in the highly publicized civil

complaint tiled against them on September 8, 2014, Yet, my clients have never been given a

copy or even a transcript or the recording. This is hardly consistent with the type or transparency

of government information advocated by the Administration.

Very truly yours,

/ „ct

r

Patric IIdoiler

Pli/PH

cc: David M. Finkelstein

Arthur Di Dio

'1,10u11


Exhibit 6



Civil Division

JMK: 45-F01-13=133

Patric Hooper

Health Care Lawyers & Advisors 1875 Century Park East, Suite 1600

Los Angeles, CA 90067

Dear Mr. Hooper,

Washington. DC 20.531) October 24, 2014

'!'his is the 1112,11 response of the Civil Division, Department of Justice (Dal) to your

Freedom et Information Act (FOIA) request for a copy of a specific audio recording or

transcript of such recording in the case U.S. v. Reliance Medical Syrtems LTC el ca.

Your request was referred to the Civil Frauds Branch for search and review That office identified the requested recording and reviewed it for disclosure.

Pursuant to our review, the Civil Division has withheld the subject recording in full

because it is protected limn disclosure under the POIA pursuant to 5 U.S.C. 8 552(b) (5). This provision concerns cousin inter- and intra-agency communications protected by the attorney

work-product privilege,

In addition the subject recording is also exempt from disclosure under the FOIA pursuant to 5 U.S.C. § 552(b) (7) (A). This provision concerns records or information compiled for law

enforcement purposes the release of which could reasonably be expected to interfere with

enforcement proceedings.

Per your agreement to be bound for fees, the cost for the processing of your request is $138.00. Please remit your check in that amount, payable to the U.S. 'Treasury, to me at U.S.

Department ofiustice. Civil Division, c/o James M. Kovakas, Room 8020 ! 100 L Street, N W.,

Washington, D.C. 20530.

For your Information, Congress excluded three discrete categories of law enforcement

and national security records from the requirements or the POIA. See 5 U.S.C. 552(c) (2006 Supp. IV 2010). This response is limited to those records that are subject to the requirements of

the FOIA. This is a standard notification that is given to all our requesters and should not be

taken as an indication that excluded records do, or do not, exist.

you are not satisfied with my response to this request, you may administratively appeal by writing to the Director, Office of Information Policy, United States Department of Justice, Suite 11050, 1425 'New York Avenue, NW, Washington, DC 20530.0001, or you may submit an appeal through the eFOIA portal at Impilltyww.justice.gov/uipiefoin-portaLhuni.


Your appeal must be received within sixty days from the date of this letter It you submit your appeal by mail, both the letter and the envelope should be dearly marked -Freedom of Information Act Appeal."

Sincerely,

,n

JtLmes M. Kuvaloas Senior Supervisory MIA Counsel

POI/PA Unit, Civil Division


Exhibit 7


r.

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5 t...ANIN U.41:1

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Att. IA wA.oZINNFON /A hop/DA CM

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HOOPER, LUNDY & BOOKMAN, P.C.

HEAL] H CARE LAWYLRS & ADVISORS

1271 ('I'NTURY PnilE EAS1 iouu

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FREEDOM OF INFORMATION ACT APPEAL

VIA CERTIFIED, RETURN RECEIPT 7196 9008 9111 3169 7581

Director Office of Information Policy United States Department olJustice 1425 New York Avenue. NW, Ste. 11050 Washington DC 20530-0001

Re: Freedom of Information Act ("FOIA-) Request DOJ file no. 145-F01-13433 Adam Pike and Bret Berry

Dear Director:

As your records in the above referenced matter will show, I represent Adam Pike and Bret Berry in connection with their October 2, 2014 FOIA request, copy attached as Bxhibit A.' The request is Ibr the disclosure of the July 26, 201 1 tape recording (and a copy of any transcript thereon of conversations of Mr. Pike and Mr Berry and an unidentified "doctor- expressly referred to, and quoted From, at various paragraphs of the civil complaint tiled in United States of America v. Reliance Medical Systems, Lk et al, CV-14-6970, tiled September 8, 2014, in the

nited States District Court for the Central District of Cali thrnia.

The original request contained a complete copy of the federal court complaint in the action discussed above. For brevity's sake and because your office presumably has access to the complaint or has a copy in the "record," a copy is not included again in this appeal.

IC11524 I


HOOFER, LUNDY & BOOKMAN, P.C. HEALTH CARE LAWYERS

Director Office of Information Policy October 28, 2014 Page 2

By letters of October 6, 2014 (Exhibits B and C hereto. respectively) James M. Kovakas responded that he would not be expediting the processing of the request (Exhibit B) and that the request "presents unusual circumstances" under the FOIA thus requiring as many as six months to process the request (Exhibit C), I responded by letter that same day (copy attached as Exhibit D) and agreed to pay estimated costs up to $275.00. I also urged Mr. Kovakas to complete the process within 20 days.

On October 27, 2014, we received Mr. Kovakas' October 24, 2014 letter (copy attached as Exhibit E) containing his "final response" to the FOIA request. He informed me that the DOJ Civil Division had determined to withhold the subject recording in full (and presumably any transcript of' it) because:

I. It is protected from disclosure under 5 U.S.C. § 552(b)(5) because h is protected by the attorney work-product privilege; and

2. It is exempt from disclosure under 5 U.S.0 § 552(b)(7)(A) because it is a record compiled for law enforcement purposes the release of which could reasonably be expected to interfere with enforcement proceedings.

The October 24, 2014 final response contains no further hasis or explanation for DOJ's refusal to disclose the audio recording in full or even in part (or any transcript of it). The response advises me of the instant appeal process:-

Before discussing why this refusal violates the letter and intent of the FOIA and denies my clients due process of the law, certain undisputed facts must again he emphasized. The very same day DOJ tiled the civil action containing numerous quotes and characterizations of my clients' comments purportedly based on the July 26, 211 audio recording, it issued a press release (copy enclosed as Exhibit F) in which it expressly refers to the recording. Shortly thereafter, the media published comments from the recording. Two of many such publications are attached as Exibit G.

