The Department of Justice recently announced that ResMed Corp., a California-based durable medical equipment (“DME”) manufacturer, has entered into a settlement wherein it has agreed to pay more than $37.5MM to the Government in order to resolve allegations that it paid kickbacks to suppliers, labs, and other healthcare providers in violation of the False Claims Act. The settlement specifically resolved allegations that ResMed paid kickbacks by providing equipment and services at no cost, or below cost, to DME companies, DME suppliers, and physicians in order to induce the purchase of ResMed’s DME which were ultimately paid for by federal healthcare programs.
The case against ResMed makes it clear that direct cash transactions (in which cash or a car are handed to a prescriber to induce that prescriber to refer business) are not the only form of kickbacks that are ripe for prosecution. Rather, even more nuanced forms of remuneration – providing equipment or services at no charge, or at a reduced cost – are also being targeted, should one’s purpose of that remuneration be to induce the referral of federal healthcare items or services. Moreover, violations of the Anti-Kickback Statute may be brought under the False Claims Act, which statute is unique in that it financially incentivizes individual citizen whistleblowers (“Qui Tam Relators”) to bring suit against offenders, by permitting Qui Tam Relators to share in a portion of the government’s recovery when their actions are successful. Frequently, Qui Tam Relators are disgruntled employees, contractors or competitors that have knowledge of suspect arrangements.
If you believe any relationship with referral sources may be questionable, contact Frier Levitt’s Government Defense attorneys who can evaluate your situation and advise accordingly. In some circumstances, corrective measures, such as self-disclosure, can prevent prosecution by the government.
