Philips Respironics Inc has agreed to pay $34.8 million to resolve alleged False Claims Act violations for paying kickbacks in the form of free call center services to durable medical equipment (DME) suppliers that bought its masks for patients with sleep apnea, the Department of Justice announced Wednesday.
“The payment of illegal remuneration in any form to induce patient referrals threatens public confidence in the health care system,” says Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, in a release. “Americans deserve to know that when they are prescribed a device to treat a serious healthcare problem, the supplier’s judgment has not been compromised by illegal payments from equipment manufacturers.
The Anti-Kickback Statute prohibits the knowing and willful payment of any remuneration to induce the referral of services or items that are paid for by a federal healthcare program, such as Medicare, Medicaid, or TRICARE. Claims submitted to these programs in violation of the Anti-Kickback Statute are also false claims under the False Claims Act.
The United States alleged that Philips Respironics violated the Anti-Kickback Statute and the False Claims Act by providing free services to DME suppliers to induce them to purchase Philips Respironics masks that treat sleep apnea. Philips Respironics allegedly provided DME companies with call center services to meet their patients’ resupply needs at no charge as long as the patients were using masks that Philips Respironics manufactured; otherwise, the DME companies would have to pay a monthly fee based on the number of patients who used masks manufactured by a competitor of Philips Respironics. The government alleged that the conduct began in April 2012 and continued until November 2015.
“This office has made a substantial commitment to combating fraud,” says U.S. Attorney Bill Nettles of the District of South Carolina. “Our commitment has made this district one of the leaders on behalf of whistleblowers. We hope that those who commit fraud will recognize that it is our goal to make the consequences more than just the cost of doing business.”
Philips Respironics will pay roughly $34.14 million to the federal government and roughly $660,000 to various state governments based on their participation in the Medicaid program.
The settlement resolves a lawsuit originally brought by Dr Gibran Ameer, who has worked for different DME companies, under the qui tam provisions of the False Claims Act. The Act permits private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Under this civil settlement, Ameer will receive $5.38 million out of the federal share of the recovery.
“Medical equipment manufacturers that boost profits by providing kickbacks to suppliers will be held accountable for their improper conduct,” says Special Agent in Charge Derrick L. Jackson of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “We will continue to investigate such business arrangements, which threaten the integrity of federal healthcare programs.”
The government states that this settlement illustrates its emphasis on combating healthcare fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $27.4 billion through False Claims Act cases, with more than $17.4 billion of that amount recovered in cases involving fraud against federal healthcare programs.
This settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the District of South Carolina, and HHS Office of Counsel to the Inspector General and Office of Investigations and the National Association of Medicaid Fraud Control Units.
The lawsuit is captioned United States et al. ex rel. Dr. Gibran Ameer v. Philips Electronics North America, et al., Case No. 2:14-cv-2077-PMD (D.S.C.). The claims resolved by the settlement are allegations only, and there has been no determination of liability.