Medical Equipment Company, Olympus Corp., Agrees to Pay Record Settlement to Resolve Illegal Kickback Allegations of Payments to Doctors and Hospitals Under the False Claims Act

Written March 3, 2016 by Janine Arno

On March 1, 2016, the Department of Justice (DOJ) announced that Olympus Corp. of the Americas (OCA), the United States’ largest distributor of endoscopes and related equipment, will pay $623.2 million to resolve criminal charges and civil claims under the False Claims Act relating to a scheme to pay kickbacks to doctors and hospitals.  The DOJ also announced that a subsidiary of the distributor will pay $22.8 million to resolve criminal charges relating to the Foreign Corrupt Practices Act in Latin America.

According to the DOJ, this settlement is the largest total amount paid in U.S. history by a medical device company for violations of the Anti-Kickback Statute (AKS), which prohibits payments to induce purchases paid for by federal health care programs. Those kickbacks included OCA giving a hospital a $5,000 grant to set up a $750,000 sale, refusing to give a $50,000 research grant until a hospital agreed to buy their medical equipment, paying for three doctors to go to Japan in exchange for switching to OCA, and giving a doctor with buying power in a New York medical center $400,000 in free equipment.   These and other kickbacks helped OCA obtain more than $600 million in sales and realize gross profits of more than $230 million.

“The Department of Justice has longstanding concerns about improper financial relationships between medical device manufacturers and the health care providers who prescribe or use their products,” said Principal Deputy Assistant Attorney General Benjamin Mizer of the DOJ’s Civil Division.  “Such relationships can improperly influence a provider’s judgment about a patient’s health care needs, result in the use of inferior or overpriced equipment, and drive up health care costs for everybody.  In addition to yielding a substantial recovery for taxpayers, this settlement should send a clear message that we will not tolerate these types of abusive arrangements, and the pernicious effects they can have on our health care system.”

Details of OCA’s kickback scheme were brought to the government’s attention by John Slowik, OCA’s former chief compliance officer, who brought a lawsuit in federal court in New Jersey under the qui tam provisions of the federal and various state False Claims Acts.  Under the False Claims Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.   As a result of Mr. Slowik’s whistleblower efforts, he will receive $44.1 million from the federal share and $7 million from the state share of the civil settlement amount.

The case is captioned as United States ex rel. John Slowik et al. v. Olympus Corporation of the Americas, et al., Civ. No. 10-cv-5994 (D.N.J.)

For additional information about the False Claims Act, and the Firm’s services and resources for whistleblowers in general, please visit the Robbins Geller Rudman & Dowd LLP whistleblower site.

United States Settles False Claims Act Allegations Against Laguna Beach Physician Over Kickback Scheme

Written March 4, 2015 by Robert Lu

On Monday, March 2, 2015, the U.S. Department of Justice announced that Dr. Charles Denham of Laguna Beach, California, and the former chair of the Safe Practices Committee of the National Quality Forum, has agreed to pay the United States $1 million to settle allegations that he violated the False Claims Act by soliciting and accepting kickbacks.

Dr. Denham is a patient safety consultant who operates Health Care Concepts and the research organization Texas Medical Institute of Technology, both of which were also named as parties in the lawsuit. In 2009 and 2010, he was also co-chair of the Safe Practices Committee of the National Quality Forum.

The settlement resolves allegations that, under agreements entered into in 2008, Dr. Denham received monthly payments from CareFusion Corporation while serving as the co-chair of the Safe Practices Committee, which reviews, endorses and recommends standardized healthcare performance measures and practices. The lawsuit further alleged Dr. Denham received the kickbacks in exchange for influencing the recommendations of the National Quality Forum and for recommending, promoting and arranging for the purchase of CareFusion’s product, ChloraPrep, in violation of the Federal Anti-Kickback Statute. The United States alleged that this conduct caused the submission of false or fraudulent claims for ChloraPrep to federal health care programs because a violation of the Anti-Kickback Statute is a predicate offense under the False Claims Act statute.

