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Medical device maker settles federal kickback charges

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Medical device maker settles federal kickback charges

A medical equipment manufacturer has agreed to pay more than $37.5 million to settle charges that it paid kickbacks to suppliers, sleep labs and other health care providers, in violation of the False Claims Act, the Department of Justice said.

San Diego-based ResMed Corp., which manufactures medical devices for patients who suffer from sleep apnea, chronic obstructive pulmonary disease and other chronic diseases, denied in a statement it had violated any laws. The charges were first made by whistleblowers.

The DOJ said Wednesday the settlement resolved allegations that included ResMed provided medical equipment companies with free telephone call center services and other free outreach services that enabled these companies to order resupplies for their patients with sleep apnea, and provided sleep labs with free or below-cost positive airway pressure masks and diagnostic machines as well as free installation of these machines.

The company was charged with violating the Anti-Kickback Statute, which prohibits payments to induce the referral of services or items that are paid for by a federal health care program, the DOJ said. Claims submitted to these programs in violation of the Anti-Kickback Statute create liability under the False Claims Act, it said.

The agreement resolves five lawsuits originally brought by whistleblowers, who will receive about a $6.2 million share of the settlement, the department said.

“Paying any type of illegal remuneration to induce patient referrals undermines the integrity of our nation’s health care system,” Assistant Attorney General Jody Hunt of the Justice Department’s Civil Division said in the statement.

 “When a patient receives a prescription for a device to treat a health care condition, the patient deserves to know that the device was selected based on quality of care considerations and not on unlawful payments from equipment manufacturers.”

David Pendarvis, ResMed’s chief administrative officer and global general counsel, said in a statement that the company “has not violated any laws; its business practices are conducted in full accordance with U.S. laws and regulations.

“That said, we are pleased to put this matter behind us and avoid the expense, inconvenience and distraction it would cause to gain the favorable outcome we deserve.”

“This settlement does not impact our ability to sell products in the United States, nor does it impact the reimbursement of our products by federal health programs. We have always acted in good faith with patients and our valued customers, and we do not expect this to impact our relationship with either,” the company’s statement said.

In July, an ITT Inc. unit agreed to pay $11 million to settle False Claims Act allegations that it supplied inadequately tested electrical connectors to the military, with a whistleblower to be awarded $2.1 million in the matter, the DOJ said.