PA Convicted of Fraud for Amniotic Fluid Shot Scheme

A Texas physician assistant has been convicted of fraud for giving patients unapproved injections of amniotic fluid for purported pain relief, and then illegally billing Medicare for the shots.

After a 5-day trial, a jury deliberated for less than an hour to convict Ray Anthony Shoulders, PA, who had submitted $788,000 in fraudulent claims and took in more than $614,000 from Medicare for the shots, which aren’t approved to treat pain.

The 36-year-old, who worked out of a Fort Worth pain management clinic, faces up to 240 years in federal prison, according to federal prosecutors.

“Not only did this defendant attempt to scam Medicare out of hundreds of thousands of dollars, he did something far worse by potentially endangering his patients’ health in recommending that they be injected with a drug that had not been approved for that purpose,” Leigha Simonton, the U.S. Attorney for the Northern District of Texas, said in a statement.

Shoulders gave patients shots of an amniotic fluid product called Cell Genuity, which isn’t approved by the FDA for any indication, federal prosecutors said.

Initially, some patients paid more than $800 out of pocket for each shot, but many declined because of the high price tag, prosecutors said.

Then, Shoulders connected with a sales rep for another amniotic product called Fluid Flow, which had a unique code for reimbursement, known as a “Q code.”

While Shoulders never purchased any Fluid Flow — it was far more expensive than Cell Genuity — he ultimately used its unique reimbursement code, Q4206, to bill Medicare for Cell Genuity shots. More patients took the shots because they were covered by insurance, prosecutors said.

Shoulders made $1,200 per cc of Cell Genuity; he would only have earned about $400 per cc for Fluid Flow, prosecutors said.

From August to October 2020, Shoulders’ clinic submitted more than 100 claims for Fluid Flow to Medicare, and received about $400,000 in reimbursement. By November 2020, Shoulders halted the scheme after he became wary that the sudden increase in billing volume might trigger an investigation.

When he saw no repercussions after 10 months, he started up again in October 2021 and continued through December of that year, prosecutors said.

Related to the Shoulders case, in February 2022, several U.S. regional Medicare Administrative Contractors announced that they would seek to recover losses from “birth tissue” claims going back more than 2 years. This applied to amniotic, placental, and umbilical cord injectables, MedPage Today previously reported.

That story noted that some companies were able to secure Q codes from CMS, which were in turn marketed to doctors as being reimbursable. It specifically mentioned Fluid Flow by BioLab Sciences using code Q4206, and a source at that time told MedPage Today that the DOJ would likely be getting involved, opening the door to criminal prosecutions.

Chris Centeno, MD, a physician who owns stem cell clinics across the U.S. and who was sued by the FDA more than a decade ago over certain stem cell treatments, has long criticized birth-tissue product companies that promote their products for unapproved orthopedic indications.

“This is just the tip of a billion-dollar claims iceberg as there are hundreds of U.S. clinics that have fraudulently billed Medicare for these birth tissue products to treat pain,” Centeno told MedPage Today in an email. “Most of those clinics are getting their payments clawed back, but I’m sure some will end up losing at trial as well.”

In June 2021, the FDA warned that many so-called regenerative medicine therapies are unapproved, but were being marketed nonetheless to treat a wide range of diseases and conditions. Amniotic fluid — among other birth tissue products, such as umbilical cord blood, cord blood stem cells, and Wharton’s jelly — were on that list. Other products included stem cells, stromal vascular fraction (also called fat-derived cells), orthobiologics, and exosomes.

The FDA has long been trying to put a lid on these unapproved cell therapies. In 2017, the agency issued guidance on regenerative medicine products, with a November 2020 deadline for full compliance. That deadline was extended due to the pandemic and went into effect in June 2021. Now, manufacturers must meet FDA’s premarket approval or IND requirements for certain products before promoting them to patients.

In addition, companies can’t market those products for uses outside of the IND, as FDA noted in a recent warning letter to exosome maker Kimera Labs.