Assistant Convicted at Trial of Amniotic Fluid Scam

Following a five-day trial, a physician’s assistant who injected amniotic fluid into patients’ joints in a dubious attempt at pain management has been convicted of conspiracy to commit health care fraud and 12 counts of healthcare fraud, announced U.S. Attorney for the Northern District of Texas Leigha Simonton.

On Monday, after less than one hour of deliberation, a jury convicted Ray Anthony Shoulders, a 36-year-old physician’s assistant at a Fort Worth pain management clinic, on all counts. He will be sentenced at a later date.

“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,” said U.S. Attorney Simonton.  “In a very real way, he sought to profit off of his patients’ pain for his financial benefit, and I am proud of our federal law enforcement partners and our experienced prosecutors for bringing him to justice.”

“Medicare providers who are motivated by greed and financial gain place our most vulnerable citizens at risk,” said Acting Special Agent in Charge Jeff Richards of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “HHS-OIG and our law enforcement partners will tirelessly pursue practitioners whose primary purpose is to amass profit instead of provide Medicare-approved services and procedures.”

According to evidence presented at trial, Mr. Shoulders and his conspirators submitted $788,000 in fraudulent claims and received more than $614,000 in reimbursements from Medicare for injecting amniotic fluid – the liquid that surrounds a growing fetus during gestation – into patients’ connective tissue in an off-label attempt to relieve joint pain.

Certain amniotic products have been approved by the U.S. Food and Drug Administration for wound care, but not for pain management. (In fact, the FDA has issued repeated consumer alerts warning that biologics like amniotic fluid “have not been approved for the treatment of any orthopedic condition, such as osteoarthritis, tendonitis, disc disease, tennis elbow, back pain, hip pain, knee pain, neck pain, or shoulder pain,” nor for “chronic pain or fatigue.”) Because amniotic products have not been approved to treat pain, Medicare considers amniotic injections administered to treat pain medically unnecessary and does not reimburse for them. They do reimburse for some – but not all – amniotic injections administered to reduce inflammation of damaged tissue, as in a wound.

Mr. Shoulders primarily used “Cell Genuity,” an amniotic product for which Medicare would not reimburse, neither for wound care nor for pain. Initially, because the product was not covered by insurance, Mr. Shoulders asked patients to pay out of pocket more than $800 per injection. Due to the high cost and questionable efficacy, however, many patients refused.

In August 2020, Mr. Shoulders identified an amniotic product, known as “Fluid Flow,” that he believed he could convince Medicare to reimburse for in certain circumstances. He spoke with a sales rep about Fluid Flow reimbursement rates and billing requirements but did not purchase any Fluid Flow, which was significantly more expensive than Cell Genuity. 

Instead, he continued to inject Cell Genuity into patients but billed the shots to Medicare under Fluid Flow’s unique code, Q4206.  Because they were told insurance would cover the cost of the injections by Shoulders and other conspirators, patients readily consented to the procedure.

The pain clinic profited approximately $1,200 per cc of Cell Genuity they injected. (Had the clinic used Fluid Flow, they would have made only around $400 per cc.) From August to October 2020, the clinic submitted more than 100 bills for Fluid Flow to Medicare and received around $400,000 in reimbursements. Mr. Shoulders then received a cut of those reimbursements totaling over $200,000.   

In November 2020, in an attempt to avoid detection, Mr. Shoulders suddenly halted the scheme after he became concerned that a sudden increase in the volume of billings might attract the attention of investigators. With no repercussions over the ensuing 10 months, Mr. Shoulders re-engaged in the scheme in October 2021 and continued through December 2021.

Mr. Shoulders now faces up to 240 years in federal prison – 20 years per count.

The Department of Health & Human Services’ Office of Inspector General (HHS - OIG) conducted the investigation with the help of the Federal Bureau of Investigation’s Dallas Field Office. Assistant U.S. Attorneys P.J. Meitl and Nancy Larson prosecuted the case.