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Medical Equipment Manufacturer Pays $37.5 Million for Alleged Kickback Payments to its Suppliers

Southern California medical equipment manufacturer ResMed Corp. recently settled its whistleblower case with the Department of Justice (DOJ) for $37 million. The government alleged that ResMed violated the Anti-kickback Statute of the False Claims Act by paying monetary incentives to durable medical equipment (DME) suppliers, labs, and other providers of ResMed equipment. According to the DOJ, the company provided free patient outreach to equipment companies, which “enabled  …  [those] companies to order resupplies for their patients with sleep apnea.”

Additionally, ResMed allegedly provided “sleep labs with free and below-cost positive airway pressure masks and diagnostic machines,” as well as arranging and fully guaranteeing payments to third-party financial institutions on interest-free loans for DME suppliers to purchase ResMed equipment. The company also allegedly provided “non-sleep specialist physicians free home sleep testing devices referred to as ‘ApneaLink.’”

ResMed is a healthcare company eligible for federal reimbursement for medical devices and submits claims to Medicare for payment on equipment sales and services to labs, physicians, and other healthcare companies. The devices that ResMed sells assist patients with different types of sleep disorders. Federal healthcare programs such as Medicare intend to provide crucial medical treatment to those who need medical assistance. DME companies receiving funding, free services, or loans from ResMed to inflate the use of ResMed’s medical devices and services is a violation of the Anti-Kickback Statute.

Similarly to this case, there have been many instances in which whistleblowers exposed the fraud of companies taking advantage of the Medicare system. Civil Chief of the U.S. Attorney’s Office for the Southern District of California, Katherine Parker, acknowledged that “medical decisions should always be made without outside influence caused by cash payments, free goods, or other types of illegal remuneration, and we will continue to take action to prevent attempts to induce medical decisions through illegal kickbacks[.] … We applaud the whistleblower for coming forward and notifying the United States.” Many successful whistleblowers receive a sizeable portion of the proceedings from the case. In the ResMed case, the whistleblowers will receive $6.2 million of the settlement proceeds.

If you believe that you may have information about a company committing fraud against the government, the Qui Tam Attorneys at Tycko & Zavareei are readily available to assist in bringing forward a case. We have years of experience litigating under the False Claims Act by holding individuals and corporations accountable for fraud against the government. We have the resources to provide you with guidance on whistleblowing cases relating to fraud within government programs, securities and commodities, tax payments, the banking industry, and more. We have won our clients millions of dollars in compensation as a result of their efforts working with our lawyers and the government. If you would like to consult with one of our False Claims Act attorneys, please fill out our Confidential Case Evaluation Form or call (202) 973-0900 to speak with a lawyer.