Investigations Newsletter: Medical Device Manufacturer Settles Improper Payment Allegations for $18 Million

Arent Fox

Medical Device Manufacturer Settles Improper Payment Allegations for $18 Million

Merit Medical Systems Inc. (MMSI), a Utah-based medical device maker, will pay $18 million to settle allegations that it engaged in a kickback scheme and caused the submission of false claims to Medicare, Medicaid, and TRICARE. The government alleged that for a period of over six years, MMSI paid physicians, hospitals, and other health care providers kickbacks to use its products in medical procedures performed on patients receiving Medicare, Medicaid, or TRICARE. The millions of dollars of alleged kickbacks took the form of free advertising assistance, practice development, practice support, and purported unrestricted “educational” grants. The inducements were allegedly provided under the guise of an internal program known as the Local Advertising Program.

As part of the settlement, MMSI has entered a five-year Corporate Integrity Agreement that requires MMSI to hire a compliance expert and to undergo independent reviews of MMSI’s systems and transactions. In addition, the former Chief Compliance Officer who originally filed the lawsuit pursuant to the FCA’s whistleblower provisions will receive $2.65 million from the settlement.

The DOJ press release is here.

Four Women Indicted for $1 Million Child Care Subsidy Fraud Scheme

A federal grand jury in Illinois has indicted four women from Chicago for allegedly defrauding a government child care subsidy program. The women each owned and operated licensed day cares that allegedly submitted false claims for payment to the subsidy program for child care services that were not provided or overbilled for services that were actually provided. As a result of the allegedly false submissions, the government was allegedly defrauded of more than $1 million. The indictment includes several charges of mail and wire fraud and money laundering.

The USAO press release is here.

DOE Subcontractor Settles $5.7 Billion False Claims Act Lawsuit

Indian Eyes LLC settled a lawsuit brought by Savage Logistics LLC (Savage) involving claims that the equipment logistics subcontractor submitted false invoices on a Department of Energy (DOE) contract. Savage, a trucking company, also alleges that the prime contractor, CH2M Hill Plateau Remediation Co., failed to set aside a percentage of jobs for small and disadvantaged businesses as required by its contract with the DOE for cleanup of a Hanford, Washington nuclear site. The value of the contract is allegedly estimated at $5.7 billion as of 2018. Details of Indian Eyes’ settlement have not been made public, but the parties indicated in an October 12 court filing that a stipulation of dismissal is forthcoming.

The case is United States of America et al. v. CH2M Hill Plateau Remediation Co. et al., case number 4:14-cv-05002, in the United States District Court for the Eastern District of Washington.

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