A Philips subsidiary agreed to pay approximately $1.3 million to settle charges it unlawfully paid kickbacks as part of its second resolution addressing alleged False Claims Act (FCA) violations this month.
Philips RS North America, formerly known as Respironics, manufactures durable medical equipment (DME) specializing in sleep aid products. The company unlawfully induced referrals for its equipment in violation of the FCA and anti-kickback statute, the Department of Justice (DOJ) announced in a press release Thursday.
In the case, which grew out of a 2017 whistleblower lawsuit filed in U.S. District Court for the District of Northern Iowa, Respironics was alleged to have helped DME suppliers purchase Respironics equipment by helping the suppliers to secure interest-free loans fully guaranteed by Respironics. The loans acted as an inducement for the DME suppliers to recommend Respironics’ equipment for Medicare and Medicaid patients, according to the settlement agreement.
The DOJ’s allegations centered on Respironics’ loans to a DME supplier from December 2015 through December 2016.
During that time, the Medicare and Medicaid claims submitted by the DME supplier were connected to the loan agreement that violated the anti-kickback statute and the FCA, the DOJ found.
Philips also agreed to a five-year corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. The company must put in place and maintain a compliance program that includes monitoring its sales team and reviewing its arrangements with referral sources and must retain an independent monitor selected by the inspector general to assess the effectiveness of its compliance systems.
Philips will pay $641,912 in restitution to Medicare and Medicaid. The whistleblower will receive $211,831, plus $35,586 to cover legal fees.
“Illegal kickbacks in our federal healthcare system create an unfair marketplace and the potential for medical decisions to be made based on financial incentive rather than what’s best for the patient,” said U.S. Attorney Timothy Duax in the press release. “Our office is committed to the full and fair enforcement of the anti-kickback statute and False Claims Act.”
Philips neither admitted nor denied the DOJ’s findings in reaching settlement. The same subsidiary agreed to pay more than $24 million and enter a five-year corporate integrity agreement on Sept. 1 to settle DOJ allegations it paid kickbacks to medical equipment suppliers to push its products ahead of other brands that are provided to patients of federal health programs.
In March 2016, Respironics agreed to pay $34.8 million and signed a corporate integrity agreement pledging to halt any kickback activity.
Philips did not reply to a request for comment.
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