Although Dr. Denham has agreed to this settlement, there has been no determination of liability.

Amedisys Home Health Companies Agree to Pay $150 Million to Resolve Medicare Fraud False Claims Act Allegations

Written May 14, 2014 by Janine Arno

Last month, the U.S. Department of Justice announced that it had entered into a $150 million settlement with Amedisys Inc. and its affiliates to resolve claims concerning the company’s Medicare billing practices.  Amedisys is one of the largest providers of home health services in the United States.
Continue reading

Saint Joseph Health System Inc. Agrees To Pay Government $16.5 Million To Settle False Claims Act Lawsuit

Written February 1, 2014 by Robert Lu

On January 29, 2014, the U.S.

Department of Justice announced that Saint Joseph Health System Inc. has agreed to pay the government  $16.5 million to resolve civil allegations that it submitted false or fraudulent claims to the Medicare and Kentucky Medicaid programs for a variety of medically unnecessary heart procedures.
Continue reading

United States Sues Kellogg, Brown & Root Services Inc. for Kickbacks and False Claims Relating to Iraq Support Services Contract

Written January 24, 2014 by Robert Lu

On January 23, 2014, the United States announced that it has filed suit under the False Claims Act (and the Anti-Kickback Act) against Kellogg, Brown & Root Services In.c (KBR), and two foreign subcontractors, Kuwaiti companies La Nouvelle General Trading & Contracting Co. (La Nouvelle) and First Kuwaiti Trading Co. (First Kuwaiti), for kickbacks and false claims related to government contracts with the Department of Defense (Army) for logistical support in Irag. KBR is an engineering, construction and services firm headquartered in Houston, Texas. Kuwait-based La Nouvelle and First Kuwaiti provided transportation, maintenance and other services in support of KBR’s contract with the Army.

Continue reading

Therapy Provider and Nursing Home to Pay $30 Million to Settle Kickback Allegations Under the False Claims Act

Written January 21, 2014 by Janine Arno

A physical therapy provider and a nursing home operator have agreed to pay $30 million to settle False Claims Act allegations in a whistleblower lawsuit, according to the Department of Justice.

The whistleblower lawsuit, filed in 2007, accused RehabCare Group Inc. and Rehab Care Group East Inc., and nursing home operator Health Systems Inc. and its affiliate, Rehab Systems of Missouri, of a kickback scheme concerning nursing home referral business.
Continue reading

Abbott Laboratories to Pay $5.475 Million to Settle False Claims Act Whistleblower Kickback Claims

Written December 30, 2013 by Janine Arno

Last week the U.S. Department of Justice announced that Abbott Laboratories has agreed to pay the United States $5.475 million to resolve allegations that it violated the False Claims Act by paying kickbacks to induce doctors to implant the company’s carotid, biliary and peripheral vascular products.  Abbott is a global pharmaceuticals and health care products company based in Abbott Park, Ill.
Continue reading

Johnson & Johnson to pay $2.2 billion in drug marketing penalties, and to resolve False Claims Act lawsuits

Written November 5, 2013 by Robert Lu
Global healthcare giant Johnson & Johnson, and its subsidiaries, have agreed to pay more than $2.2 billion to settle criminal and civil claims that it marketed the antipsychotic drug Risperdal and other medications for off-label uses and paid kickbacks to a large pharmacy, the Justice Department said on Monday, November 4, 2013.

The penalties announced Monday involve fines and forfeiture to the federal government and several states under the False Claims Act. Specifically, the settlement involves the schizophrenia drugs Risperdal and Invega, and the heart failure drug Natrecor, the company and Attorney General Eric Holder said. The penalty amounts to one of the country’s largest health care-related settlements, according to the Justice Department said.

Whistleblowers in three states (Pennsylvania, California and Massachusetts) will collect $167.7 million under the False Claims Act.

