On July 22, 2022, the U.S. Department of Justice (DOJ) issued a press release noting that Biotronik Inc. greed to pay $12.95 million to resolve allegations it violated the False Claims Act and the Anti-Kickback Statute.

The federal False Claims Act (“FCA”) and the federal Anti-Kickback Statute (“AKS”) have remained some of federal government’s top tools to investigate and punish alleged fraud, waste, and abuse in federal programs.  The FCA prohibits any person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to the federal government.  And AKS prohibits, among other things, knowingly and willfully paying or receiving remuneration (i.e., anything of value) in exchange for federal healthcare program referrals.  AKS violations carry potential criminal penalties, as well as civil and administrative consequences, including monetary penalties and possible exclusion from federal healthcare programs.  Submitting claims to a federal healthcare program tainted by an AKS violation may also amount to false claims under the FCA, as was the situation for Biotronik.

According to the press release, the government alleged that Biotronik (a medical device manufacturer based in Oregon) paid favored physicians “to induce and reward their use of Biotronik’s pacemakers, defibrillators and other cardiac devices.” The government alleged that Biotronik paid providers for an excessive number of trainings and for trainings that either never occurred or were of little educational value as part of its new employee training.  Interestingly, according to the government, Biotronik’s compliance department raised concerns that salespeople had too much influence in selecting providers for the new employee training program and that payments for these programs were over-utilized.  Regarding the alleged AKS violations, Biotronik allegedly provided physicians holiday parties, winery tours, lavish meals, and international business class airfares.

Like many FCA cases, this case was brought under the qui tam provisions of the FCA under which whistleblowers – known as relators – are granted financial incentives and procedural mechanisms to bring FCA cases on behalf of the government.  The financial incentive can be significant, as whistleblowers are entitled to 15% to 30% of the money the government recovers, based on several factors.  The whistleblowers in this case were previously employed by Biotronik as independent sales representatives and will collectively receive approximately $2.1 million from the settlement.  Since some of the underlying claims involved Medicaid, several states will receive $933,200 of the settlement, according to the press release.

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with False Claims Act investigations and related litigation.  If you need assistance with such a matter, please contact us today.