Recently, ResMed Corp. agreed to pay more than $37.5 million to resolve alleged False Claims Act violations for paying kickbacks to durable medical equipment (DME) suppliers, sleep labs, and other healthcare providers, in violation of the Anti-Kickback Statute. They also entered into a corporate integrity agreement.
According to DOJ allegations, ResMed: (1) provided DME companies with free telephone call center services and other free patient outreach services that enabled these companies to order resupplies for their patients with sleep apnea, (2) provided sleep labs with free and below-cost positive airway pressure masks and diagnostic machines, as well as free installation of these machines, (3) arranged for, and fully guaranteed the payments due on, interest-free loans that DME supplies acquired from third-party financial institutions for the purchase of ResMed equipment, and (4) provided non-sleep specialist physicians free home sleep testing devices referred to as “ApneaLink.”
Along with the civil settlement, ResMed entered into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS OIG). Under the CIA, ResMed must not only implement additional controls around its product pricing and sales but it also must conduct internal and external monitoring of its arrangements with referral sources.
This mirrors what was expected and is in line with the tentative agreement the company reached with the DOJ in the summer of 2019. As we wrote at that time, “while some limited product support services may not violate the AKS [Anti-Kickback Statute], compliance professionals should not conclude that product support services generally fall into some sort of compliance safe harbor simply because of the 2003 guidance.”
ResMed continues to deny any wrongdoing, stating, “ResMed has not violated any laws. Its business practices are conducted in full accordance with U.S. laws and regulations. That said, we are pleased to put this matter behind us and avoid the expense, inconvenience, and distraction it would cause to gain the favorable outcome we deserve.”
“Paying any type of illegal remuneration to induce patient referrals undermines the integrity of our nation’s health care system,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “When a patient receives a prescription for a device to treat a health care condition, the patient deserves to know that the device was selected based on quality of care considerations and not on unlawful payments from equipment manufacturers.”
The agreement settles five lawsuits brought by whistleblowers under the qui tam provisions of the False Claims Act. Those whistleblowers will collectively receive an estimated $6.2 million share of the settlement.
The corporate integrity agreement governs all agreements with healthcare providers (HCP’s) including referral agreements.
All agreements have to be tracked in a centralized contract tracking system and sales reporting system which includes an approval process for all contracts.
The agreement also includes stipulated penalties for submission delays, errors and omissions, and compliance violations.