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Medical Equipment Manufacturer Pays $37.5 Million for Alleged Kickback Payments to its Suppliers

Southern California medical equipment manufacturer ResMed Corp. recently settled its whistleblower case with the Department of Justice (DOJ) for $37 million. The government alleged that ResMed violated the Anti-kickback Statute of the False Claims Act by paying monetary incentives to durable medical equipment (DME) suppliers, labs, and other providers of ResMed equipment. According to the DOJ, the company provided free patient outreach to equipment companies, which “enabled  …  [those] companies to order resupplies for their patients with sleep apnea.”

Additionally, ResMed allegedly provided “sleep labs with free and below-cost positive airway pressure masks and diagnostic machines,” as well as arranging and fully guaranteeing payments to third-party financial institutions on interest-free loans for DME suppliers to purchase ResMed equipment. The company also allegedly provided “non-sleep specialist physicians free home sleep testing devices referred to as ‘ApneaLink.’”

ResMed is a healthcare company eligible for federal reimbursement for medical devices and submits claims to Medicare for payment on equipment sales and services to labs, physicians, and other healthcare companies. The devices that ResMed sells assist patients with different types of sleep disorders. Federal healthcare programs such as Medicare intend to provide crucial medical treatment to those who need medical assistance. DME companies receiving funding, free services, or loans from ResMed to inflate the use of ResMed’s medical devices and services is a violation of the Anti-Kickback Statute.

Similarly to this case, there have been many instances in which whistleblowers exposed the fraud of companies taking advantage of the Medicare system. Civil Chief of the U.S. Attorney’s Office for the Southern District of California, Katherine Parker, acknowledged that “medical decisions should always be made without outside influence caused by cash payments, free goods, or other types of illegal remuneration, and we will continue to take action to prevent attempts to induce medical decisions through illegal kickbacks[.] … We applaud the whistleblower for coming forward and notifying the United States.” Many successful whistleblowers receive a sizeable portion of the proceedings from the case. In the ResMed case, the whistleblowers will receive $6.2 million of the settlement proceeds.

© 2020 by Tycko & Zavareei LLPNational Law Review, Volume X, Number 38


About this Author

Jonathan K. Tycko, Civil Litigation Attorney, Tycko Zavareei Law firm

Mr. Tycko has represented clients in numerous qui tam whistleblowing cases, in areas including Medicare fraud, government contracts fraud, and tax fraud. In addition, with the 2010 passage of the Dodd-Frank Act, Mr. Tycko’s practice has expanded into representation of whistleblowers in the areas of securities and commodities, and violations of the Foreign Corrupt Practices Act.

Mr. Tycko focuses his practice on civil litigation, with special concentrations in whistleblower cases, consumer class actions, unfair competition litigation, employment litigation and housing litigation. He...

Jonathan K. Tycko leads the Whistleblower Practice Group of Tycko & Zavareei LLP

In recent years, the laws of the United States have undergone a whistleblower revolution. Federal and state governments now offer substantial monetary awards to individuals who come forward with information about fraud on government programs, tax fraud, securities fraud, and fraud involving the banking industry. Whistleblowers also now have important legal protections, designed to prevent retaliation and blacklisting.

The law firm of Tycko & Zavareei LLP works on the cutting edge of this whistleblower revolution, taking on even the most complex and confidential whistleblower cases. We have represented numerous clients who have blown the whistle on fraudulent conduct across the country. We understand the unique legal issues faced by whistleblowers, as well as the personal and career perils that whistleblowers often face. We fight hard for our clients’ rights, and to achieve the maximum qui tam whistleblower awards available under the laws. And we do so while treating our clients with utmost respect and understanding.

For information about Tycko & Zavareei LLP's whistleblower practice, contact partner Jonathan K. Tycko.