Medical Manufacturer Settles Whistleblower Suit for $37.5 Million

A California-based manufacturer of durable medical equipment (DME) has settled a lawsuit brought against it by the Department of Justice (DOJ) for $37.5 million. The suit accused the company of violating the Anti-Kickback Statute of the False Claims Act, alleging they had paid money, and offered other incentives, to those that offered their equipment. The suit came about due to whistleblowers at the company reporting their practices to the DOJ, and a part of the settlement is directed to redressing whistleblower grievances.

The company allegedly provided free patient outreach to make it easier for DME suppliers, laboratories, and others to order their equipment. They also allegedly provided medical equipment for free or below market cost to sleep labs to encourage them to purchase their equipment. Most damningly, however, they allegedly arranged for, and guaranteed, no-interest loans to DME suppliers so they would purchase the company’s equipment. These practices, among others, inflated the value of the company’s products and artificially drove up demand, in violation of the Anti-Kickback Statute.

The company’s conduct only became clear once whistleblowers at the company notified the DOJ of their practices. Of the $37.5 million settlement the company will pay out, $6.2 million will go to the whistleblowers as compensation for the risk and retaliation they faced for blowing the whistle on the company. The suit shows the importance of whistleblower laws in protecting the public from abusive, dishonest and coercive economic practices, particularly in the field of medicine.

Healthcare law offers many pitfalls for the unwary healthcare provider. With offices conveniently located in Garden City, Nassau County, and Babylon in Suffolk County, the firm provides high-quality legal care at reasonable prices. The attorneys at Blodnick, Fazio & Clark are well-versed in all manner of healthcare law issues and are dedicated to saving their clients both time and money. Call (516) 280-7105 for our Garden City office or (631) 669-6300 for our Babylon office to arrange a free consultation or visit our contact page.

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