A Johnson & Johnson medical device subsidiary admitted to providing thousands of dollars in equipment as kickbacks to an orthopedic surgeon as part of a $9.75 million settlement reached with the Department of Justice (DOJ).
Sales agents of the subsidiary, DePuy Synthes, gave a Massachusetts-based orthopedist free spinal surgery equipment from at least July 2013 through February 2018 for use overseas in an effort to induce him to select DePuy equipment for his surgeries performed in the United States, the DOJ said in a press release Friday.
The federal anti-kickback statute prohibits companies and individuals from receiving or giving money, equipment, or other benefits to create more referrals or billings to Medicare, the federal health program that provides care to seniors; Medicaid, the federal-state program for low-income residents; and other government programs.
DePuy sales agents gave the surgeon more than $100,000 worth of free implants and instruments, including cages, rods, screws, and plates, according to the settlement agreement. The complaint, filed in August 2017 in U.S. District Court for the District of Massachusetts, was a qui tam lawsuit by former sales agent turned whistleblower Aleksej Gusakovs. The DOJ and Massachusetts intervened in the case in September.
The surgeon used the products in more than 20 spinal surgeries he performed in the Middle East, including in Bahrain, Kuwait, and Saudi Arabia. Neither he nor the hospitals or patients paid DePuy for the equipment, the DOJ said.
The orthopedist used DePuy products in his spinal surgeries in Massachusetts, including those for Medicare patients paid for by the federal government. Doing so caused false claims to be filed, the DOJ alleged.
As part of the settlement, DePuy agreed within 90 days it will identify any unallowable costs and related payments it received from federal health programs and to not charge unallowable costs in the future.
The company agreed to cooperate with the government’s ongoing investigation concerning individuals who had allegedly been involved in the illegal kickback scheme.
“Unlawful kickbacks can severely distort medical judgment as well as the market for medical devices,” said U.S. Attorney Rachael Rollins in the DOJ’s release. “The millions of patients that depend on our healthcare system deserve untainted medical decisions. This settlement reflects our commitment to stamping out illegal kickbacks.”
About $7.23 million of the payment total will be returned to the federal government and $2.52 million will go to Massachusetts. Gusakovs will receive $1.37 million, as called for under the whistleblower statute.
DePuy response: “We have fully cooperated with the government throughout its investigation of the allegations and were credited for that cooperation in the settlement,” the company said in an emailed statement. “This settlement avoids further lengthy legal processes. We are committed to ensuring our employees conduct business in a way that complies with our credo and with all laws and regulations.”