August 4, 2021

Volume XI, Number 216

Advertisement

August 03, 2021

Subscribe to Latest Legal News and Analysis

August 02, 2021

Subscribe to Latest Legal News and Analysis

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.

© 2021 by Tycko & Zavareei LLPNational Law Review, Volume XI, Number 145
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

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...

202-973-0900
Advertisement
Advertisement