When medical device salesman John Thomas heard in late 2000 that there was a new doctor in Arkansas specializing in patients with ailing backs, he stopped by his office to see if the two could do a little business.

The would-be customer, Dr. Patrick Chan, said he was partial to a metal plate made by Medtronic Inc. -- just the kind of item Thomas sold working for a distributor of devices, including those from the Fridley-based medical technology company.

But what Chan said he really wanted was $1,500 in cash for a party he was planning at his new home northeast of Little Rock, according to a lawsuit filed and later settled in U.S. District Court in Arkansas.

In the complaint, Thomas said he refused. In the weeks and years to come, Thomas said, he heard that his competitors in the medical device industry had provided cash and other perks to Chan under the guise of "consulting agreements." In fact, it was three secret transfers of $31,000 in cash -- all videotaped by the FBI -- that would prove to be Chan's downfall, according to Karen Whatley, an assistant U.S. attorney for the Eastern District of Arkansas.

The case, though egregious and rare, provides a window on how far some medical device companies allegedly are willing to go to court influential doctors. It describes alleged payments of millions each year in consulting fees, research support or royalties for devices they invented.

Few patients would know to ask whether their doctor is being paid by a company that profits from the device about to be implanted in their body.

But recently, congressional investigators have questioned whether some agreements with doctors, particularly those who perform lucrative and increasingly common spine surgeries, are appropriate or even legal.

Medtronic, with $13.5 billion in annual revenue, has been caught up in this maelstrom because it includes the world's largest and arguably most-successful spine business.

"Medtronic takes great care to assure that all arrangements with physicians are fully compliant with the law and the industry's standards for such contracts," said Medtronic spokeswoman Marybeth Thorsgaard.

The congressional inquiry has asked pointed questions about the company's financial relationship with important spine doctors. A recently unsealed whistle-blowers' lawsuit against the nation's top spine surgeons alleges Medtronic paid them well to promote use of its devices in ways not approved by the Food and Drug Administration.

The Chan case is unusual because an individual doctor was convicted on criminal charges for soliciting and receiving illegal kickbacks. Typically, the companies that make drugs and devices are the subjects of these investigations. But some industry observers say the Chan case is a hint of what is to come.

"I think we'll see more doctors facing charges going forward," said Dr. Charles Rosen, a spine surgeon at the University of California, Irvine, and founder of the Association for Ethics in Spine Surgery. "It's been coming to a head for the past 10 to 15 years. The consulting agreements are so woven into the culture of being a spine surgeon that some people think it's normal."

Congressional investigators are detailing myriad ways the device companies allegedly approach doctors. Sometimes it happens at popular meetings typically attended by hundreds of doctors, at facilities where doctors are schooled on new treatments and techniques, or at educational training courses.

"Surgeons tend to choose one brand of device or another," said Dr. Jeffrey Kahn, director of the University of Minnesota's Center for Bioethics. "It's not like you get to pick from all the different brands, like you're shopping for a new car. You go to one doctor and they use one brand, and you go to a different doctor and they use a different brand. Why? Often because they have some sort of relationship" with the companies that make them.

Courting opinion leaders

Medical device companies select doctors for consulting arrangements by looking at "high-volume surgeons who are going to use a lot of their stuff, and surgeons with the moniker 'Key Opinion Leader,'" said Dr. John Sherman, an orthopedic surgeon in Edina who consults for several device companies.

These "opinion leaders" are generally well-known in their specialty and hold considerable sway with their peers. They speak at medical meetings. They publish articles in widely read medical journals. They conduct important research. They are quoted in the media and on medical blogs.

The idea, according to Sherman, is that everyday surgeons who attend these meetings or read journals may be convinced that a certain device is a better way to go when treating patients because it is recommended by a so-called key opinion leader.

Writing in the New England Journal of Medicine last fall, Dr. Eric Campbell, an associate professor at Harvard Medical School, advised doctors to recognize that these relationships exist in the first place for a reason -- to influence prescribing behavior.

