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The founder and former CEO of Stimwave was arrested and charged with creating and selling nerve stimulation devices with a non-functioning component that was implanted into chronic pain patients for profit, the Department of Justice (DOJ)opens in a new tab or window announced.

Laura Perryman's alleged scheme, the DOJ said, resulted in the loss of millions of dollars for federal healthcare programs. Perryman has been charged with one count of conspiracy to commit healthcare fraud and wire fraud and one count of healthcare fraud.

Stimwave, a Florida-based medical device company, admitted wrongdoing in the case and reached a settlement with the DOJ in October 2022 for a $10 million penalty, agreeing to ongoing compliance measures as well, the release noted.

"As alleged, at the direction of its founder and CEO Laura Perryman, Stimwave created a dummy medical device component -- made entirely of plastic -- designed to be implanted in patients for the sole purpose of causing doctors to unwittingly bill Medicare and private insurance companies more than $16,000 for each implantation of the piece of plastic," Damian Williams, the U.S. Attorney for the Southern District of New York, said in the announcement.

Perryman's role in the alleged scheme arose from a technical issue related to an implanted receiver, known as the pink stylet, according to the DOJ. After Stimwave began selling the stimulation device along with the pink stylet in 2017, physicians informed the company that this receiver was too long to properly implant in some patients.

The DOJ alleged that Stimwave and Perryman knew that the stylet could not be cut down in length without affecting its functionality, and without the ability to implant the receiver, physicians would suffer a financial loss for purchasing the device, according to the DOJ.

Rather than refund physicians for the unusable devices or lower the cost, Perryman allegedly devised a scheme to develop a white stylet, made entirely of plastic, said to be modifiable as needed. But that stylet was just "a dummy component" designed to "serve no medical purpose," according to the DOJ.

The DOJ alleged that the scheme was designed to continue to sell the device at the same price, which caused physicians "to unwittingly implant the non-functional white stylet into patients and submit fraudulent reimbursement claims" to Medicare.

"The defendant and Stimwave did this so that they could charge medical providers many thousands of dollars for purchasing their medical device," Williams said. "Our office will continue to do everything in its power to bring to justice anyone responsible for perpetuating healthcare fraud, which in this case led to patients being used as nothing more than tools for financial enrichment."

The alleged scheme was initially brought to the attention of the government by a whistleblower in 2018.

In addition to accepting responsibility for the scheme and paying the financial penalty, Stimwave has also agreed to hire a chief compliance officer and hold regular compliance committee meetings. The company has also agreed to cooperate with the government's investigation. The company must abide by these requirement for 3 years from the date of the agreement, according to the DOJ.

A civil fraud lawsuit was also filed against Stimwave and Perryman under the False Claims Act, the DOJ said. The company reached a settlement agreement on that lawsuit, which has been submitted to a U.S. district judge for approval. That settlement requires Stimwave to admit responsibility for the alleged scheme detailed in the government's civil complaint. It must also agree to pay $8.6 million to the government, credited toward the $10 million penalty, according to the DOJ.

The DOJ investigation was joined by representatives the FBI and the FDA.

Stimwave filed for bankruptcy in June 2022 and reached an agreement to sell nearly all of its assets to another entity for $40 million, according to a company announcement released last yearopens in a new tab or window. The agreement will allow Stimwave to continue operating without interruption to its business, according to the announcement.

Perryman was fired from her position at Stimwave in 2019. The civil complaints against her are still pending.

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PERRYMAN, Md. — Plans to turn hundreds of acres of farmland into warehouses in Harford County are on hold.

It's a decision the Harford County Council voted on Tuesday night after a large group of people voiced their concerns about the effects these warehouses will have on their homes.

RELATED: Harford County residents upset over redevelopment plans, argue it affects livelihood

The council voted six to one on moving forward with a moratorium for approval or permits for the warehouses.

Two amendments passed. The first will cut the moratorium from six months down to 90 days. The other lists the kinds of projects the moratorium will not apply to.

Now, plans to turn 700 acres of farmland into five million square feet of warehouses have been halted. Those who live on the Perryman Peninsula were happy.

