One more False Claims Act case has been settled; this time Respironics, Inc., who allegedly violated the False Claims Act by paying kickbacks to durable medical equipment suppliers that bought its services. Respironics, who makes breathing masks for people who suffer from sleep apnea, allegedly provided free customer support through its medSage call center to suppliers whose customers used Respironics masks. Medical product suppliers that sold masks made by Respironics' competitors had to pay for the call center services based on the number of patients who used masks manufactured by other companies. Such a setup essentially forced suppliers into using Respironics masks. It is a violation of the law to induce medical suppliers to use a particular company's product for any government-covered medical service. Since the masks could be covered by Medicaid, Medicare, or Tricare programs, doing so came under the purview of the Anti-Kickback Statute.
This settlement also resolves a qui tam lawsuit that was originally brought by Dr. Gibran Ameer, who has worked for different medical equipment companies and who was once presented with the concept from Respironics, immediately realizing the arrangement resembled illegal kickbacks. Dr. Ameer will receive $5.38 million out of the federal share of the recovery.
According to Special Agent in Charge Derrick L. Jackson of the Department of Health and Human Services, "Medical equipment manufacturers that boost profits by providing kickbacks to suppliers will be held accountable for their improper conduct. We will continue to investigate such business arrangements, which threaten the integrity of federal health care programs."
Alicia Cafardi, spokeswoman for Respironics stated that the company had a "good-faith believe" that it wasn't doing anything wrong when it "bundled" the call center service in the price of its sleep apnea masks. She also stated that Respironics has snce "made a business decision" to restructure the call center pricing. Medical supply companies who use the call center service now pay a flat monthly price for each patient, regardless of whether the patient uses a Respironics mask.
The settlement comes to approximately $34.8 million, including $34.14 million in payments to the federal government and approximately $660,000 to various state governments (including Washington, D.C. and twenty-nine states that joined the lawsuit) based on their Medicaid participation.
According to Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Department of Justice's Civil Division stated, "the payment of illegal remuneration in any form to induce patient referrals threatens public confidence in the health care system. Americans deserve to know that when they are prescribed a device to treat a serious health care problem, the supplier's judgment has not been compromised by illegal payments from equipment manufacturers."
As part of the settlement Respironics entered into a five year Corporate Integrity Agreement. As part of the agreement Respironics will establish a compliance department including hiring a compliance officer, compliance training for the boards of directors, management and all staff, and review of procedures to ensure compliance with federal law.