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Philips subsidiary to pay $24 million for illegal kickbacks

A Philips subsidiary agreed to pay more than $24 million to settle claims that it paid kickbacks to medical equipment vendors in order to push its items ahead of rival brands given to federal health-care programme consumers.

Philips RS North America, formerly known as Respironics, manufactures breathing-aid devices such as ventilators and CPAP machines. According to the settlement, the DOJ claimed that from November 2014 to April 2020, the illegal inducements Philips gave induced suppliers to file false claims to government programmes such as Medicare, Medicaid, and TRICARE, a health programme for military families.

According to the complaint, the inducements took the form of data about physician prescribing behaviour known as health market science data, which is highly coveted by marketing teams of medical equipment suppliers and that Philips salespeople offered free of charge to the suppliers.

The DOJ determined that Philips violated the federal anti-kickback statute as well as the False Claims Act (FCA).

As part of the settlement, Philips agreed to a five-year corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. The corporation must design and maintain a “robust” compliance procedure that includes an assessment of arrangements it has with referral sources and monitoring of its sales team. The inspector general's office will appoint an impartial monitor to assess the efficiency of Philips' compliance measures.

The settlement arose from a 2019 whistleblower case filed in U.S. District Court for the District of South Carolina under the FCA's qui tam provisions by Jeremy Orling, a former Respironics employee, and about 30 states.

The business will pay the US $22.62 million and the states whose Medicaid programmes were damaged by the alleged bogus claims $2.13 million. Orling will earn around $4.3 million from the government settlement.

“Paying illegal remuneration to induce patient referrals undermines the integrity of our nation’s healthcare system,” said Principal Deputy Assistant Attorney General Brian Boynton in a press release Thursday. “To ensure that the goods and services received by federal healthcare program patients are determined by their healthcare 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.”

This is Philips' second settlement with the DOJ over alleged bribes to DME suppliers. In March 2016, the business agreed to pay $34.8 million and signed a corporate integrity agreement agreeing to end any kickback behaviour.

"In direct violation of such responsibilities, Respironics engaged in the kickback scheme charged [in the current lawsuit] in 2016, at the time of the corporate integrity agreement," the DOJ stated.

By agreeing to the most recent settlement, Philips does not admit guilt.

“Settling this claim allows us to put this matter behind us and maintain our focus on our customers and the patients they serve,” a spokesman said in an emailed statement. “We maintain a comprehensive compliance program, and we will work with the relevant authorities to satisfy the terms of the settlement. This agreement should have no impact on our customers or the patients they serve.”


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