Whistleblower Exposes Foreign Maker of Medical Devices and its American Affiliate That Paid Kickbacks to Physicians to Prescribe their Devices, Helping the Government Collect $2 Million under the False Claims Act, and the Open Payments Program
An insider exposed the lavish entertainment of physicians by a French medical device manufacturer and its American company to allegedly induce those physicians to buy or order the device companies’ spinal devices to implant in patients. This violates the Anti-Kickback Statute, which prohibits doctors or other medical professionals from having their medical judgment influenced by some form of financial payment or remuneration. The Government collected $1M under the False Claims Act and $1M under the Open Payments Program, administered by the Centers for Medicare and Medicaid Services. The Whistleblower will receive a share of the Government’s recovery.
In this case, the device maker paid for the physicians to travel abroad, have lavish meals, alcoholic beverages, and entertainment. These types of “benefits” are seen as kickbacks to induce or encourage the doctors to use the spinal devices sold by foreign and American companies to Medicare, Medicaid, and TRICARE patients. Such carrot and stick incentives can warp the physician-patient relationship and for that reason are illegal.
Notably, this settlement is also ground-breaking because this is one of the first settlements under both the False Claims Act and the Open Payments Program. This newer enforcement tool was urged by Congress in 2019 to require action against companies that fail to comply with the Open Payments Program. Congress had expressed concern about physician-owned distributorships (PODs) whereby a physician owned a share in an entity that sells implantable medical devices used in the physician’s surgeries. In such an instance, the physician would have a financial incentive to purchase the device and implant them into patients. Congress saw that as a big “no-no” to protect patient safety.
The Open Payments Program requires companies like device and drug manufacturers to report any payments to physicians. The purpose is to make the public knowledgeable about any such payments so that kickbacks to physicians are transparent and avoided.
This settlement resolves claims brought by a whistleblower under the qui tam, or whistleblower, provisions of the False Claims Act. The Act allows private parties known as “relators” to sue on behalf of the government for false claims and to share in any recovery. The relator’s share of the recovery, in this case, will be between 15% to 25% of the settlement amount. Healthcare fraud is exposed by individuals with the knowledge that the fraud is occurring. Whistleblowers might be executives, employees, colleagues, clients or competitors of the offending healthcare provider. Whistleblowers are protected against retaliation under the whistleblower provisions of the False Claims Act.