DME Manufacturer Pays Nearly $1.3m to Resolve Allegations it Violated Anti-Kickback Statute, False Claims Act

Last month, Philips RS North America, LLC (formerly Respironics, Inc.), a durable medical equipment manufacturer, agreed to pay $1.28 million to settle civil allegations that it unlawfully induced referrals for its equipment in violation of the Anti-Kickback Statute and False Claims Act. The government alleged that, beginning in December 2015, Respironics assisted a DME supplier in obtaining a 12-month, interest-free loan which Respironics fully guaranteed, thereby assuming the financial risk of non-collection if the DME supplier defaulted. The government alleged this scheme to be a violation of the Anti-Kickback Statute, and, resultantly, a violation of the False Claims Act. In addition to the settlement, Respironics entered into a five-year Corporate Integrity Agreement with HHS-OIG, which requires that Respironics implement and maintain a robust compliance program, including specifically with regard to arrangements with referral sources and sales force monitoring.

This action was initiated under the whistleblower provisions of the False Claims Act.

This case highlights the broad definition of the term “remuneration,” as defined within the Anti-Kickback statute. Specifically, remuneration can consist of anything of value, regardless of form. It extends well beyond the provision of money, cars, or a below-market rate on office space. Additionally, qui tam plaintiffs remain an important tool in the government’s arsenal for bringing alleged fraud to the government’s attention. Hence, when it comes to sales force oversight and monitoring, compliance training is particularly important. The competitive nature of their jobs often motivates sales personnel to find new and creative ways to provide value to prospective customers; in the highly regulated healthcare industry, however, certain otherwise permissible business arrangements may run afoul of the law. These risks are further amplified with respect to government programs, even at the relatively low dollar settlement amount at issue here.

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