EBI LLC, a subsidiary of Biomet, Inc. has agreed to a $6 million settlement with the U.S. Department of Justice to resolve kickback allegations connected to the company’s bone growth stimulators and “billing federal healthcare programs for refurbished stimulators.” The claims focused on a period from 2001 to 2008, when the company allegedly bribed physician office staffers to convince them to use the products, according to the DOJ.
Biomet and its subsidiaries design, manufacture and market surgical and non-surgical products used primarily by orthopedic surgeons. The United States alleged that, from 2001 to 2008, EBI paid staff at doctors’ offices to influence doctors to order its bone growth stimulators. These payments were allegedly provided pursuant to personal service agreements with staff members. The United States concluded that these payments violated the Anti-Kickback statute and resulted in false billings to various federal health care programs, including Medicare. The settlement also resolves EBI’s disclosure that it received federal reimbursements for bone growth stimulators that had been refurbished.
The settlement resolves in part an allegation filed former EBI product manager Yu Yue. The lawsuit was filed under the qui tam provisions of the False Claims Act, which permits private individuals to sue on behalf of the government for false claims and to share in any recovery. Yu’s share has not yet been determined, according to the DOJ press release.
Yu alleged that the defendants, which also operate under the name Biomet Spine & Bone Healing Technologies, caused false claims to be submitted to Medicare and Medicaid by using illegal kickbacks, including remuneration to staff in doctors’ offices under personal service agreements to induce orders of OsteoGen bone growth stimulators. The U.S. concluded that these payments violated the Anti-Kickback Act. The settlement also resolved allegations that EBI was reimbursed for stimulators that had been refurbished.
Importantly, Biomet admitted no liability in agreeing to the settlement.
“This settlement demonstrates our resolve in ensuring that patients receive, and the government pays for, health care that is based on sound medical judgment, not compromised by kickbacks,” said Carmen Ortiz, U.S. attorney of the district of Massachusetts, in a statement cited in the article.
“Medical device companies must not use improper financial incentives to influence the decision to use their products,” stated August Flentje, acting deputy assistant attorney general for the Justice Department’s Civil Division.
Ms. Yu’s case is captioned United States ex rel. Yu v. Biomet, Inc., Civil Action No. 09-1731 (D.N.J.), though the case is still labeled as under seal on PACER. View the DOJ announcment here.