How Stimwave’s Laura Perryman Went from Working the System to the System Working

What started as a company working the system by implanting a jumble of plastic into patients to score a lucrative payout, has finally turned to the system working, resulting in the conviction of former Stimwave CEO Laura Perryman on one count of healthcare fraud and one count of conspiracy to commit healthcare and wire fraud.

But how did we get here?

When Stimwave — which was founded by Perryman in 2010 — received FDA clearance of its StimQ PNS system in 2016, it seems the company was on the up and up, creating the implantable, wireless device to reduce chronic neuropathic pain at most locations throughout the body. At that time, the device included three components: an implantable electrode array, which stimulated the nerve; a battery worn externally; and an implantable receiver that transmitted energy from the battery to the implantable electrode array.

The problems started when physicians complained that the receiver component, known as the pink stylet, did not fit in certain patients. After receiving the reports, Stimwave developed a second iteration of the receiver, known as the white stylet, which could be cut to size.

This new iteration of the receiver would lead to an Elizabeth Holmes–level downfall. The new white stylet the company was touting as the solution to its problems, was actually a dummy part made of plastic that served no medical purpose, according to the US Department of Justice.

Follow the money

The device was sold to medical providers for about $16,000. Medical insurance providers like Medicare would reimburse medical practitioners for implanting the device through two separate reimbursement codes, one for implanting the electrode array and another for the Pink Stylet. “The billing code for implanting the [electrode array] 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,” according to the Department of Justice (DOJ).

This meant, according to previous reporting, that “[i]t 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 system working

The fraud, which lasted from 2017 to 2020, came to light in March 2023, when Perryman was indicted by the DOJ. Now, one year later, Perryman has been convicted by a jury of her peers on both counts, which together could amount to up to 30 years in prison. Stimwave, after the scheme unraveled, recalled the device and eventually filed for bankruptcy.

“Perryman brazenly created a dummy medical device component — made entirely out of plastic — to be implanted into patients,” US Attorney Damian Williams said in a statement, after the conviction was announced. “She marketed that dummy component as a means for doctors to bill Medicare and private insurance companies approximately $18,000 for each implantation of the piece of plastic. She did this so that she could entice doctors to buy her device for many thousands of dollars. Perryman recklessly used patients as tools for financial gain, and this jury’s unanimous verdict sends a resounding message that individuals who defraud health care programs will be held criminally accountable.”

On top of the DOJ conviction, it was only four months ago, in December 2023, that MD+DI reported that the US Securities and Exchange Commission (SEC) also charged Perryman with defrauding investors out of about $41 million.

The SEC complaint alleges that Perryman knew “or was reckless in not knowing, that the smaller receiver was, in reality, fake and nothing more than a piece of plastic,” according to a press release. “According to the complaint, Perryman misrepresented to investors that the PNS Device was approved by the US Food and Drug Administration and was the only effective device of its kind on the market. The complaint also alleges that Perryman made false and misleading statements to investors about Stimwave’s historical revenues, revenue projections, and business model.”

The complaint charges Perryman with violating the antifraud provisions of the federal securities laws. The SEC said it seeks permanent injunctions, including a conduct-based injection, disgorgement plus prejudgment interest, a civil penalty, and an officer and director bar.

Correction: A previous version of this story incorrectly referred to the StimQ PNS system’s implantable electrode array as a lead.