USA –A Philips subsidiary has agreed to pay more than US$24 million to settle allegations it paid kickbacks to medical equipment suppliers to push its products ahead of other brands that are provided to patients of federal health programs.
Philips RS North America, formerly known as Respironics, manufactures durable medical equipment (DME) to aid breathing, including ventilators and Continuous positive airway pressure (CPAP) machines.
According to the Department of Justice (DOJ), Respironics, a Philips’ business, provided kickbacks to many of its durable medical equipment (DME) customers from November 2014 through April 2020.
Philips provided illegal inducements that caused suppliers to file false claims to government programs, including Medicare; Medicaid; and TRICARE, a health program for military families, according to the settlement.
The inducements were in the form of data about physician prescribing behavior, called health market science data, information which is highly valued by marketing teams of medical equipment suppliers and that Philips salespeople provided free of charge to the suppliers, according to the complaint.
“By paying kickbacks to obtain patient referrals, DME manufacturers are prioritizing financial incentives over patient needs, which undermines the integrity of federal health care programs,” said Tamala E. Miles, Special Agent in Charge for the Department of Health and Human Services, Office of the Inspector General (HHS-OIG).
The Anti-Kickback Statute prohibits the knowing and willful payment of any remuneration to induce the referral of services or items that are paid for by a federal health care program, such as Medicare, Medicaid, or TRICARE.
The settlement provides that Respironics will pay US$22.62 million to the United States, and in addition, will pay US$2.13 million to the various states as a result of the impact of Respironics’ conduct on their Medicaid programs.
Claims submitted to these programs in violation of the Anti-Kickback Statute give rise to liability under the False Claims Act.
The settlement provides that Respironics will pay US$22.62 million to the United States, and in addition, will pay US$2.13 million to the various states as a result of the impact of Respironics’ conduct on their Medicaid programs.
In addition to the civil settlement, Respironics entered into a five-year Corporate Integrity Agreement (CIA) with HHS-OIG.
The CIA requires Respironics to implement and maintain a robust compliance program that includes, among other things, a review of arrangements with referral sources and monitoring of Respironics’ sales force.
The CIA also requires Respironics to retain an independent monitor, selected by the OIG, to assess the effectiveness of Respironics’ compliance systems.
The settlement resolves a lawsuit originally brought by Jeremy Orling, a Respironics’ employee, under the qui tam or whistleblower provisions of the False Claims Act.
Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery.
As part of this resolution, Orling will receive approximately US$4.3 million of the federal settlement amount.
In other related news, Philips has also reached a settlement with the Justice Department relating to the sale of the MP2 mobile patient monitoring device to the US military.
Philips sold MP2 to the US Air Force, US Army, US Navy, and the Defense Logistics Agency from 2012 to 2018, as per Medtech Dive report.
By its own admission, Philips did not adequately notify the relevant military testing facilities to determine whether its device modifications required retesting for certification after receiving initial airworthiness and safe-to-fly certifications from the Army in 2008 and Air Force in 2011.
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