Johnson & Johnson, with its subsidiaries DePuy Synthes Inc. and DePuy Synthes Sales Inc. (collectively DePuy), have agreed to pay $9.75 million to resolve allegations that DePuy violated the Anti-Kickback Statute and the False Claims Act by providing free products to a Massachusetts-based surgeon, in an attempt to use persuade him to use DePuy products in his procedures.
The federal government and the Commonwealth of Massachusetts allege that DePuy cased the submission of false claims for payment to Medicaid and Medicare. Specifically, the governments allege that DePuy provided free products – in excess of $100,000 – to the Surgeon to induce him to use DePuy’s products in spine surgeries performed on Medicare and Medicaid patients in Massachusetts or to reward his use of the products in surgeries.
Slightly different from what we are used to seeing, DePuy admitted, acknowledged, and accepted responsibility for some of the allegations, including that from at least July 2013 through February 2018, DePuy and its sales representatives gifted the Surgeon DePuy implants and instruments, as well as a modular access and retraction system. The Surgeon then turned around and used some of the products in spinal surgeries performed overseas for patients that were not Medicare or Medicaid beneficiaries.
The Surgeon performed more than 20 surgeries overseas during the relevant time period, often using the gifted DePuy products, which were worth thousands of dollars.
In addition to the international surgeries, the Surgeon also used DePuy products in his spinal surgeries performed in Boston, Massachusetts. Some of those surgeries were performed on Medicare and Medicaid beneficiaries, and Medicare and Medicaid paid those claims.
Of the settlement amount, $5,416,666.67 is restitution and $1,852,500 will be paid to the Relator. DePuy is also to pay $209,968.50 for expenses, attorneys’ fees, and costs on behalf of the Relator.
The Settlement also notes that DePuy will “cooperate fully and truthfully with the United States’ and Commonwealth’s investigation and litigation of certain individuals” who are named – but not released – in the Agreement. DePuy also agreed to encourage current and former employees, directors, and officers to cooperate and be made available for interviews and testimony in the seemingly ongoing investigation.
“Today the United States resolves allegations that DePuy provided over $100,000 worth of free product to a surgeon in order to secure and reward that physician’s continued business,” said United States Attorney Rachael S. Rollins. “Unlawful kickbacks can severely distort medical judgment as well as the market for medical devices. The millions of patients that depend on our health care system deserve untainted medical decisions. This settlement reflects our commitment to stamping out illegal kickbacks.”
“Today’s settlement makes it crystal clear that it is illegal for medical device companies to provide physicians with free medical products to win business and boost their bottom line through illegal kickback schemes,” said Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigations, Boston Division.