Notwithstanding DOJ's widespread public disclosure of statements purportedly obtained from the audio recording of the July 26, 2011 meeting, it now refuses to disclose the recording to my clients based on conclusory statements which simply repeats irrelevant provisions of the FOIA.

Congress enacted the FOIA "to pierce the veil of administrative secrecy and open agency action to the light of public scrutiny." Among others, one purpose of the POIA is to "hold the

2 It also requests payment of $138.00, which will be processed and paid in short order.

1173524 I


HOOPER, LUNDY & 800KMAN, P.C. HEALTH CARE LAWYERS


governors accountable to the governed." Citie.ens for Responsibility and Ethics in Washington v. U.S. Dept. of Justice, 955 F. Supp. 2d 4, l I (D.D.C. 2013).

Requested records must be made available promptly. Exemptions to disclosure are to be narrowly construed and there is a "strong presumption in favor of disclosure." The government bears the burden of demonstrating that at least one exemption applies in order to withhold documents requested under the FOR. The government cannot justify its withholdings based on summary statements that merely reiterate legal standards. Id. at 12.

There must be factual support for the essential elements of a particular exemption. Where there is none, as is the case here, the label "conclusory" is "surely apt. Id. at 15. At a minimum, for the attorney work product exemption to apply the government must demonstrate that the lawyer who prepared the document possessed the subjective belief that litigation was a real possibility. Id. at 19.

Here, the information requested is contained in an audio tape that was not prepared in any way by an attorney according to DOS's representations. Rather, it contains facts stated by various non-attorneys including Mr. Pike and Mr. Berry. It does not in any manner contain the impressions or beliefs of any attorney within DOJ or elsewhere, Such purely factual "documents" may not he withheld under the attorney work product privilege of subsection (b)(5). See Cause of /lotion v. Federal Trade ComM, 961 F. Supp. 2d 142, 166-67 (D.D.C. 2013) (the deliberative process privilege of this same section does not protect factual material).

Similarly invalid is DOJ's reliance on the subsection (b)(7)(A) exemption. While the audio recording apparently has been intended to further an enforcement proceeding, including the pending federal court action, any right to withhold the audio recording was waived when DOJ published quotes from it in the federal court complaint and in its September 8, 2014 press release. Where the government has already publicly disclosed the exact information requested there is no basis for withholding it, See Bullock v. 587 F. Supp. 2d 250, 253, (D.D.C. 2008).3

Independent of the above analysis, due process of the law compels disclosure of the audio recordings. It is unconscionable and shocking for DOS to contend it may release its version of quotes and comments from the audio recording to the public while at the same time denying access to the actual audio recordings to Mr. Pike and Mr, Berry, whom DOJ publicly accuses of paying kickbacks to doctors based on statements made in the audio recording. Notions of fundamental fairness and due process of the law compel the production of the full audio

3 In Bullock, the government relied on subsections (b)(7)(C) and (D), which exempt documents front disclosure to protect confidential sources. DOJ does not rely on either section here. However, any concern about confidentiality could be remedied through redaction.

1171514 I


HOOFER, LUNDY & BOOKMAN, P.C. HEALTH CARE LAWYERS


recording so that Mr. Pike and Mr. Berry can adequately defend themselves against such reckless accusations.

For the foregoing reasons, Mr. Pike and Mr. Berry respectfully request that you grant this appeal and order DOJ to disclose and promptly produce the July 26, 2011 audio recording.

Very truly yours,

Patric Hooper

13F1/P1-1

11 73524 I


Exhibit A


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VIA EMAIL Clvil.routing.FOIA@usdoj,gov

James M. Kovakas Freedom of Information/Privacy Act Office Civil Division, Department of Justice Room 8020 1100 L Street, NW Washington, D.C, 20035

Re: July 26, 2011 tape recorded conversations o Adam Pike and Bret Berry United States of America v. Reliance Medical Stystems, LLC et al, CV14-6979 United States District Court for the Central District of California

Dear Mr. Kovakas:

1 represent Bret Berry and Adam Pike, and others, in connection with a Department of Justice ('DOJ") investigation, which has been ongoing for some time now and recently resulted in the filing of the above referenced civil action against my clients. This letter is their request for certain specific information required to be produced under the Freedom of Information Act C•f:ClA"). Copies of their completed Forms D0.1-361 are enclosed.

For your convenience, I am also attaching a copy of the filed complaint. According to the complaint, at paragraphs 137, 140, 145, 146, 147, 148, 149, 150, 152, 153, 155, 164, 178, 183, 184, 197, and 202, Mr. Berry and Mr. Pike were tape recorded during a July 26, 2011 conversation with an unidentified person. The taped conversation apparently occurred in California. Any such recording was done without Mr. Pike's or Mr. Berry's knowledge or consent. Since such an unconsented-to recorded conversation is a crime under California law,

11716112 I


HOOPER, LUNDY & BOOKMAN, P.C. IIEA Lilt CARE LAWYERS

James M, Kovalcas October 2, 2014 Page 2

we must assume for now that this recording was done under the direction of federal law enforcement officials and in accordance with federal and state law.

In any event, a copy of the recording and presumably a written transcript of it are now in the possession of', or accessible to, the Civil Division of DOJ ("Main Justice") since it is referred to throughout the accompanying civil complaint. The case is being handled by Main Justice out of Washington D.C.

We have repeatedly demanded production of the tape recording and/or a transcript thereof on several occasions over the past several months and before. My most recent request is contained in my letter of September 25, 2014 (copy enclosed). DOD's counsel (most recently by letter dated September 30, 2014, copy enclosed) have refused immediate production on the grounds that they will eventually give us a copy after discovery begins in the lawsuit which will not occur until after a pending motion to dismiss is resolved and until after a discovery conference is held with the court. This could take many, many months.

In the meantime, my clients are suffering substantial harm to their reputations, their businesses, and their emotional well being because DOJ has made its characterizations of the content of the tape recording public through the filing of the complaint and a September 8, 2014 press release.

As mentioned in my September 25 letter, the television (CBS), radio (NPR), internet (various publications), and newspaper (Wall Street Journal) media have had a field day with the allegations in the complaint, especially those pertaining to the taped conversation of July 26, 2011, resulting in my clients being characterized as greedy fraudsters, and being treated as pariahs in the health care industry and beyond.

