The U.S. Department of Justice (DOJ) and the U.S. Department of Health and Human Services (HHS) reportedly imposed fines exceeding $110 million on medical device companies in fiscal year 2014. The annual report from the federal government agencies details the judgement and settlements that were negotiated or won. Collectively in fiscal year 2014, through the Health Care Fraud and Abuse Control (HCFAC) program, approximately $3.3 billion was “returned to the Federal government or paid to private persons,” according to the report.
Actions taken against doctors, pharmacies, hospitals, clinics, dentists, or pharmaceutical companies were also included in the annual report assembled by the DOJ and HHS. According to a WSGR news release, which focused on medical device manufacturers which were fined or settled in connection with the HCFAC program, several high-profile federal cases involved prominent medical device companies including Guidant, Abbott Laboratories, and Smith & Nephew.
Boston Scientific Corporation, which also recently announced a settlement in connection with a lawsuit filed by Johnson & Johnson stemming from the acquisition of Guidant, agreed to pay $30 million to settle federal allegations that Guidant sold defibrillators which were implanted into Medicare patients knowing the defibrillators were defective. The federal government alleged that Guidant sold its remaining stock of defective defibrillators and then tried to hide its actions from the FDA, doctors, and patients. In 2010, the company pleaded guilty to criminal charges, according to WSGR, which included misleading the FDA. Those charges were related to the defective defibrillators at the center of the settlement with the federal government.
The federal government reported that in 2014, Abbott Laboratories paid five-and-a-half million dollars to resolve allegations that the company made false claims to Medicare. The U.S. government alleged that Abbott Laboratories paid unlawful kickbacks to physicians if they agreed to arrange it so that the hospitals they were affiliated with would purchase the companies carotid and peripheral vascular and biliary stents for use in treating Medicare patients.
Smith & Nephew settled allegations that it violated the Trade Agreements Act and sold medical devices to the government that were required to be made in the United States, but were allegedly made in Malaysia. Smith & Nephew is a global medical equipment manufacturing company with operations in the Americas, Asia, Australasia, Europe and the Middle East. Smith & Nephew agreed to pay $8.3 million to settle the claims against the company.
HHS Secretary Sylvia M. Burwell announced that since the creation of the HCFAC, $27.8 billion has been returned to the Medicare Trust Fund in total.
“These impressive recoveries for the American taxpayer demonstrate our continued commitment to this goal and highlight our efforts to prosecute the most egregious instances of health care fraud and prevent future fraud and abuse. New enrollment screening techniques and computer analytics are preventing fraud before money ever goes out the door. And together with the continued support of Congress and our partners at the Department of Justice, we’ve cracked down on tens of thousands of health care providers suspected of Medicare fraud – all of which are helping to extend the life of the Medicare Trust Fund.”
For more information about the annual report of medical device companies’ settlements and lawsuits or details of the Health Care Fraud and Abuse Control Program’s annual report, you can read the the publication online.
[Photo of Secretary Burwell via U.S. HHS on YouTube]