PHG - Philips unit to pay $24M to resolve US DOJ lawsuit on alleged false claims for medical devices

A unit of Philips ( NYSE: PHG ), Philips RS North America, will pay $24M to resolve allegations that it misled federal health care programs by paying kickbacks to durable medical equipment (DME) suppliers, said the U.S. Department of Justice.

The settlement resolves allegations that Philips RS North America, formerly known as Respironics, caused DME suppliers to submit claims for ventilators, oxygen concentrators, CPAP and BiPAP machines, and other respiratory-related medical equipment which were false because the company provided illegal inducements to the DME suppliers, the Justice Department said in a Sept. 1 press release.

Respironics allegedly gave the DME suppliers physician prescribing data free of charge which could assist their marketing efforts to physicians.

"To ensure that the goods and services received by federal health care program patients are determined by their health care needs, rather than the financial interests of third parties, we will pursue any individual or entity that violates the prohibition on paying kickbacks, including DME manufacturers," said Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department's Civil Division.

Respironics will pay $22.62M to the U.S. and $2.13M to the various states due to the impact of the company's conduct on their Medicaid programs, the Justice Department added.

The lawsuit was originally brought by a whistleblower Jeremy Orling, a Respironics' employee, and as part of the resolution, Orling will receive ~$4.3M of the federal settlement amount.

In addition, Respironics entered into a five-year agreement with the Department of Health and Human Services, Office of the Inspector General (HHS-OIG) to implement a compliance program that includes, review of arrangements with referral sources and monitoring of Respironics' sales force, the Justice Department noted.

The agreement also requires Respironics to retain an independent monitor, selected by the OIG, to assess the effectiveness of the company's compliance systems.

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