Most unfortunately, all of this has occurred without my clients being given the recording or even a transcript of it so that they can verify the context of what was supposedly said and be able to respond accordingly. Indeed, they believe they will be able to refine DOJ's characterizations of their discussion in the complaint, They further question the integrity of the investigation and the resulting allegations against them.

Under the controlling law, 5 U.S.C. § 552, and DOJ RNA guidelines, this request for a copy of the recording and any transcript should be expedited because of the denial of due process to my clients and because of question about the integrity of investigation giving rise to the filing of the complaint,

Because of the attachments, locating the requested information should take far less than two hours. You simply need to contact Mr. Finkelstein or Mr. Di Dio, whom I am copying on this letter. Thus, we doubt if any Fee will he required. However, if a fee is required, please let us

11716811


HOOPER. LUNDY & BOOKMAN, P.C. IIPAI t II CARP. AWYFRN


know the amount us soon as possible. We hope to receive the information requested herein as soon as possible and certainly within the 20 working days allowed by law.

Thank you very much, If you have any questions, please contact me.

Very truly yours,

Patric Hooper

P1-1/P11 cc: David Finkelstein via email

Arthur Di Dio via email

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VIA EMAIL

David M. Finkelstein Arthur S. Di Dia United States Department of Justice 601 D Street, NW Washington D.C. 20004

Re: Untied States v. Reliance Aletliccil Systenm. el CIL

Dear David and Arthur:

Thank you for your letter today in response to my email of September 22 that you characterize as being a "[threat! to seek sanctions against the United States.- You further state -this threat is part of a pattern of troubling conduct that began almost immediately after" I was retained in July 2014. You then discuss what you believe to be "a pattern of baseless accusations" by me. Before responding to these charges, let me please provide some context once again to the current situation.

Perhaps you had the opportunity to view today's episode of "CBS This Morning in which DOJ's lawsuit against my clients is highlighted to a national TV audience 'flits publication and many others, including articles in the Wall Street Journal and health industry

media, and radio broadcasts, completely demonize my clients based in large part, 'Clio! wholly, on the allegations published by DOJ in its recent press release and in the body of the complaint in this case. The alleged tape recorded conversations of Jab' 201! and your characterization of their contents provide the primary fodder for the media's woefully inaccurate -description- of

my clients and their conduct.

1171174 1


HOOPER, LUNDY 5, BOOKMAN, P.C. iie A LTH CARE LAWYERS


As you know, the media crusade against my clients did not begin with the filing of your lawsuit. Rather, the persecution began once your investigation started and was fueled by leaks to the media regarding the investigation. Moreover, as you obviously know, the conducting of the

investigation, itself, was extremely detrimental to the reputation of my clients and their ability to earn a living and pursue an occupation. It requires no speculation to conclude that when a hospital or a doctor learns that DO) is investigating someone who is engaged in doing business with the hospital or doctor, the hospital or doctor will be inclined to terminate the relationship to avoid being tainted by the investigation. This is especially so when counsel for DOJ essentially tell the hospitals that my clients' activities are illegal.

Mere, since the filing of the action and well before then, hospitals and doctors have stopped doing business with my clients for fear of retribution and retaliation by Dal and damage to their own reputations. Not surprisingly, my clients' competitors and sonic sell-proclaimed medical "ethicists" are quite pleased by this result. The bad facts being bantered about also sell more newspapers than a more nuanced and truthful story, My clients have become pariahs in the health care industry due solely to your investigation and the charges you have made against

them.

As you know, I am very familiar with the Federal Rules of'Civil Procedure to which you refer in your letter regarding discovery and other procedural aspects of False Claims Act cases and are obviously prepared to proceed pursuant to such rules. However, as lawyers, especially government lawyers (and I was one many years ago), we are required to do justice as opposed to trying to win a case at any costs. Also, as you know, Constitutional provisions trump tho Federal

Rules of Procedure.

Here, fundamental fairness and due process of the law require that iny clients be given timely notice of the evidence against them, DOJ has now possessed and selectively used the July 2011 tape recordings against my clients for more than three years. In fact, you used your characterization of their content to question my clients extensively about them under oath in March 2013 without ever giving them copies or even a transcript to review before, during, or

after their testimony.

Now, your one-sided and agenda-driven characterization of their content is included in the juiciest parts of your complaint - the parts that were obviously intended primarily for the media's consumption and publication. Yet, you still refuse to make the recordings available to me under any circumstances and instead argue that I will get them in due course under the

Federal Rules of Civil Procedure — e., months from now - even though my clients' liberty and property interests are continuing to be damaged and have been damaged for some time now.

am certain you must know that Due Process of the Law prohibits the government from depriving a person of property or liberty absent timely notice and an opportunity to be heard regarding charges of the type here. DOJ's contentions based on the tapes have been destroying

101174.1


HOOPER, LUNDY & BOOKtvtAN, P.C. HI:Al 711 LARK LAWYERS

David M. Finkelstein September 25. 2014 Page 3

my clients' businesses and reputations for a long time now without the content being made known to my clients, Even "enemy combatants" are entitled to due process rights greater than that which have been given my clients under the circumstances here. See Hamdi v RumsfeId. 542 U.S. 507 (2004) where the Court determined the rights of enemy combatants under Due Process Clause of the Fifth Amendment, among other laws. We once again demand to see the tapes immediately?

As to my "baseless accusations," please let me remind you that my earlier speculation was correct about the pendency of a qui tam action even though I was mistaken about the relator, Moreover, it is apparent that you did not need any further information from my clients in July 2014 to complete your investigation confirming that my position rejecting your request for information (in addition to the 168,000 pages of documents already produced) was correct.

As to the allegations in paragraph 91 of the complaint, please produce the evidence in

your• possession that you contend supports them since my clients deny the truth of the allegations. I am trying to avoid tiling a Rule I I motion. Finally, I continue to stand by my

other "accusations."2

Very truly yours,

h Patric ilouper

PH/PH Jonathan Frank (via email)

As you know, under California Law, Penal Code Section 632 and others, tape recording a confidential conversation without the consent of all parties is a crime, and the content of such a recording is inadmissible in any court proceeding. We know there is an exception Ibr law enforcement and assume that there was duly authorized involvement of law enforcement here but are beginning to question that assumption in light of your continued withholding of the tape recordings.

