DME Manufacturer Settles False Claims Act Allegations for Nearly $2.5 Million

Philips Respironics paid nearly $2.5 million to resolve allegations that it violated the False Claims Act by giving kickbacks to sleep laboratories in exchange for physician referrals for its sleep masks.

The manufacturer of durable medical equipment allegedly provided sleep labs with free masks used to treat and diagnose sleep-related respiratory disorders as a way to induce the labs’ physicians to write referrals or prescriptions for Respironics-brand masks that suppliers would fill and bill to federal healthcare programs. The activity allegedly took place from 2016 through 2021.

The Anti-Kickback Statute prohibits paying money or giving goods to induce referrals for medical services or items covered by a federal healthcare program such as Medicare, Medicaid or TRICARE. Claims submitted to these programs in violation of the Anti-Kickback Statute give rise to liability under the False Claims Act. 

False Claims Act Allegations in 2022

This isn’t the first multimillion-dollar settlement that the company entered. In September 2022, the company agreed to pay more than $24 million to resolve False Claims Act allegations that it misled federal healthcare programs by paying kickbacks to DME suppliers. The affected programs were Medicare, Medicaid and TRICARE, which is the healthcare program for active military and their families.

That settlement resolved allegations that Respironics caused DME suppliers to submit claims for ventilators, oxygen concentrators, CPAP and BiPAP machines, and other respiratory-related medical equipment that were false because Respironics provided illegal inducements to the DME suppliers. Respironics allegedly gave the DME suppliers physician prescribing data for free that could assist their marketing efforts to physicians. The activity is alleged to have taken place from November 2014 through April 2020.

That settlement resolved a lawsuit brought by Jeremy Orling, a Respironics’ employee, under the qui tam or whistleblower provisions of the False Claims Act. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. As part of this resolution, Orling received approximately $4.3 million of the federal settlement amount.

Also in September 2022, Respironics agreed to pay nearly $1.3 million to settle allegations that it unlawfully induced referrals for its equipment in violation of the False Claims Act and Anti-Kickback Statute.

The government alleged that between December 2015 and December 2016 Respironics helped a DME supplier obtain a twelve-month, interest-free loan that was fully guaranteed by Respironics. Under the arrangement, Respironics took the full financial risk of non-collection on the loan in the event the DME supplier defaulted. The United States contended this arrangement violated the Anti-Kickback Statute and, in turn, the False Claims Act.

The case also arose from an action brought under the whistleblower provisions of the False Claims Act.

Other False Claims Act Allegations in 2016

In 2016, Philips Respironics agreed to pay $34.8 million to resolve allegations it violated the False Claims Act for paying kickbacks to DME providers that bought its CPAP masks.

The government alleged that from April 2012 to November 2015 Respironics provided DME companies with call center services to meet their patients’ resupply needs at no charge if the patients were using masks that Respironics manufactured; otherwise, the DME companies would have to pay a monthly fee based on the number of patients who used masks manufactured by a competitor of Respironics. 

The settlement resolved a whistleblower lawsuit originally brought by Dr. Gibran Ameer, who worked for different DME companies, under the qui tam provisions of the False Claims Act. 

In each case, the company has neither admitted to nor denied the false claims act allegations and has said in previous statements it agreed to the settlements to avoid costly litigation.

Beware of Whistleblowers

As evidenced in three cases, whistleblowers can cost companies and individuals a significant amount of time, effort and if the case is successful, money.

Whistleblower cases are highly complex and require the knowledge and skill of an attorney who has extensive and relevant experience. The Health Law Offices of Anthony C. Vitale is known for its representation of whistleblowers, as well as its ability to defend those who become the target of a whistleblower action.