Consumer Fraud

Siemens settles allegations it overcharged U.S. military for medical equipment

whistleblower 4 370x210 Siemens settles allegations it overcharged U.S. military for medical equipmentSiemens Medical Solutions USA Inc., a unit of the German multinational engineering conglomerate Siemens AG, has agreed to pay the U.S. $5.9 million to end a dispute with federal prosecutors that it overcharged the U.S. government for medical imaging equipment.

According to a complaint filed by the U.S. Attorney’s Office, Malvern, Penn.-based Siemens Medical Solutions failed its contractual obligation with the Defense Supply Center of Philadelphia to provide the U.S. Department of Defense and the U.S. Department of Veterans Affairs the largest available discount on medical equipment.

Federal prosecutors alleged that Siemens Medical Solutions sold a “like system” to a private commercial enterprise for a lower price than what the federal government had to pay.

“In doing so, SMS overcharged the United States,” the settlement agreement stated. “SMS withheld information regarding this overcharging and kept money that it was not entitled to retain.”

Settlement documents state that an internal review conducted by Siemens Medical Solutions found it had been overcharging the U.S. but withheld those findings from the government. “Instead, the company issued mass discounts for certain product lines intended only to address potential future overcharges,” Law360 reported.

Despite the other discounts, “This action did not correct the overcharging that had occurred and, moreover, further concealed it from the United States,” the settlement agreement documents stated.

Federal prosecutors said that the U.S. government could take legal action against Siemens Medical Solutions under the False Claims Act, the Program Fraud Civil Remedies Act, and the Contract Dispute Act, which likely would result in heavy civil penalties, but agreed to release the company from those claims upon payment of the settlement.

Siemens denied any misconduct and said it “chose to settle this matter with no admission of wrongdoing to avoid further expense and distraction.”

The company also added that it has “further improved its processes for monitoring government contract compliance over the years and continues in its unwavering commitment to its customers, including important government customers, and adherence to all applicable laws and regulations.”


Philadelphia Business Journal