2 I abide by the Central District's "Civility and Professionalism Guidelines." in FTy

opinion ex parte discussions with other counsel in this case, such as your recent discussion with

Mr. Frank, and your refusal to disclose the tape recordings until the federal rules purportedly require them to be disclosed are inconsistent with these guidelines.

1111174 1



Civil Division

MDG:TL11:DMPInktilsteln 46-77-752

WashIngion, DC 20530

September 30, 2014

VIA ELECTRONIC MAIL

Patric Hooper Hooper, Lundy & Bookman, P.C. 1875 Century Park Bast, Suite 1600 Los Angeles, California 90067.2517

Re. United States v. Reliance Medical Systems, et al.

Dear Patric:

Your most recent loner asserts and repeats unfounded accusations that merit no further response. Your letter also repeats your demand for premature discovery from the Government. This time, you base your demand on an appeal to 'fundamental fairness and due process of the law." We disagree that due process entitles your clients to pre-discovery access to the contents of the Government's investigative files. The Federal Rules of Civil Procedure afford your clients the full measure of the due process to which they are entitled, We have followed the Rules of Civil Procedure, and will continue to do so. Further exchange of letters on this issue would not

be productive,

Regards,

David NI, Finkelstein Trial Attorney Civil Division

cc: Kevin Barry


P.S Department of Justice Certification or Identity

FORNI 4R111101'itl) Okla NO I ENPii(ISS eA ab1'1

Prlyney Act Statenteill. In accordance with 21i CPR Section 10.41(d) personal dale sufficient to 'derail') ihe battyR.10A. subin tiling requesta ht Mail undor the Prh at) Act or 1074, 5 I .'.SS: Scullin) 552o. is required, The purpose or this solicitation ti to i; that the records o/ odes /duals

Ito um the subiert or U.S. Department or Justice *stems Or records are tut n rmiglt1111 disclosed by the Department Requests nth not tie processed ir this intbmintiou 14 not furnished. False in forination on this Illrm etas suhicut the requester to etlnialui piniallio coder IR t Iteetion 1001 nabtat 3 11.53.Y. Hem ion 5.52ati)13).

Pubtio reporting burden roe this collection a Information is ustinnired b, avorttgc 0.50 hours per response. including the limo /Or corlott inp instruetion5. /marching et, sling than sources, gathering and maintaining the data needed, and completing, rind ret icii ing the collect Ion in Iiarrnoijun, Suggestions ror reducing this ',Urdu° tan) he sob:IIhied in the Older' or Inibonution and Regulatory A Ituirs f >Ike or Management and Budget, Public I Ise Reports l'inject U I00-0016). Washington, DC 20501.

Pull Name of Requester I Bret Michael Berry

Citizenship Status 2 U.S. Social Security Number 5 593-44-9115

Current Address 514 Frank Show Road. Tallahassee, FL 32312

Date of Birth October 16, 1976 Place of Birth Tallahassee, Leon County. Florida, USA

OPTIONAL; • Authorization to Release Information to Another Person

This thrill 1'4 ako to he completed Itt requester k‘ hi) Is nuthorinIng InrOrnitil km relating Iv himself or herself Iv he cc le,isvif iti :mother purism,

parimint tu 5 L.S.C. Stetion 552nd by. I anthorlre the I IS. penortMent orJristiet: 10 release an> and it I Inhamutign relilling 10 nic uv

Patric Hooper

Print ur Type Marne

I decium under penal') of perjury under the lows of the Unhed States or America that the foregoing is true and 1.itirNCI, and that I am the person named &love, and I understand that any fah Mention or Ibis simmer,' 43 ponisbubto under the pro', isions of IR ll.S.C' Section 1001 by n fine of nut more than 510,000 or by Imprisomnent or nol mom than hive years or troth. and that requesting or obtaining any recordt5) under lilac pretenses is punishable der the pro Wong of 5 LI S.C. 552000I ti fine anot more than ¶5.00(I.

Signature 4 Date 02 Oct 2014

$ Nome of individual who IS tha subject of the record(s) sought.

I Individual subdnlnlug n requirsl under the Privacy Act of 1074 must be either "it citizen, or the United Si a tog or an alien I awfully admitted Ibr permanent residence." pursuant to 5 U.S.C., Section 552a1a)(2). Requests will be processed as Freedom or In formal ion Act requesu pl11111/1,11 10 5 U.S.C. Section S52. rather than Privacy Act requests. fur Individuals who are not United Slates cidi Zane Or aliens

lawfully admitted Ibr permanent residence. Providing your social security number is voluntary. You are asked to provide your social security number only to facilitate the

identification of records relating ID you. WIthOUI your social SVC11111), number, the Department may be unable to locate any an all records

pcoaliaila to ',Du

'Signature of individual who is the subject of the record sought,

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Exhibit B


U,S. Department of Justice

Civil Division

Washington. DC 2115,30

JMK: jrn10145-F01.13433 October 6, 2014

Pf(VIC Hooper Health Care. Lawyers & Advisors 1875 Century Park East, Suite 1600 Los Angeles, CA 90067

Dear Mr. Hooper,

This is the initial response of the Civil Division, Department o f' Justice (00,1) to your Freedom of Information Act (FOR) request for a copy of a specific audio recording or a transcript of such recording in the case U.S. v. Reliance Medical Systems LLC et nt. Your request was received in this office on October 2, 2014 and assigned control number 145-FO1-13431 You also requested expedited processing.

After reviewing your request for expedited processing, I determined that there is no threatened loss of due process and no question as to the integrity of the Department of .histice In this matter, Therefore, the request For expedited processing is denied.