Omnicare Agrees to Pay $120 Million to Settle Whistleblower’s False Claims Act Allegations

Written October 30, 2013 by Janine Arno

Omnicare, Inc., a Fortune 500 pharmaceutical provider based out of Cincinnati, Ohio, has agreed to pay $120 million to settle a whistleblower-initiated False Claims Act lawsuit.  Whistleblower Donald Gale, a former Omnicare pharmacist, filed the case in 2010 in the U.S. District Court for the Northern District of Ohio.  Gale alleged the company violated the False Claims Act when it submitted claims for payment to the federal government, under Medicare and other federal government health programs, that were induced in contravention to the Federal Anti-Kickback Statute.

Specifically, Gale claimed Omnicare illegally provided discounts to Skilled Nursing Facilities (“SNFs”) in exchange for reimbursable drug referrals.  His allegations focused on Omnicare’s practices in connection with Medicare Part A, which provides prescription drug coverage for patients in SNFs.  According to the complaint, Omnicare offered discounts and below-cost pricing for prescription drugs or supplies to the SNFs for their Part A patients in exchange for referrals of patients the company could bill against other public insurance programs, such as Medicare Part D.

Under the provisions of Medicare Part A, SNFs are provided a flat fee to cover all prescription costs; these provisions incentivize provider facilities to find the best price for prescription drugs.  Gale alleged that Omnicare engaged in a swapping scheme with SNFs, offering them a pricing plan for Medicare Part A drugs well below fair market value in return for referrals, or a “swap,” of the SNFs’ non-Part A patients to Omnicare.  Omnicare then billed these other patients (e.g. self-pay or Medicare Part D) the full price for their prescription drugs or other pharmacy services.

This type of activity is considered a kickback under the Federal Anti-Kickback Statute, which prohibits the receipt or paying of anything of value to induce the referral of federal health care program business.  Claims submitted for payment to the federal government under Medicare or other federal government health programs as a result of Anti-Kickback Statute violations constitute false claims for purposes of the False Claims Act.

The False Claims Act qui tam provisions allow private individuals, such as Gale in this case, to bring suit on behalf of the federal government where the private person has information that individuals and/or businesses have knowingly submitted or caused the submission of false or fraudulent claims to the United States government.  For their role in the False Claims Act litigation, a whistleblower is entitled to 15-30% of the federal government’s recovery and is protected from employer retaliation.

The $120 million settlement came a week before the case was set to go to trial.  Gale will get as much as $36 million of the settlement, with the remainder going to the federal government.  Omnicare has also agreed to pay  Gale’s attorney’s fees.


California Laboratory and X-Ray Provider Settles Whistleblower False Claims Act Medicare Fraud Action for $17.5 Million

Written September 25, 2013 by Janine Arno

The Department of Justice announced today that California-based company Kan-Di-Ki LLC, doing business as Diagnostic Laboratories and Radiology (Diagnostic Labs), has agreed to pay $17.5 pay someone to do your assignment million to settle allegations that the company violated the federal and California False Claims Act by paying kickback for referral of mobile lab and radiology services subsequently billed to Medicare and Medi-Cal (the state of California’s Medicaid program).

The action was initiated by two whistleblowers who are former executive Diagnostic Labs employees.  Together they will receive more than $3.7 million as their share of the federal government’s recovery.  The whistleblowers brought the suit against the company in February 2010, alleging that Diagnostic Labs provided below-cost discounts to skilled nursing facility providers for Medicare Part A and HMO patients in return for the referral of all Medi-Cal and Medicare Part B business.  This was profitable for Diagnostic Labs because of the different way in which Part A, HMO, Part B, and Medi-Cal reimbursements are made.  According to the Department of Justice, the kickback scheme brought in a “steady stream of lucrative outpatient referrals that it could directly bill to Medicare and Medi-Cal.”

Continue reading