"We do believe the pause in development will allow the county to step back and access the zoning and the land use plan going on in the county and make real time decisions based on real time data instead of stuff that may have been appropriate 20, 30, 40 years ago,” said Leigh Maddox, who is part of the Protect Perryman Peninsula leadership team.

Others in favor of the bill feel more time is needed to study the impact it has on the community, economy, and environment.

"I think this is an issue that really needs to be looked at and. I don't think they can get it done in 90 days; I don't think they can get it done thoroughly and looking at it in depth,” said Bill Montanary, who is for the moratorium.

Nobody who opposed the moratorium in the crowd would speak, but while Councilwoman Jessica Boyle-Tsottles did vote for the amended moratorium, she does not agree with it.

"One of my many goals as a legislator is to encourage the economic development, and this moratorium hampers the environment for current business owners who are operating in our community as well as businesses that are looking to relocate,” said Councilwoman Boyle-Tsottles.

The bill was signed by County Executive Bob Cassilly on Wednesday.

“I am pleased the County Council has approved my moratorium on mega-warehouses, which will provide a necessary pause as we update our zoning code to properly account for the many unique impacts of these facilities,” Cassilly said. “I thank Council President Vincenti and Councilmembers Dion Guthrie, Tony Giangiordano, Jim Reilly, Jessica Boyle-Tsottles, and Jacob Bennett for their support and I look forward to working with the Council as we prepare legislation to bring our zoning code up to date.”

Patients seeking a non-opioid method to treat chronic pain were heartened when a neurostimulation device, the StimQ PNS system, came on the market in late 2016. The medical device may have worked, but it turned out that the manufacturer was also working the system.

Developed by Stimwave LLC, a medical device company founded in Florida in 2010 by CEO Laura Perryman, the StimQ PNS received 510(k) clearance from the FDA in March 2016. At the time, Stimwave said, "Thanks to our revolutionary wireless device, we are the only neuromodulation company cleared by the FDA to help patients with reducing their chronic neuropathic pain at most locations throughout the body." The device included a receiver that had to be surgically implanted to transmit energy from an externally worn battery to the neurostimulator. It turned out, however, that a second iteration of the receiver was made entirely of non-conductive plastic. Its sole function was to bilk Medicare and private insurers out of more than $16,000 for each procedure.

Last week, Perryman was indicted by the US Department of Justice for conspiracy to commit wire and healthcare fraud, which carry a combined maximum potential sentence of 30 years in prison, reports the International Consortium of Investigative Journalists (ICIJ).

Just a piece of plastic

“As alleged, at the direction of its founder and CEO Laura Perryman, Stimwave created a dummy medical device component — made entirely of plastic — designed to be implanted in patients for the sole purpose of causing doctors to unwittingly bill Medicare and private insurance companies more than $16,000 for each implantation of the piece of plastic,” said US Attorney for the Southern District of New York Damian Williams in a release issued by the DOJ on March 9, when Perryman was arrested. “The defendant and Stimwave did this so that they could charge medical providers many thousands of dollars for purchasing their medical device. Our office will continue to do everything in its power to bring to justice anyone responsible for perpetuating healthcare fraud, which in this case led to patients being used as nothing more than tools for financial enrichment.”

Stimwave filed for bankruptcy on June 15, 2022. A non-prosecution agreement entered into on Oct. 29, 2022, was also unsealed last week. Under the terms of the agreement, Stimwave accepted responsibility for its conduct. It was fined $10 million and will be required to maintain a compliance program overseen by a Chief Compliance Officer for three years.

In the beginning

Perryman didn’t start out with the intention to commit fraud, as the timeline laid out by the DOJ shows. When the device was initially brought to market, it contained three components — an implantable electrode array, the lead, which stimulates the nerve; a battery worn externally; and an implantable receiver that transmits energy from the battery to the lead. Called the Pink Stylet, because of its distinctive pink handle, this receiver was fit for purpose, but it had to be a certain length to work. After it was introduced, physicians told the company they were having problems implanting the stylet in some patients because of its length. Stimwave addressed their concerns by developing the White Stylet, which, the company said, could be cut to size. The only problem, which Stimwave failed to disclose to doctors, was that the White Stylet was a “dummy component made entirely of plastic that served no medical purpose,” in the words of the DOJ.