With regard to processing tees relating to your request, I believe that you have u commercial Interest in the requested record and it Is my estimate that the cost to process your request will be $275. Please advise me it' you agree to he hound for fees up to $275 by writing to meat; U.S, Department of Justice, Civil Division, c/o James M. Kovakas, Room 8020 1100 L Street, N.W., Washington, D.C. 20530, You may also provide your agreement to be bound for fees electronically at [email protected]

[ [ do not receive your agreement to be bound for lees by October 16, 2014 I will assume that you do not wish to proceed with your request and I will close my file un your request. If you have any questions regarding the processing of your request in my office you may contact me at 202 514-3319.

For your information, Congress excluded three discrete categories of law enforcement sod national security records From the requirements of the FOIA. See 5 U.S.C. 552(c) (2006 & Stipp, IV 2010), This response is limited to those records that are subject to the requirements of the FOIA, This is a standard notification that is given to all our requesters and should not be taken as an indication that excluded records do, or do not, exist.

If you are not satisfied with my response to this request, you may administratively appeal by writing to the Director, Office of Information Policy, United States Department of Justice, Suite 11050, 1425 New York Avenue, NW, Washington, DC 20530-0001, or you may submit an appeal through the ePOIA portal at http://www,justice.govfoip/efoia-purtal.html.


Your appeal must be received within sixty days from the date of this letter. If you submit your appeal by mall, both the letter and the envelope should be clearly marked "Freedom of Information Act Appeal,"

Sincerely,

/q. (5,0044,

=CS lvt, Kovakas Senior Supervisory FOTA Counsel

P01/PEA Unit, Civil Division


Exhibit C



Civil Division

Was h» won. 7,0510 JMK; tg 4145-FO1-13433

October 6, 2014

Mr. Patric Hooper Health Care Lawyers & Advisors 1875 Century Park East, Suite 1600 Los Angeles, CA 90067

Dear Mr. Hooper:

This 1 s tri acknowledge receipt of your Freedom or In ['Donation Aci request doted

October 2, 2014 and received by this Office on October 2, 2014 in which you requested records on

U.S. v. Reliance Medical Systems. This Office has assigned your request the following tracking

number: 145-F01.13433,

The records you seek require a search in another Office in the Division, and so your request presents "unusual circumstances" under the FOR. See 5 U.S.C. 552 § (n)(6)(B)(0. Because of those unusual circumstances, we need to extend the time !link to respond to your request beyond the ten additional clays provided by the statute. The time needed to complete our processing of your request will depend on the complexity of our records search and on the volume and complexity of any records located. For your information, this Office assigns requests to one of three tracks: simple, complex, or expedited

Each request is then handled on a Erst•in, first-out basis in relation to other requests in the sane track. Due to current budget constraints, simple requests usually receive a response in about six months;

complex requests necessarily take longer. At this time, your request has been assigned to the complex

track, In an effort to speed up our records search, you may wish to narrow the scope of your request to limit the number of potentially responsive records or agree to an alternative time frame for processing, should records be located; or you may wish to await the completion of our records search to discuss either

of these options.

regret the necessity of this delay, but I assure you that your request will he processed as soon as possible. Ilyou have any questions or wish to discuss reformulation or an alternative time rrantc for the processing oiyour request. You Ma) comsat WC by telephone at (NZ) 311-3319 of )ot, nu.

at the Freedom of Information/Privacy Act Office, Civil Division, Department onus:Lice, Room 8020,

1 100 L Street NW, Washington, DC 20035.

Sincerely,

?lc /1 N Wea IsQ-1

James M. Kovakas

Senior Supervisory FOIA Counsel FO1/PA Unit, Civil Division


Exhibit D


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AD11101/1111‘11,1411',1,10N 111 11111111/...DN,

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1101 D1.14.1 OD 1. HAAN I ALI. SOFIP HAW

1.05 ANOI“ IS. CAI IFOILNIA 1)11067-2/07

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October 6, 2014

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VIA EMAIL

James M. Kovakas Senior Supervisor FOIA Counsel U.S. Department of Justice Civil Division 1100 L Street, N,W. Room 3020 Washington D.C. 20530

Re: Control Nu. 145-F01-13433 (Hooper) — Agreement to he Bound tar Fees

Dear Mr. Kovakas:

Thank you very much for your response to my recent FOIA request to which you have assigned the above referenced control number.

While, we respectfully disagree with your determination concerning expediting the request, we nevertheless agree to he bound for fees up to $275,00.

Given the fact that we have specifically identified the location of the requested information and that the information requested consists solely of a tape recording and any transcript thereof, we cannot imagine it will take more than the 20 working days required by law

for you to produce the information.

Furthermore. because the custodians of the requested infortnat ion (Mr. Finkelstein and Mr. Di Pio) have not indicated any objection to the production of the information, other than an unjustified delay in the date for producing the information, we expect that no objection will be

asserted to this FOIA request.


HOOPER, LUNDY & BOOKMAN, P.C. III Al III CARl I AWYHES


We continue to point out that the July 26.20)1 tape recording has been in existence fur more than three years and has been the source of serious and very damaging allegations of wrongdoing on the part of my clients appearing most recently in the highly publicized civil complaint tiled against them on September 8, 2014. Yet, my clients have never been given a copy or even a transcript athe recording, This is hardly consistent with the typo of transparenc,i, of government inlbrmation advocated by the Administration.

Very truly yours.

Pat•ic 1-I doper

P14/111 cc: David M. Finkelstein

Arthur Di Din


Exhibit E


D.S. Deportment of Justice

Civil Division

JMIC: jniki7195-1701-13433

Patric Hooper

Health Care Lawyers & Advisors 1875 Century Park East, Suite 1600 Los Angeles, CA 90067

Dear My, Hooper,

WuSlunglOn. Ut' • 20530

October 29, 2014

This is the final response of the Civil Division, Department of Justice ()01) to your Freedom of Information Act (FOIA) request for a copy of a specific audio recording or a transcript of such recording in the case U.S, v Reliance ,Medical Systems 1.1,C et cd.

Your request was referred to the Civil Frauds Branch for search and review. That office identified the requested recording and reviewed it for disclosure.

Pursuant to our review, the Civil Division has withheld the subject recording in Rill

because it is protected from disclosure under the FOTA pursuant to 5 U.S.C. § 552(b) (5). This provision concerns certain inter- and intra-agency communications protected by the attorney

work-product privilege.

