The U.S. Department of Justice announced on October 14, 2020 that medical device manufacturer Merit Medical Systems Inc. (“MMSI”) of South Jordan, Utah has agreed to pay $18 million to resolve allegations that the company caused the submission of false claims to the Medicare, Medicaid, and TRICARE programs by paying kickbacks to physicians and hospitals to induce the use of MMSI products.
The Anti‑Kickback Statute prohibits offering or paying anything of value to induce the referral of items or services covered by Medicare, Medicaid, TRICARE, and other federal healthcare programs. The statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives.
The settlement resolves allegations that MMSI engaged in a kickback scheme to pay physicians, medical practices, and hospitals to induce their use of MMSI products in medical procedures performed on Medicare, Medicaid, and TRICARE beneficiaries, for over six years. The government alleged that under the guise of an internal program known as the Local Advertising Program, MMSI provided remuneration to healthcare providers in the form of millions of dollars in free advertising assistance, practice development, practice support, and purported unrestricted “educational” grants to induce the healthcare providers to purchase and use a wide variety of MMSI products, including MMSI’s EmboSphere devices that were used for uterine fibroid embolization procedures and its QuadraSphere devices that were used for other types of embolization procedures.
Despite publicly claiming that its financial assistance was designed to “increase the awareness” of medical treatments, MMSI allegedly provided it only to select healthcare providers to reward past sales, induce future sales, and steer business to MMSI and away from MMSI’s competitors. The government alleged that MMSI disregarded numerous warnings that its conduct may violate the Anti-Kickback Statute including warnings from MMSI’s Chief Compliance Officer, during the course of the alleged kickback scheme.
Of the $18 million to be paid by MMSI, $15.21 million will be returned to the federal government, and a total of $2.79 million will be returned to individual states, which jointly funded claims involving MMSI devices that were submitted to state Medicaid programs. MMSI also entered into a five-year Corporate Integrity Agreement (“CIA”) with the U.S. Department of Health and Human Services Office of Inspector General. The CIA requires MMSI to hire a compliance expert and an independent review organization to analyze its systems and transactions.
The allegations were originally made in a lawsuit filed under the whistleblower provisions of the False Claims Act by Charles J. Wolf, M.D., the former Chief Compliance Officer of MMSI. The act permits private parties to sue for false claims on behalf of the United States and to share in any recovery. Dr. Wolf will receive $2.65 million from the federal share of the settlement.
The lawsuit is captioned United States ex rel. Wolf v. Merit Medical Systems, Inc., No. 2:16-cv-01855-CCC-MF (D.N.J.).
If you have information regarding false claims having been submitted to Medicare, Medicaid, TRICARE, other federal health care programs, or to other federal agencies/programs, and the information is not publically known and no actions have been taken by the government with regard to recovering the false claims, you should promptly consult with a False Claims Act attorney (also known as qui tam attorneys) in your U.S. state who may investigate the basis of your False Claims Act allegations and who may also assist you in bringing a qui tam lawsuit on behalf of the United States, if appropriate, for which you may be entitled to receive a portion of the recovery received by the U.S. government.
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