Yet many surgeons are confused about what level of industry compensation is appropriate, if any.

At a North American Spine Society meeting last year, doctors were shown research about the nature of bias by a professional ethicist and then given a pop quiz of real-world scenarios involving interaction with industry representatives.

"There was considerable confusion among a portion of the audience about where to draw the line to maintain a completely ethical relationship,'' wrote the society's president, Dr. Thomas Faciszewski, in a March 11 letter to Sen. Herb Kohl, a Wisconsin Democrat who has co-sponsored legislation that would require public disclosure of drug and device companies' consulting payments. Spine surgeons, Faciszewski concluded, "are hungry for guidance on how to conduct themselves.''

Dr. Daniel Riew, a Missouri surgeon, was shocked to find himself named in a congressional investigation probing doctor-company relationships. He said he stopped accepting payments from the industry after his name surfaced in a New York Times article on the spine industry last year.

Riew estimates that he made "$20,000 or $30,000" during a two- to three-year period consulting for Medtronic -- an amount he says is far less than what he would normally make in his busy practice at Washington University's Department of Orthopedic Surgery. He said most of his work involved training other doctors on cervical spine surgery techniques.

"If people perceive that being paid by industry is a negative, then it's not worth it,'' he said.

The case against Chan

It is unclear from his sentencing hearing what motivated Chan to cross the ethical and legal boundaries of his profession.

Ultimately, it was Thomas, a salesman for a distributor of Medtronic products called NuMed Technologies Inc. of Tulsa, Okla., who blew the whistle on the Arkansas neurosurgeon's illegal behavior.

Thomas, a 12-year med-tech sales veteran, claimed in the legal complaint that he began to believe something was awry when a competitor bought a new computer system for Chan's office. Another competitor allegedly paid for the honeymoon of one of Chan's nurses, the complaint states.

Thomas, through his Little Rock-based lawyer, declined to comment for this story.

Thomas also alleges in the lawsuit that between 2001 and 2003, Chan operated on patients who didn't need surgery.

In one case, Chan performed spine fusion surgery on an 80-year-old patient who had only a few weeks to live, according to Thomas' complaint. At the time, an anesthesiologist allegedly questioned why Chan was operating on such a vulnerable patient -- an exchange that led to a shouting match between the two in the operating room, the complaint recounts.

Chan was ultimately arrested after another sales rep for a distributor selling Osteotech, Orthofix, Alphatec Spine and Signus Medical devices admitted in 2006 she was paying half of her commissions to him, according to Whatley, the assistant U.S. attorney. Later that year, the rep was videotaped by the FBI handing Chan envelopes of cash on three occasions.

The saleswoman, who was never identified in court papers, died in an accidental choking incident at a Little Rock restaurant the night before she was scheduled to appear before the grand jury.

'I lost everything'

In the end, Chan, then 43, pleaded guilty in January to one count of soliciting and receiving kickbacks in exchange for recommending the purchase of certain brands of medical devices. Three of the criminal charges were dropped, and Chan agreed to pay $1.5 million to settle Thomas' whistle-blower lawsuit.

Since whistle-blowers typically glean 15 to 25 percent of a settlement, Thomas walked away with $350,000 from his case, according to the U.S. attorney's office.

In the criminal case, Chan was sentenced to three years of probation and ordered to pay a $25,000 fine, as well as $23,000 for the two-year investigation by the FBI, plus costs of probation. Half of the $4 million cash bond Chan originally posted will remain in place. He still faces several medical malpractice suits in Arkansas.

Chan, a Canadian citizen, currently lives in Edmonton. He no longer practices medicine in the United States. His lawyer could not be reached for comment.

During his criminal sentencing in April, Chan told the court he was sorry. "I have suffered significantly. I've lost my career. I lost everything I have."

Janet Moore • 612-673-7752 • jmmoore@startribune.com