In addition the subject recording is also exempt from disclosure under the FOIA pursuant to 5 U.S.0 § 552(b) (7) (A). This provision concerns records or information compiled for law enforcement purposes the release of which could reasonably be expected to interfere with

enforcement proceedings.

Per your agreement to be bound for fees, the cost for the processing of your request is

$138.00. Please remit your cheek in that amount, payable to the U.S. Treasury, to me at U.S.

Department of Justice, Civil Division, c/o James M. Kovakas, Room 8020 1100 L Street, NI W,,

Washington, D.C. 20530.

For your Information, Congress excluded three discrete categories of law enforcement and national security records from the requirements of the FOIA, See 5 U.S.C. 552(c) (2006 & Supp. 1V 2010). This response is limited to those records that are subject to the requirements of the FOIA. This is a standard notification that is given to all our requesters and should not be taken as an indication that excluded records do, or do not, ONISI,

IF you are not satisfied with my response to this request. you may administratively appeal by writing to the Director, Office of Information Policy, United States Department of Justice, Suite 11050, 1925 New York Avenue, NW, Washington, DC 20530-0001, or you may submit an appeal through the aFOIA portal at httpii/www.justice.govioipiefoia-portaLinmi.


2.

''our appeal must be received within sixty days from the date of this letter If you submit your appeal by mail, both the lector and the envelope should be dearly marked "Freedom of Information AO Appeal."

Sincerely,

1-.?“aw... ge-i-‘4440

James M. Kovakas Senior Supervisory POIA Counsel

POI/PA Unit, Civil Division


Exhibit I


United States Pursues Claims Against Neurosurgeon. Spinal Implant Company. Physician... Page 1 oft

JUSTICE NEWS

Department of Justice

Office of Public Affairs

FOR IMMEDIATE RELEASE Monday, September d. 2014

United States Pursuoa Claims Against Neurosurgeon, Spinal Implant Company, Physician-Owned Distributorships and Their Non-Physician Owners for Alleged Kickbacks and Medically

Unnecessary Surgeries

The United States has filed two complaints under the False Claims Act against Michigan neurosurgeon Dr Aria Sabit. spinal implant company Reliance Medical Systems, two Reliance distributorships—Apex Medical Technologies and Kronos Spinal Technologies—and the companies' owners, Brett Berry, John Hoffman and Adam Pike, the Justice Department announced today. The complaints allege that Apex Medical and Kronos Spinal paid physicians, including Sabit, to induce them to use Reliance spinal implants in the surgeries they performed

"Improper payments to physicians can alter e'physician's judgment about patients' true health care needs and drive up health care coats for everyone," said Assistant Attorney General Stuart F Delery for the Justice Department's Civil Division. "The Justice Department is committed to enforcing the laws that

prohibit such payments "

Berry and Pike founded Reliance in 2008, and subsequently created more than 12 physician-owned distributorships that sold Reliance devices. Each of Reliance's distributorships sold spinal Implants ordered by their physician-owners for use In procedures the physician-owners performed on their own patients. '(he complaints allege that Reliance used one of its distributorships, Apex Medical, to funnel improper payments to Sabi( for using Reliance spinal implants in his surgeries. According to the complaints, Sabit began using Reliance implants on his patients only after he acquired an ownership Interest in Apex and started receiving payments from the sale of Reliance's spinal implants Apex allegedly paid Sabit $438.570 between May 2010 and July 2012. during which time Sabit used Reliance implants in approximately 90 percent of his spinal fusion surgeries The government also alleges that these payments caused Sahli to perform medically unnecessary or excessive surgeries on certain patients who did not need the spinal implants.

The government further alleges that Reliance operated a second distributor. Kronos in southern California which made improper payments to two other physicians. Drs Ali Mesiwala and Gowriharen Thetyananthan Allegedly. Reliance's owners were recorded telling a potential Kronos investor that Reliance was formed as part of a plan to -get around' the federal Anti-Kickback Statute, which prohibits such improper payments, and that Reliance pays its physician-investors enough in the first month or two to "put their kids through

College "

httpWwwvtjustlee.goviopaipthinited-statOS-purSues-claims-against-neurosurgc:On-spinal-i... 10/6/20 I 4


United States Pursues Claims Against Neurosurgeon, Spinal Implant Company, Physician... Page 2 of 2

The allegations that Sabit performed medically unnecessary or excessive surgeries were raised in a separate lawsuit thee by Dr. Cary Savitch and Dr. Gary Proffett under the qui tam, or whistleblower, provisions of the False Claims Act. The act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery, The act also permits the government to intervene in the whistleblowers' lawsuit. In this case, the government hes both intervened in the whistiebtowers' medical necessity claims and filed a separate lawsuit containing kickback claims against both Sabit and the Reliance defendants

These lawsuits illustrate illustrates the government's emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009. the Justice Department has recovered a total of more then $22 4 billion through False Claims Act cases, with more than $14.2 billion of that amount recovered in cases involving fraud against federal health care programs

This Investigation was a ceordinaled effort among the Commercial Litigation Branch of the department's Civit Division and the U.S. Department of Health and Human Services•Oftce of the Inspector General The lawsuits were filed in the Central District of California (Los Angeles), and are captioned United Slates ex ref Carey Savfich M D.. and Gary Prciltalt, M.D. v. Ana Sabit. M.D Moustapha Abou-Samra M D . and Community Memories Health System. Case No, 13-3363, and United Slates v Reliance Medical Systems, Apex Medical Technologies, Kronos Spinal Technologies. Bret Berry, John Hoffman. Adam Pike. end Aria

Sab', M.D

The claims asserted by the government are allegations only and there has been no determination of

liability

14-949

Civil Division

hltp://www,j uStiee.gov/opa/priumted-states-pursues-claims-ageinst- neurosurge.on-spinal- 10/6/2014


Exhibit G


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Feds target physician-owned companies for unnecessary surgeries

New photos show age decline of pop music icon in prison

Stephen King's new movie inspired by infamous killer

Federal prosecutors filed a knesuil lest week against u network or physician-owned COM patties. They mid it involved 35 doctors nationwide and that it led some of them to perform risky surgeries that were not necessary, reports CbS Nests

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anything. I said no," Rey acids told CBS News In o story Ilnn aired last October.

