Federal lawsuit accuses Cape doctor of kickback scheme

A federal lawsuit filed earlier this month accuses a Cape Girardeau neurosurgeon of altering his practice to benefit his fiancée's business as part of an illegal kickback scheme.

The five-count complaint alleges Dr. Sonjay Fonn and his fiancée, Deborah Seeger, violated a federal anti-kickback law that seeks to prevent conflicts of interest and overuse of medical services or items by prohibiting anyone from making or accepting payments for referring, recommending or arranging for federally funded medical services.

Violators can be subject to civil penalties of $50,000 per violation plus three times the amount of any payments they received.

Reached by telephone Thursday, Fonn's attorney, James Martin of St. Louis, said the suit was "without merit" and was the work of Fonn's competitors.

Online federal court records show attorneys for a group of medical personnel filed the initial lawsuit in January 2012, but the case was sealed until this month, when it was unsealed and dismissed.

On July 9, federal prosecutors refiled the suit as a complaint by the United States itself.

The federal False Claims Act allows private individuals to sue on behalf of the federal government if they know of fraud against the government.

"We are aware of the lawsuit. While we're very disappointed the suit was filed, we are fully confident it was without merit, and we look forward to our day in court," Martin said. "The lawsuit contains alleged facts which we will be able to prove are just flat-out wrong. We also feel it's important to note that this lawsuit was started by competitors of Dr. Fonn. We think that fact speaks for itself."

The complaint prosecutors filed this month accuses Fonn of two counts of submitting false claims to Medicaid and Medicare for services rendered as a result of kickbacks; one count of conspiring to violate the False Claims Act; one count of payment under mistake of fact; and one count of unjust enrichment.

Among the allegations in the lawsuit:

• Fonn and Seeger -- who have been engaged since June 2008 -- live together in a house bought with more than $284,000 in

commissions received by Seeger's business, DS Medical.

• From November 2008 to March 2012, Fonn had privileges to perform spinal implant fusion surgeries at a Cape Girardeau hospital. The suit does not name the hospital.
• The hospital treated spinal implants as a "physician preference" item, allowing doctors to choose their own vendors so they could match products to individual patients' needs.
• The hospital paid for the implants, and implant distributors received commissions from the manufacturers.
• Fonn and Seeger ran DS Medical -- a spinal implant distributorship -- as a joint venture with profit margins up to 95 percent. The lawsuit attributes DS Medical's "extraordinary financial success" to Fonn's use of the company as his "virtually exclusive source of spinal implants and related products."
• Fonn was the company's only "true physician customer" generating "any significant ... commission revenue."
• Fonn, who played a management role in DS Medical, "directly and indirectly benefitted financially" from the company's success.
• Seeger had no background in spinal implant distributing before opening DS Medical, which limited the company's ability to perform "typical activities of a distributorship," including product evaluation, assistance with surgeries and inventory management.
• Fonn altered his medical practice to include more surgeries and to use more spinal implants in each of those surgeries during the time DS Medical was operating, raising eyebrows among people in the industry who noted his unusually high use of implants.

The federal action seeks civil penalties against Fonn and Seeger and their companies, Midwest Neurosurgeons and DS Medical LLC.

The suit seeks damages, court costs and interest.

Fonn owns Old Town Cape Dining LLC, which in January bought The Bar, 117 Themis St., which was one of the locations used last fall in the filming of the movie "Gone Girl."

The Bar's opening is set to coincide with the October release of "Gone Girl." Fonn also owns the former Buckner Brewing Co. at 132 N. Main St., which he bought in April, and the former Mediterranean on Broadway location at 411 Broadway, which he bought in December.

Martin said the federal lawsuit should not affect Fonn's other business interests, including The Bar.

"Not at all. ... It's fully anticipated The Bar will be open on time," he said.

Attorney Sandy Boxerman, who is representing Seeger in the case, said Thursday night he and his client have been talking to the government for "a couple of years" about the case and are looking forward to their day in court.

"There's a lot in the government suit that we disagree with, and we look forward to the system playing itself out," Boxerman said.

epriddy@semissourian.com

388-3642

Pertinent address:

Cape Girardeau, MO