Biotronik Settles For $4.9 Million to Resolve Kickback Allegations; Follows Last Year’s Significant Consumer Protection Settlement

 

Biotronik Inc. has agreed to pay $4.9 million to resolve kickback allegations brought under the False Claims Act, the U.S. Department of Justice announced last week. The settlement resolves allegations that the company induced doctors to continue using or convert to Biotronik devices by paying implanting physician in the form of repeated meals and inflated monthly payments for membership on a physician advisory board.

Biotronik is a multinational, privately owned company based in Germany that focuses on implantable cardiac devices to manage heart rhythms, such as pacemakers and defibrillators. Their U.S. production site is located in Lake Oswego, Oregon.

This case was initiated by a former Biotronik employee, Brian Sant, pursuant to the qui tam provisions of the False Claims Act, which permit private whistleblowers to bring a lawsuit on behalf of the United States and to share in the proceeds of the suit.  The U.S. intervened in the case as to some of Sant’s allegation; he will receive approximately $840,000 of the federal settlement.

Complaint

“In order to increase sales of their [cardiac rhythm management] devices, Biotronik illegally provides monetary and other incentives for physicians who were willing to implant Biotronik devices,” states the complaint. “Biotronik trains and instructs sales representatives, business and marketing managers, and other Biotronik employees and representatives to provide physicians with cash payments, consulting jobs for physician family members, automobiles, expensive trips and meals, expensive gifts, and entertainment in exchange for the physicians’ agreement to implant Biotronik devices.”

Biotronik allegedly established internal guidelines for giving sports tickets and other benefits based on the amount of implants performed by the physicians and the ability of the physician to influence others to begin implanting Biotronik devices.  

The complaint also states that Biotronik would provide incentives to physicians in the form of consultant or “trainer” fees, cash payments for participation in speakers’ bureaus and advisory boards. “Speakers who most zealously advocated Biotronik devices were hired most frequently for speaking events, notwithstanding the fact that many of these events purported to be independent medical education seminars where independent information was supposed to be delivered.”

According to Sant, the relator in the case, some physicians “required kickbacks from Biotronik in the form of research payments in exchange for implanting Biotronik devices. Research studies often consisted of payment for the implant and for several follow-up visits, with much of the money earmarked to compensate for the physician’s administrative costs of conducting the study, despite the fact that Defendants’ employees often did nearly all the clinical study administrative work for the physicians.”

One such example that the complaint references a number of times is an email from one of Biotronik’s sales managers, who wrote that sales reps should nominate physicians to participate and get paid by Biotronik. “If your physician get can get (sic) just a hand full of patients enrolled, he will be receiving monthly (or at least quarterly) checks for the next 3 years – its almost like an annuity.”

Biotronik paid physicians to train sales reps in the operating room, which the complaint also refers to as “kickbacks.” The complaint takes issue with the fact that trainees would sometimes simply “observe” physicians in the operating room. Furthermore, the complaint questioned why new employees were allowed to be trained up to five times. “This is simply a way to funnel cash to physicians in exchange for using Biotronik devices.”

The complaint does not make much of the fact that implanting cardiac devices is a fairly complicated activity and that more hands-on instruction may be beneficial to patient health.

Oregon’s Unlawful Trade Practices Act

Last year, Oregon’s Department of Justice scrutinized Biotronik’s doctor payments as well. Two doctors were part of a Biotronik program to train and certify sales representatives to assist other doctors in programming and calibrating their products. The doctors conducted the training during implant surgery and would be paid $400-1,250 per surgery where such instruction took place. The complaint outlined above alleged that the same practices constituted kickbacks.  

The ODOJ charged the doctors with violating the Oregon Unlawful Trade Practices Act (UTPA) because they had not disclosed the payments in advance of treating patients with devices from the company.

This case has been dubbed a critical “conflict-of-interest case” because it expanded the state trade practices law to physicians, which one of the doctor’s attorneys stated was unprecedented. Furthermore, the attorneys noted that physician input in the complex surgeries at hand is both common and very important. Industry representatives, especially in a medical device setting, understand the complexity of their company’s new products and can provide important information to implanting physicians.

Under the judgments, each physician agreed to pay a $25,000 penalty and to obtain written patient consent before receiving a payment from a drug or device manufacturer associated with that patient’s treatment. The physicians also agreed to include a link on their practices’ websites to the Open Payments database.

We noted last year that “once the Sunshine Act database goes live, plaintiff’s lawyers and state attorneys general will both have a buffet of doctors to sue—and not because patients are being harmed.” Indeed this case brought under the UTPA seemed to capitalize on an unclear law as applied to physicians. Physicians should check the Sunshine database and make sure the recorded information lines up with any necessary disclosures they have to make.