Consumer Fraud

Medical Manufacturer, Supplier Pay $3.6 Million To Settle Whistleblower Complaint

Pills Stethascope on Money 435x289 Medical Manufacturer, Supplier Pay $3.6 Million To Settle Whistleblower ComplaintA manufacturer and a supplier of medical care products have agreed to pay the U.S. $3.6 million to resolve allegations made by three whistleblowers in a False Claims Act lawsuit that the companies engaged in an illegal kickback scheme that prioritized profits over patients.

Colonplast Corp., a manufacturer of continence care and ostomy products, and Liberator Medical Supply Inc., which distributes medical care products, will pay $3,160,000 and $500,000 respectively to settle the complaint, the U.S. Attorney’s Office for the District of Massachusetts announced.

Two of the whistleblowers are former employees of Colonplast and one still works for the company, U.S. prosecutors said. The plaintiffs accused Colonplast of entering into kickback schemes with Liberator and other suppliers that promoted Colonplast products in exchange for valuable rebates, price concessions, and “spiffs” – cash awards used to sway sales representatives to push Colonplast products and refer patients to Colonplast.

The U.S. government prohibits companies from engaging in kickback schemes in an effort to encourage physicians to base their decisions on the needs of the patient rather than financial inducements and to protect Medicare, Medicaid, and other government health care programs from paying for products and services that weren’t provided in the patients’ best interests.

The settlement with Coloplast settles allegations that it paid kickbacks to Liberator: Byram Healthcare Centers; CCS Medical; Liberty Medical; and Handi Medical in return for marketing promotions and conversion campaigns.

The settlement with Liberator resolves allegations that it received kickbacks from Coloplast in the form of price concessions in return for Liberator’s agreement to conduct two campaigns promoting Coloplast ostomy products to Liberator’s customers.

“The payment of kickbacks to induce purchases of medical supplies undermines our federal health care programs, ultimately distorting consumer purchasing decisions, and increasing health care costs,” said United States Attorney Carmen M. Ortiz.

“Both of these companies acted with their own self-interests in mind, putting profits over patient care,” said Harold Shaw, Boston-based FBI Special Agent. “The decision on which medical products to refer should be based on what is best for the patient, not on cash incentives or rebates.”

Source: U.S. Department of Justice