Now the Justice Department is saying her sit rgen• was not necessary and that Sahli performed it because he was profiting off of the hardware that he put In her back. A single pedicle screw like the ones he Implanted in her spine cart cost Slop to make and sell for St,000.

Reynolds sold Sabh never told Win about having an ownership stake in Apex Medical Technologies t.LC, the company where the screws canoe (ruin.

Prosecutors said Subit was part of a network of physician-owned companies across the country started by Bret Bern) and his business partner, Adam Pike.

Some of the most trembling details in the complaint conic from on undercover recording of Berry and Pike trying to recruit a surgeon. They told him their doctors make enough to "put their kids through college in the first two months sinus, but that it should all be kept secret.

"Our job is...to let everyone outside...think that you're Just using this product," Berry said. "We don't want anyone to know I hat you're an Owner."

Republican Seri Orrin Hatch has been looking Into physician-awned corn pumas far para.

"If you have doctors who are overu tilini ng a medical device strictly because they can make more money out of it—you have to conclude. 'lley, wail a minute. there's something wrong here,'" he said,

Hutch said the Justice Department's actions inn rk a turning point, and he is nun questioning whether these companion should be legal al all.

"my personal belief is doctors should not invest in medical devices that they're going to utilize lit their prnetice...l would limit that to serious Invasive surglcnl des ices," Ha tch said,

Physiciairowned cumpunka now supply an estimated one-sixth of spinal implants nationwide. A report from the inspector general of the Department of I health and Human Sen•fces found the hospitals these companies serve average 28 percent

more than spine surgeries.

SOIL Berry and Pike would not gratt I CBS Newa an Interview, but an attorney for

Pike and Barry provided a statement hi an small sayinV 'Me go% erninenth;

allegationa...ave reckless and untrue. Our clients have always mode every attempt possible to comply with the letter and spirit oldie myriad of laws and regulnlinns applicable here"

Lost !noon; Sahli lost his license to prnc ice medicine in California, but he is a

peel king in Michigan.

While he would not provide CBS News with a statement, in the pest he hal, denied

the allegations.

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httpli/www.cbsnews.corninewsifederal-prosecutors-target-physic an-owneci-c:oin p 9/2.5120 I 4


Docio'nent: Fads link former Ventir a doctor to kickbacks, unnecessary surgeries 189.3 K.„ Page 1 of 10

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'

Per yews, it small group of Southern (nit bruin doalais porlbrmcyl unnoceresary or used); extensive admit' surgeries, which “eee Men Proadulenity billed to Medicare. agegagg te, Isompliarat iowently_dilg.d.hydihil_tt_AntenoLy_pliga:

la Myra°. Cbrypoinvooto is sing flamer Venture surgeon Dr Ann Saha and three ITIVV.ItOrN m u spinal implant lliitiliM11011 colnininy attempting to rotator moms) Medicare paid for what onvyinment lawyers soy were unnecessary or eaeossiye ourgeiltse encovroged by the &Modems

the emit complaint r filed Sept 8. claims Adam Pike and Wet Own tire the founders or Reliance Medical SSIPVIIIN an implant company and sithoequtinly at itatSi 12 physician-owned distribidwohips IPODs1 John lladimen was nn an emu in one nI the Reliance Pops

P00s ore e business etude' in winch doctors ore inYestart in a company Mut makes products dial any he used hy the dolours (Jeer the years. there huye Mow kt, 1 idol concerns onacopay the Ilculth unit I !union Son tees Office of Inspector Caner&

hl') Airy Rehense Medical Systems and its ties to )octal spinal surgeons

The U S Attorney's Oilice says Berry and Pike offered doctors the chance to he "physician investors" in the Reliance PODS m (axle:ripe for agreeing to use Reliance spinal pans in surgeries

According to the complaint. that relationship "tamed" spinal fusion chums mode to Medicare by Palo local doctors •-• Arm Sohn. Sean Xci, Ali Heston:1a and Dowrilwan llialyanonthori — by dassailially giving "lockbaakr for Mang certain graduals

'the doctors did nut respond to requests no vonimuol

Poore !hipper, unatney Oar Pike, Derry and )1oIllmin, sap his Wends didn't brook any Ines and lam the Minim "is u slam nil by the government m the urea 01 ohm:noun sionership " I hyper filed his ieoptinbe to die collodium 101 week

Doctors handpicked to be investors

Court papers ralbmiwe a %mum of meetings in July 3011 secretly recorded by II is oh P potential pub Ispengtur

rtiwernment m allieh Pike. Bern ,end HnrlMon thooght were illeettog

During one of 111LIRU memingo. dm dovernent elanny, Adam Pike and Bret Berry stud they "hand pick" ph

tors and inonitor the number of surseneo they Jo

"We always start guys aid with un c alum= period We mandate dial." Adorn Pike allegedis baid during a July 2a, 21111. mectinC with (I prospectiio mvrarat

The Justice Doom-Intent ahem* Mk and Mary iYouldn't allow physimans to become aviators unless OW hospitals they eddied at agreed to purchase Reliance

(Weise>

Apparently sonic doctors didn't make Ole cot. cowl documents sit)'

Or David 1.undm, an investor m ti Reliance POD, was rowed lo leave laseuttoe he didn't use Reliance in:pi:Into in a "significant number or'Ins surgeries." uccording in the complaint Moulin has not responded to a reotier1 for comment

Another doctor didn't VVVI7 gel n thence to he un ins-color become John Ihillman fell "he's not bon tit oil "

n 11)05

hup://mvw orginews/2014/09/23/46884/lods-1 ink-former-vent era-doctor-to-ki ckbacks.., 9/23/2014


.• - • •- . • • -

Document: Peds link former Ventura doctor to kickbacks, unnecessary surgeries) 89.3 K... Page 4 of 10

Surgeon champions

The U.S. Attorneys Office also alleged surgeons who were investors in Reliance PODs were presumed to gel hospitals to pay above•market prices the Reliance 'implants

