A healthcare division of electronic components manufacturer OSI Systems agreed to pay $2.5 million as part of a settlement with the Department of Justice (DOJ) resolving allegations it overcharged the U.S. Department of Veterans Affairs (VA) for medical devices.
Spacelabs Healthcare provided patient monitoring equipment to the VA. From 2014-19, it failed to abide by a price reductions clause in its contract with the department, the DOJ said in a press release Monday. The contract stated if Spacelabs sold the same equipment at a lower price to other customers, it must provide the lower price to the government.
Spacelabs continued to charge the VA at the original rate, resulting in violations of the False Claims Act, the DOJ alleged. The settlement also resolved similar alleged violations by Spacelabs with the Defense Logistics Agency.
The case was originally brought under the qui tam provisions of the False Claims Act by two former Spacelabs employees: Marci Gebhardt, a government business specialist, and Christopher Kelley, a government accounts manager. The two whistleblowers will share a $437,500 portion of the settlement.
“Federal contractors are expected to deal honestly with federal agencies and faithfully abide by the terms of their government contracts,” said U.S. Attorney Matthew Graves for the District of Columbia in the DOJ’s release.
In June 2021, the former director of global product support at Spacelabs was sentenced to 14 months in prison for defrauding the company of almost $800,000 by using shell companies to resell Spacelabs used equipment and keeping the profits for himself.
OSI did not respond to a request for comment.
In a separate announcement Monday, Florida Cardiology and 10 physicians agreed to pay $2 million to the DOJ and the state of Florida to resolve allegations they filed false claims by billing Medicare and Medicaid for cardiac stents that were never inserted into patients. The physicians billed the health programs while they were outside the United States, which is not allowed, the DOJ said.
The agreement resolves a case brought in June by two whistleblowers, who will share $420,000 from the federal portion of the settlement.