So why did Perryman do this? Follow the money.

Stimwave sold the device to medical providers for approximately $16,000. As the DOJ explains in its news release: “Medical insurance providers, including Medicare, would reimburse medical practitioners for implanting the device into patients through two separate reimbursement codes, one for implantation of the lead and a second for implantation of the Pink Stylet. The billing code for implanting the lead provided for reimbursement at a rate of between approximately $4,000 and $6,000, while the billing code for implanting a receiver, like the Pink Stylet, provided for reimbursement at a rate of between approximately $16,000 and $18,000.”

Capiche?

It would have been next-to-impossible to sell the device at the list price without reimbursement for implanting the receiver since the medical provider would have been losing money with each procedure. So, Stimwave kept selling its device with the White Stylet while submitting “fraudulent reimbursement claims for implantation . . . to Medicare, resulting in millions of dollars in losses to the federal government,” said the DOJ.

The FBI conducted investigative work in the case and the FDA provided assistance.

In addition to the indictment by the DOJ, Stimwave faces a civil lawsuit.

And maybe one day Pennyman and Elizabeth Holmes will be roommates.

HAVRE DE GRACE - Harford County is currently at the center of a heated debate over two proposed warehouse developments that are causing concerns about the impact of such projects on the environment and local economies.

County Executive Bob Cassilly responded to community concerns by issuing a moratorium on new warehouses in the county on February 14. He asked the council to support a six-month halt on new warehouse construction to allow sufficient time to introduce, consider, and approve new legislation that would define and regulate mega-warehouse distribution centers.

Chesapeake Real Estate Group's (CREG) 5.2 million-square-foot Mitchell property warehouse development in Perryman has faced public opposition for over a year. On March 23, a Harford County Circuit Court judge denied a request for a temporary restraining order from CREG. The developer had filed the lawsuit in an attempt to force Harford County to respond to their requests regarding the development.

Meanwhile, the proposed two million-square-foot Abingdon Business Park is also generating controversy, with many community and environmental groups expressing their fears that the unmitigated expansion of this industry will turn Harford County into "Warehouse County."

Harford County is already home to many warehouses along the I-95 corridor. According to the County Executive's Office, more than 2.8 million square feet of existing warehouse space is unused and leasable.

Abingdon Residents such as MaryLee Stritch say new warehouses will decrease property values.

"None of the prospective homeowners in these developments were notified that their homes would be adjacent to or within a half-mile radius of a commercial/industrial property. There is no doubt that the property values of homes in these developments will plummet," Abingdon resident Stritch wrote in a reader commentary featured in The Aegis.

Other groups, such as The Gunpowder Riverkeeper and 3P Protect Perryman Peninsula, have expressed concerns over dwindling greenspace and environmental impacts.

A moratorium on warehouse development is essential to allow time for lawmakers and citizens to understand the consequences of further industrial expansion. Harford County must break the pattern of neglecting recommendations from legislative, scientific, and community groups," 3P Protect Perryman Peninsula wrote in a statement.

"This project has been challenged by a coalition of community and environmental groups and is emblematic of the negative impacts of these types of projects that the County Executive wants to evaluate. This project removes greenspace and increases air and water pollution to the adjacent communities and Title I schools. The community has already documented significant water pollution impacts caused by the clearing associated with this project," the Gunpowder Riverkeeper wrote.

Abingdon Woods feeds into Otter Point Creek and the tidal Bush River and stands as the last significant, intact stretch of forest buffer in the Bush River watershed. In 2013, MDE conducted a study of water quality in the Bush River. The study found that its health, based on the richness of species and biodiversity, was poor and that the watershed was impacted by "urban stream syndrome," where high percentages of impervious surfaces lead to polluted stormwater runoff, negatively impacting water quality.

On the other side of the debate, developers have argued that the moratorium will dissuade businesses from bringing jobs to Harford County.

Despite their negative reputation, the U.S. Chamber of Commerce says warehouses and distribution centers have a broadly positive impact on local economies.

According to the chamber, on average, a new distribution center (D.C.) employing 3,000 workers resulted in 5,111 total new jobs in a metropolitan service area (MSA), including those 3,000 at the new D.C., and sustained those new jobs over a 20-year period. In other words, for every job created directly by a new D.C., an additional 0.7 jobs are created in the MSA.

