On July 22, 2022, the United States Department of Justice (DOJ) announced a $12.95 million settlement with Biotronik Inc., a medical device manufacturer, to resolve allegations that the company violated the False Claims Act.
The civil suit, originally brought under the qui tam provisions of the False Claims Act by former independent sales representatives for Biotronik alleged that Biotronik caused the submission of false claims to Medicare and Medicaid by paying kickbacks to physicians to induce their use of Biotronik’s cardiac devices (i.e., pacemakers and defibrillators). The United States intervened in the qui tam case in June 2021.
More specifically, the DOJ alleges that Biotronik abused a new employee training program by paying physicians for an excessive number of trainings, and in some cases, paying the physicians for training events that either did not actually take place or did take place but offered little to no value to new employees. Under written agreements between Biotronik and the training physicians, physicians paid a fixed fee of roughly $400 each time a Biotronik employee received training during one of the physician’s CRM implant procedures. During the training program implant procedure, the training physician was supposed to educate the Biotronik employee on Biotronik’s devices and how to assist a physician during an implant procedure.
The settlement also covers allegations that Biotronik paid for physician holiday parties, winery tours, and lavish meals with no legitimate business purpose, as well as international business class airfare and honoraria in exchange for making brief appearances at international conferences, in violation of the Anti-Kickback Statute. Biotronik also frequently failed to require sign in sheets for the lavish meals and did not use adequate methods to verify the number or identity of attendees or to confirm whether the meals were for a legitimate business purpose.
Perhaps even more alarming than Biotronik’s alleged violations, the company allegedly made these payments in spite of concerns raised by the compliance department, which had said that salespeople had too much influence in choosing which physicians would conduct new employee training.
Biotronik will also be entering – or already has entered into – separate settlement agreements with certain individual states that will be receiving settlement funds from the company related to the alleged conduct.
As is typical in these settlements, the claims resolved by the settlement are only allegations and there has been no determination of liability.
“Paying kickbacks to doctors to influence their selection of medical devices undermines the integrity of federal healthcare programs,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “When medical devices are used in surgical procedures, patients deserve to know that their device was selected based on quality of care considerations and not on improper payments from manufacturers.”