Ex-Walter Reed head of prosthetics gets 8 months in prison for accepting gifts from supplier in exchange for hospital business
A judge on Thursday sentenced the former head of prosthetics and orthotics at Walter Reed National Military Medical Center to eight months in prison and ordered him to pay nearly $8,000 in restitution for accepting cash and gifts from a man courting government business.
David Laufer, 64, pleaded guilty last year to accepting gratuities as a public official. As part of his sentence, Laufer is required to serve four months of home confinement after he completes his prison term. Two other men have been charged in the corruption scheme.
For nearly a decade, Laufer worked as the chief of the prosthetics and orthotics department at Walter Reed, the most hallowed wing of the world’s preeminent military hospital, visited by presidents, dignitaries and celebrities alike. The Bethesda, Md. hospital serves U.S. service members, included some of the most grievously wounded troops, and was embroiled in scandal after The Washington Post reported filthy living conditions and neglect among patients in 2007.
As part of his job, federal prosecutors said, Laufer was involved with dictating which businesses the department purchased its medical materials from, including Pinnacle Orthopedic Services in Germantown, Md.
But from 2012 to 2016, prosecutors said, Laufer personally benefited from the military hospital’s official transactions with Pinnacle — receiving cash, airline travel, lodging and entertainment tickets from the company in exchange for his business.
In total, Pinnacle received more than $25 million in purchases from Walter Reed.
According to prosecutors, Laufer’s department used Blanket Purchase Agreements to coordinate sales with Pinnacle — a process that allowed employees to buy materials without charging a credit card or creating a contract over each purchase.
Laufer said in his plea agreement that he also refused business from prosthetics and orthotics manufacturers and distributors, directing them to sell their products to Pinnacle instead. The middleman company, which did not produce any components of its own, would then sell those products at a significant markup to Walter Reed.
“Mr. Laufer is a good man who has served his country with honor for many years, helping wounded warriors to find a second lease on life,” Liz Oyer, Laufer’s federal public defender, said in a statement. “He deeply regrets this lapse in judgement and sincerely apologizes to his colleagues and the veterans he served.”
Pinnacle’s owner, Bruce Thomas, was also sentenced to eight months in federal prison in September for paying gratuities to a public official. He was fined $50,000 and ordered to pay nearly $28,000 in restitution.
Another former employee of Laufer’s former department, Timothy Hamilton, will be sentenced in November for his role in a related case, in which prosecutors say he conspired to commit health care fraud and also received $15,000 in gifts from Thomas and Pinnacle for ordering his products at the hospital.
Acting U.S. Attorney Jonathan Lenzner said his office is committed to holding accountable public officials who “undermine the market and abuse their positions in government to benefit themselves at the expense of the taxpayers.”
Laufer’s sentence arrived a week after Sens. Tammy Duckworth, D-Ill., and Joni Ernst, R-Iowa, asked Pentagon health officials for a comprehensive review of Walter Reed’s prosthetics department in the wake of the corruption scheme. The lawmakers, who both sit on the Senate Armed Services Committee, shared concerns that potential overhauls may overcorrect problems and impact patient care, according to a Sept. 24 letter obtained by The Washington Post.
The nearly decade-long duration of the scheme “indicates broader problems related to organizational culture and ethics,” the senators said in the letter to Terry Adirim, the acting assistant secretary of Defense for Health Affairs.
Duckworth and Ernst were also troubled by reports that whistleblowers at the hospital were targeted for retribution after alerting officials about the scheme, they wrote.