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Respironics to pay $34.8M in whistleblower lawsuit

In a case that’s sure to get the attention of attorneys representing False Claims Act whistleblowers, Murrysville, Pennsylvania-based Respironics Inc. has agreed to pay $34.8 million to settle allegations that the company paid kickbacks to boost sales of equipment used to treat sleep apnea.Whistleblower

As part of the settlement, which did not require Respironics to admit any wrongdoing, Dr. Gibran Ameer of South Carolina will receive $5.38 million for blowing the whistle on the alleged scheme.

According to the U.S. Department of Justice, Respironics allegedly hoped to encourage medical providers to prescribe its products to patients suffering from sleep apnea by providing call center services, free of charge. Respironics is a subsidiary of technology giant Royal Philips.

Sleep apnea patients are often prescribed durable medical equipment, including Continuous Positive Airway Pressure devices and other accessories to aid their treatment. But because those devices make use of masks and hoses that must be replaced over time, DME suppliers often have to call their patients to have them come back in for follow up appointments. The cost of making those calls or hiring a service to make them can add up quickly for DME suppliers.

What Respironics allegedly did was to have a call center company it owns make those calls for free if a patient was prescribed Respironics equipment. Otherwise, DOJ attorneys alleged, DME suppliers would have to pay a monthly fee based on the number of patients who used masks made by a competitor of Respironics. The alleged scheme ran from April 2012 until November 2015, according to DOJ.

Andrew Melling of the McNair Law Firm in Columbia, who represented Ameer in the case, said his client “immediately recognized that arrangement as a kickback scheme” and declined to contract with Respironics for call center services. Ameer has worked with a number of DME suppliers in his career, McNair said.

After allegedly being invited to join the call center program multiple times, Ameer obtained a prospective contract from Respironics, which Melling said “laid out the kickback scheme in black and white.” Ameer ultimately determined it was necessary to file a lawsuit against Respironics under the qui tam provisions of the False Claims Act to notify government officials of the alleged scheme, Melling said.

Among other things, the federal Anti-Kickback Statute bars medical equipment providers from paying benefits to induce the referral of services or items that are paid for by a federal health care program, such as Medicare, Medicaid or TRICARE. Under federal law, claims to federal health care programs that violate the Anti-Kickback Statute are also false claims under the False Claims Act.

Attorneys from DOJ’s Civil Division and from the U.S. Attorney’s Office for South Carolina began investigating the allegations made by Ameer and eventually filed a sealed complaint against Respironics. The seal was lifted once the company agreed to settle the case.

The settlement requires Respironics to pay $34.14 million to the federal government and roughly $660,000 to various state governments, based on their participation in the Medicaid program, DOJ said.

Melling said the settlement also requires Respironics to stop providing call center services for free. The company will now charge a fee for those services, regardless of who made a patient’s sleep apnea mask.

“The system really relies on whistleblowers like Dr. Ameer to bring these kinds of things to the government’s attention,” Melling said. “And whistleblowers have to have a great deal of courage to put their careers in jeopardy to get involved.”

Ameer’s legal team from McNair Law Firm also included Celeste Jones and Victor Rawl.

For its part, Respironics spokeswoman Silvie Casanova said in an e-mail that the settlement will allow the company to move forward with heightened clarity and transparency with regulators and with its customers.

“Respironics continues to have a good faith belief that the Fit for Life program offered a permissible bundled discount of Respironics’ masks and resupply services under the appropriate discount safe harbors,” Casanova said. “Respironics is proud of its commitment to compliance and has worked diligently to comply with the changing healthcare rules and laws.”

Follow Jeff Jeffrey on Twitter at @SCLWJeffrey.

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