Medical device manufacturer Olympus Corporation of the Americas will pay the U.S. government $646 million to settle a whistleblower lawsuit that alleged the company paid “substantial kickbacks and bribes” to doctors and hospitals that agreed to purchase its endoscopes and other camera-equipped medical devices.
More than half of the total settlement ($312.4 million) is payment for criminal penalties involving the company’s disregard of federal rules and its failure to comply with regulations governing Medicare, Medicaid, and other federal health care programs. The fine is the largest amount ever paid for violating the federal Anti-Kickback Statute, a law designed to protect patients and federal health care programs from fraud and abuse by restricting the use of money to influence medical decisions.
The $310.8 million balance settles allegations that Olympus’s illegal bribes and kickbacks amounted to the submission of millions of dollars in false claims to Medicare, Medicaid, and other federally subsidized health care programs.
“The Department of Justice has longstanding concerns about improper financial relationships between medical device manufacturers and the health care providers who prescribe or use their products,” said Principal Deputy Assistant Attorney General Benjamin Mizer. “Such relationships can improperly influence a provider’s judgment about a patient’s health care needs, result in the use of inferior or overpriced equipment, and drive up health care costs for everybody.”
The agreement resolves allegations stemming from a whistleblower lawsuit filed under the False Claims Act by John Slowik, an Olympus employee for 20 years. Mr. Slowik became the compliance officer for Olympus in 2009, but quickly realized that the company had no intentions of complying with U.S. regulations.
He alleges his position was a new one for Olympus and came with no resources or training for the job. According to CNN, Mr. Slowik said that Olympus CEO Mark Gumz told him the compliance officer’s job was “to try to figure out how to ‘work around the rules’ so as to ‘not impact the business.'” Mr. Slowik claims that when he tried to develop a compliance program to stop the bribes and kickbacks, Mr. Gumz “began to ostracize and harass” him.
Mr. Slowik’s efforts to stop Olympus from disguising payments as grants and lavishing expensive trips and entertainment on doctors and hospital administrators were ignored by company officials.
Olympus fired Mr. Slowik in 2010, and the former Olympus executive says he has been unable to find work since. Fortunately, the years of hardship he faced will come to an end when he receives his $51-million share of the recovery his case brought the U.S.
Olympus said in a statement that its past conduct “does not represent the values or Olympus or its employees” today and that it is committed to complying with U.S. laws in the future.