Consumer Fraud

Medical device manufacturer Biomet settles whistleblower case for $6 million

whistleblower Medical device manufacturer Biomet settles whistleblower case for $6 millionEBI LLC, a medical device manufacturer doing business as Biomet Inc. and Biomet Spine and Bone Healing Technologies, has agreed to pay the U.S. more than $6 million to resolve whistleblower allegations that it paid illegal kickbacks to boost sales of its devices and billed government health care programs for refurbished devices in violation of the U.S. False Claims Act.

EBI, based in Parsippany, N.J., makes and sells bone growth stimulators, which are used to repair bone fractures that are slow to heal. The company is a subsidiary of Warsaw, Ind.-based Biomet.

The $6.07-million settlement resolves in part allegations made in part in a lawsuit filed by Yu Yue, a former EBI product manager, in federal court in New Jersey. The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which authorize private individuals to sue on behalf of the government for false claims and to share in any recovery.

According to the complaint, from 2001 to 2008, EBI paid staff at doctors’ offices to influence physicians to order EBI bone growth stimulators. These payments, provided under personal service agreements with staff members, violated the Anti-Kickback Act and resulted in false billings to Medicare and various other federal health care programs.

“Medical device companies must not use improper financial incentives to influence the decision to use their products,” August Flentje of the Justice Department said in a statement. “This settlement demonstrates the department’s commitment to protect patients, and the taxpayers who fund their care, by ensuring that medical decisions are based on the patients’ medical needs rather than the financial interests of others.”

The settlement also resolves EBI’s disclosure that it received full federal reimbursements for bone growth stimulators that had been refurbished.

Whistleblowers are instrumental in helping the U.S. government combat fraud against government agencies and programs.

The Justice Department has recovered more than $23 billion through False Claims Act cases since January 2009, with more than $14.8 billion of that amount recovered in cases involving fraud against federal health care programs. Most of the funds recovered have stemmed from settlement agreements in cases involving whistleblowers.

Sources:

U.S. Department of Justice