Device Company Pays Nearly $20 Million to Settle MD Bribe Claims

Case: Former sales managers of Covidien LP filed a whistleblower suit accusing the firm of providing free or discounted marketing and practice development services to California and Florida physicians to get them to buy Covidien’s ClosureFASTradiofrequency ablation catheters. In addition to kickback violations, Covidien violated the False Claims Act by billing Medicare and Medicaid for the devices, the claim alleges. Covidien denies the charges. But once the DOJ decided to pick up the case, it decided that discretion was the better part of valor and agreed to settle for $17,477,947, of which $3,146,030 will go to the whistleblowers. In addition, Covidien will have to pony up $1,474,892 to California and $1,047,160 to Florida to settle the related Medicaid claims. Significance: Although Covidien is a medical device company, this case is also extremely relevant for labs. The Antikickback Statute ban on offering referring physicians free or cut-rate practice and marketing services, e.g., accounting, technology, EHR, consulting and other forms of support, also applies to labs.