In an interview with the Maryland Daily Record, Matt Laraway, a partner with Chesapeake Real Estate Group, said that the moratorium "will definitely impact people's company's desire to want to be in Harford County and people's desire to invest in Harford County."

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As the county continues to weigh the benefits and downsides of new warehouses, a date for the council to vote on the moratorium bill has yet to be set.

More News from Havre de Grace

A public hearing on Harford County Executive Bob Cassilly’s warehouse moratorium bill was held Tuesday evening before the Harford County Council meeting.

If passed, the bill would place a six-month moratorium on the approval of warehouse projects and permits in the county. The bill was introduced on Feb. 14.

Cassilly addressed the council alongside County Attorney Jefferson Blomquist and Shane Grimm, county director of planning and zoning.

“By this bill, I’m asking this council to support a six-month moratorium on the approval of new warehouse construction in order to allow sufficient time for the introduction, consideration and the approval of new legislation that would define and appropriately regulate mega-warehouse distribution centers in our county,” Cassilly said.

Council member Aaron Penman outlined “serious concerns” with the constitutionality of the bill, noting that lawsuits could be filed against the county for violating property rights.

“This moratorium will send a message [to the] business community that Harford County is not the right place to establish business and cannot be trusted,” Penman said.

[ Dan Rodricks: In Harford County, a battle between e-commerce and green space ]

Council Vice President Tony Giangiordano expressed his support for the bill, noting that he and council President Patrick Vincenti were the only current council members on the council last year when it voted unanimously in favor of a moratorium on warehouse development on the Perryman Peninsula. That moratorium was vetoed by then-county executive Barry Glassman.

“It’s something that needs to be looked at,” Giangiordano said. “Once you build these [warehouses], they’re not going away, and people have rights.”

A total of 52 people spoke during the public comment portion of the three-hour hearing – so many that Vincenti shortened the allotted time for each from three to two minutes. The council president, however, urged people to email their full comments to the council.

“This decision is not going to be expedited,” Vincenti said.

A majority of the speakers were residents of the Perryman Peninsula, who have been vocal in opposition to the proposed Mitchell property development that would bring 5.2 million square feet of warehouse space to the waterfront community.

Concerns raised have included the threat to wildlife and the environment and increased traffic.

“The future of the Perryman Peninsula impacts all of Harford County,” said Perryman resident Karie Koch.

Delaney Mezan, a Towson University environmental science student, called the proposed Perryman development “environmental injustice.”

“If you have your property rights, I have mine,” Mezan said. “We have ours. I have the right to breathe clean air on my property. I have the right to drink clean water on my property. Pollution does not stop at the site.

“It has been the biggest highlight of my life to grow up on the Perryman Peninsula, and it would be a great shame if I was the last generation to do so.”

Some residents at the meeting raised concerns over Penman’s connection to Joe Snee, a lawyer representing the Chesapeake Real Estate Group, the firm that wants to develop the Mitchell property. As of October 2022, Penman’s campaign for county council had received over $3,300 in contributions from Snee’s Bel Air law firm Snee, Lutche & Helmlinger, P.A.

Snee also spoke at the hearing, calling the moratorium bill “bad legislation.”

Community residents are also seeking relief in the courts. The grassroots 3P – or Protect Perryman Peninsula, LLC – coalition and Perryman residents filed a lawsuit in June last year in Anne Arundel Circuit Court to prohibit a mega-awarehouse to be built on the Mitchell property. The suit states that the proposed 5.2 million square feet of warehouse space planned would be classified as a freight terminal, which is not permitted by the property’s current zoning.

The case subsequently was moved to Harford County Circuit Court in December. There’s a scheduling conference for the case on April 10.

The Chesapeake Real Estate Group filed for an injunction and temporary restraining order in Harford County Circuit Court against Harford County on Feb. 28. A hearing is scheduled for March 23.

There are other lawsuits by residents and environmental groups against developers in the county, most notably at Abingdon Woods. A few residents from that area also attended the public hearing, since the proposed moratorium would be countywide.