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Medical device manufacturer accused of illegal kickbacks

The Department of Justice (DOJ) recently pursued a case against a medical device manufacturer. The federal agency claimed the healthcare business used illegal kickbacks to encourage medical professionals to use their products. The physicians would then bill Medicare, Medicaid and Tricare for the procedures, which led to a federal investigation.

What was the evidence?

During this investigation, federal officers claim to have found the following:

  • Incentives that were actually bribes. The agency states it found evidence that the medical device company provided free advertising assistance and funds for “educational grants” in exchange for use of their products. The government claims these funds were not for the purported purposes and instead were disguises to hide illegal kickbacks.
  • Ignored warnings. Federal investigators further claim to have found warnings from the company’s own compliance officers stating their actions may be a violation of the Anti-Kickback Statute (AKS). Instead of heeding these warnings, the agency claims the business continued operations. Ultimately, former compliance officers filed a qui tam, or whistleblower suit, against the company which led to the settlement discussed below.

When presented with this evidence, the healthcare business chose to settle the claim.

What were the terms of the settlement?

The agreement includes a payment of $18 million to the federal government as well as an additional $2.79 million to impacted state organizations. The medical device company is also required to enter into a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General and to hire a compliance expert. The business will also need to undergo regular independent reviews to ensure future compliance.