The claim sms

Un Aug 10, 2007, Adorn lithe reported approvingly that Menthes "surgeon ehumptune were "nthnlingl bo111115 on oar aping Synths It losp,IRN

Reliance Operotort allegedly mieked the volume orsurgerica perthrued by its physitanns

According to 11w civil complaint, Adam ORM. u Reliance employee, was responsible for totherming Jelly Surgery reports and would "regularly celebrate" reports from physician aerators who laid 111CrIMINd Ihutr surgery %mill

Bath Adam Pike and arm Berry 'personally encouraged" surgeons to MCKIM: iho number of inthrumented rUSIUlt surgeries, according to the comPldint fl Included these usellipleS

• On May 17, 2007, in response to run inquiry from Dr Pair Wesierlend regarding a punein "Ilia' would consider hoops surgical measures," Adorn Puke encouraged Westertund to porl'urm 'a seven level Ihsion with unerbody tming lIST I linthassy Spinal I isthnolums. n Rebuitthe PODI"

• On Oct 18, 3007, in response to b Reliance dialninnOr'S report that Dr NM Oreorumild "booked 3 cases toddy I LOVIllit'Adtirn Puke wrote, "'Incase Ialt Dr Greenwald to slow down How dare he go crazy like he PS We are on ri ""

PEEK refers to a spinal edge distributed by Reliance PODS

The US Attorney's office alleges Snbit was paid $438,571 between Me) 2010 nod July 2013 by a Reliance el XS end used Re Wow implunte in approximately 90 tureen! Of his sp mBl riNiOn mewl ICS In its UOMplUM), the government also says AUnic - If itoi all Mirguriei more iiimecessary or

eNCO)lice

:ilp14ortyn)lured blupW(Peal lit.imp4 w Catifurnia kw month alter the Colt:broth Medical board made en accusalinn awla lima Involving his pediment of

patients He still fins an BUM)! license In Michigan, where lw has strive relocated

None attic physitialls hue rintliTed retille.113 for comment

'We have reason to believe they hove taken things completely Mir or U01110‘1' snot IP Wiley PuUm f leader. who ;its said he has not Isms thetle of the

transcripts of the rccordrag meetings

He also newel he lies produced I 08,00Upages of daemon's In lilt Ds•poriment of Justice nitorneys and that "whet you WO seeing ale halt trice (110 earn,: up

"in all 111)011t the money"

Dian a metIms %)itli a prospettpu Inn ester on Jul), 20. 2011, Relielle0 Ongaan Adnill Pike Iti recorded describing the purpose of the Rellance's PODS a 'pl.

Lb(1)11 the mane) "

"I always ranic011f smog NVIlh than says moll al's realty not about the u1011.4),. rib IY•'ski'•, n is all ohnot Ilk. mot,. We Make a lot ni 0101w) " Pike

is recorded saving at Om mooing, atmording to the learnt complaint

Pike went on ta Cell the potential ins eller Retainer operators um making anywheie from $ 30(100 to $80,0004 inenth. depending on the amount of business

http://www.scpr.org/news/2014/09/23/46884/feds-li nk-former-ven ture-docto r-to-k c k backs... 9/23/2014


Document Feds link former Ventura doctor to kickbacks, unnecessary surgeries I S9.3 K... Page 5 of 10

"It'. Ilkciy to make you more manes than your prom ice does: Pike it quoted as sin ing dining 2011 meeting

7w lJ S Ationiey's filings Maim both Pike and Bony benefited from being Relative operators, hating mid thenwel i vs Un million nun, 2007 ul 2012

Paine Idooper, their ntiorneyt ntlls dun number "eompleiely Wig." elan dig the government is inistbking revenue or ormits

And Ms nen psi We operators oCRellance who were allegedly I/ousting of the lucrative returns of We Reliance l'OOe

you dilly are in This to 'mike money ond you have is finite time Ilion io Jo it. I don't know ;I licher wily Dr All Alesiscula 41 owned as eying during another July 20,2011, recorded meeting

Mestwalu, an alleged imolai in the Reliance POD called '<cones. and was paid $3,4073)18 by Reliance between 201/7 and August 2111 J. according at the fedentl complaint Those swymems. the dominions says. ware based On the monis Mestivalti gent:ruled for Stenos by using Keluniee implants in his surgeries on Medicine yintienta

'There It n nwjm difference between revenue end profit and Wads A laws being ignored here" said Hooper, the intorno) for We trio

Neither Mesnwila nor Thawananthun Mt named as a defendants in federal complain; Bailie orb Di Pomona Valley I losiniut Mediate C'emer accord mg to spoken,' omen Brenda Deelcy who also confirmed. tlw Board of Directors and Medical Sluff Leadership are continuing io evaluate Drs MI:NM ale's and Thwynnanthen's rd ntionship with the hospital

A total or 35 doctors- IA Bun (Warm° - are Walla in‘estigated be the Federal Depunalem of lwaict: because ni'titcli alleged ties in Reliance PODS, according to u court Wing earlier dila ear

The 4/mime Depnrancnt declined ennunrnl 011ihrs nom

Read the Justice Department's civil complaint here:

STUART F. MORD A Atint ASIOWSW Memo Ocromi

z MICHAlit U. ORANSION TInfY I H11 car

SHOW Mc MORE LIKS JUSTICII GUM ratouNT COMPLAINT INVOLVING PODS

SIMILAR ft/STICII DHPAIel hiliNT CORIPLAINT INVOLVING P005 BACK TO DOC More from ionsell Plea tons I Next Pelietba§PLS; hhiD214'44110 1214.11421i1J1242IISJL1Jn lkintrl`

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112.U.2lit27.).,1 11111titi1J3V-i:J•C ',Ant* I. OW' IQ "411101,41 t ‘11.!thPil ItniEiFy

Here Is Reliance Medical System's response:

http://www.scpr.orginews/2014109f23/46884/feds-link-former-Yentura-doctni-to-liickbecks... 9/23/2014


exhibit 1 - s3.amazonaws.com · sep - 8 2014 central distakit cf calfopnia fm dclittty ase...

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