STAT+: Lured by a bigger payday, a medical device maker sold fake plastic parts. Many were implanted in chronic pain patients
Stimwave’s pitch was alluring. As a startup tackling chronic pain with nerve-stimulating devices, it promised to release patients from the stranglehold of addictive painkillers. And unlike its competitors, whose devices required patients to have clunky batteries implanted in their bodies, Stimwave’s system came with a sleek, wearable battery attached to thin wires under the skin.
But under financial pressure, the company’s promise soon crumbled into fraud. It became clear that the expensive, implanted batteries Stimwave wanted to free patients from were also the ticket to getting the biggest payouts from insurers. So Stimwave changed its device — first by adding an implanted metal “receiver” that ostensibly boosted the device’s power, and later, a dummy piece of plastic that did nothing at all.
The fake component let Stimwave sell their devices for thousands of dollars more than they otherwise could. The company’s CEO, Laura Perryman, pushed the company’s staffers to lie to physicians about the plastic part being medically necessary, according to interviews with former employees and court filings.
“When people asked questions about how does this actually work, there was an overall tone of, you don’t need to know how this works,” a former Stimwave sales representative, who requested anonymity to avoid professional repercussions, told STAT. “That’s not your job. Your job is to sell it.”
In March, the scope of the fraud finally came to light: Nearly 8,000 patients had been implanted with dummy parts of the device, defrauding Medicare and private insurers of millions of dollars between 2017 and 2020. The Department of Justice indicted Perryman, calling her the mastermind of the scheme and alleging health care fraud. Perryman, who pleaded not guilty, now faces 20 years in prison. Stimwave, which fired Perryman in November 2019, agreed to pay $10 million in penalties to settle allegations of knowingly enabling false Medicare claims.
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