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TheStreet Open House

Arthrocare Device Use Draws More Scrutiny

Kugler offered that information when being questioned in a deposition carried out by AllState two years ago. By now, Kugler has faced multiple courtroom challenges from car insurance companies that portray him as one of the most prevalent users of percutaneous discectomies -- with some of the highest prices -- in the country.

Kugler can thank CPT Code 63056 for some of his riches. Using that code, Kugler has picked up tens of thousands of dollars -- more than the listed price for brain surgery -- for minor operations that take no more than a half-hour of his time.

Notably, Arthrocare has promoted the use of that code in its own presentations. In documents obtained by TheStreet.com, Arthrocare's national sales trainer specifically states that she would "skim over 62287" -- the proper code for Perc-D surgeries -- and "focus on 63056" when marketing the company's SpineWands to physicians.

She talks at length about an outfit called DiscoCare as well.

Jonathan Cutler, another physician at Palm Beach Lakes, launched DiscoCare a few years ago. The company supplies Arthrocare's SpineWands to surgery centers and then seeks reimbursement from insurers on their behalf.

Since traditional health insurers consider percutaneous discectomties experimental -- and often refuse to pay for the procedures -- DiscoCare has focused on nontraditional payers instead. By concentrating on personal injury cases, in particular, DiscoCare has enjoyed phenomenal success.

Arthrocare ultimately bought DiscoCare from Cutler for $25 million late last year. While that deal has since backfired, it sparked some grand plans at the time.

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