Police arrest medical suppliers

Jenny Marder

Two Huntington Beach salesman were arrested Friday on suspicion of

overbilling county hospitals as much as $3.5 million for spinal

implant products.

Jason Koenig, 33 and Mark A. Crane, 45, were charged with mail

fraud for falsely claiming to have sold millions of dollars for

products supplied by medical firm Depuy Acromed Inc., a Johnson &

Johnson subsidiary that makes and sells orthopedic products.

From February 2000 to October 2002, Koenig and Crane sold

high-tech devices used for back surgeries to 15 Orange County hospitals.

Koenig reportedly overcharged the hospitals by at least $2 million

and Crane by $1.5 million, Assistant U.S. Atty. Jeannie Joseph said.

Both men, who were paid on commission for the amount of spinal

implant products sold, turned in lists with dramatically inflated

numbers, she said.

“Their motivation was based upon the amount of sales,” Joseph

said. “When two screws are used, but they bill for 10, that’s a

significant difference.”

Koenig and Crane were named the top billing representatives for

their company. Koenig was awarded Salesman of the Year in 2001. In

that year, he made $700,000 in commissions, and Crane made $500,000,

Joseph said.

Their actions came to light when one hospital noticed abnormally

high surgical costs.

“The hospital noticed that the cost of surgeries was sky high,

with the exception of one month, when Koenig was on vacation,” Joseph

said. “Someone noticed that one surgery was exorbitant, more than

what would be reasonable for any such surgery.”

Joseph cited a $10,000 surgery that was billed at $40,000 and

another $5,000 surgery billed at $35,000.

“The costs kept increasing as they got away with it,” she said.

The company knew nothing about the activities, Depuy Acromed Inc

spokesman Jeff Leebaw said.

“The company has actively and fully supported the government’s

probe and continues to offer its complete cooperation, Leebaw said,

adding that none of the alleged conduct had any effect on customer

care.

Joseph, who said she’s never seen anything quite like this, hopes

that the case will deter future fraud.

“Hospitals deal with hundreds of different sales reps,” Joseph

said. “Ninety-nine-point-nine percent are honest, and these guys

obviously were not.”

The arraignment will be held next Tuesday.