Medical device company pays $623.02 million to resolve Anti-Kickback and False Claims Act allegations

posted on:
March 2, 2016

Lance Gould

On Tuesday, March 1, 2016, the Department of Justice (DOJ) announced that the United States’ largest distributor of medical equipment will pay $623.02 million to settle criminal charges and civil claims relating to kickback schemes. Olympus Corp. of the Americas (OCA) was charged with conspiracy to violate the Anti-Kickback Statute, and because the kickback payments caused false claims to be submitted to federal health care programs – such as Medicare, Medicaid, and TRICARE – OCA also violated the False Claims Act (FCA).

The Anti-Kickback Statute prohibits payments to induce purchases paid for by federal health care programs because these illicit kickback payments typically result in: (1) the doctor’s judgement being compromised, (2) inferior or overpriced equipment being used, and (3) the cost of health care rising for everyone. Therefore, the government refuses to tolerate these payment arrangements and uses every means possible, including the FCA, to pursue anti-kickback claims.

It was alleged, and confirmed by OCA, that OCA won new business and rewarded sales by giving doctors and hospitals kickbacks, which included: (1) consulting payments, (2) foreign travel, (3) extravagant meals, and (4) millions of dollars in grants and free equipment. The $623.02 million settlement marks the largest total amount paid in U.S. history for Anti-Kickback Statute violations involving a medical device company.

Of the $623.02 million, $312.4 million is a criminal penalty, and $310.8 million settles the civil suit. The civil suit was filed by OCA’s former chief compliance officer, John Slowik, under the qui tam provision of the FCA.

The FCA allows private individuals to file lawsuits on behalf of the government when those individuals have knowledge of a person or company defrauding the government. These lawsuits are filed under the qui tam provision of the FCA, as ordinary citizens become whistleblowers by reporting the fraud.

The FCA provides monetary incentives and protection for these whistleblowers, which include 15 to 30 percent of the damages recovered. Mr. Slowik will receive $51 million as a reward for his part in the OCA case.

Are you aware of fraud being committed against the federal government, or a state government? If so, the FCA can protect and reward you for doing the right thing by reporting the fraud. If you have any questions about whether you qualify as a whistleblower, please contact an attorney at Beasley Allen for a free and confidential evaluation of your claim. There is a contact form on this website, or you may email one of the lawyers on our whistleblower litigation team: Archie Grubb, Larry Golston, Lance Gould or Andrew Brashier.

Source: U.S. Department of Justice

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