A recent U.S. Department of Justice (DOJ) settlement with a medical device manufacturer highlights the need for physicians to pay close attention to their dealings with medical device companies.

The settlement, announced in December, calls for the payment of $23.5 million to resolve allegations that a medical device manufacturer was manipulating post-market studies to improve the results and to encourage doctors to increase usage of the company’s products. [www.justice.gov/opa/pr/2011/December/11-civ-1623.html; wwwp.medtronic.com/Newsroom/NewsReleaseDetails.do] Specifically, the company was allegedly paying per-patient kickbacks of $1,000 to $2,000 to doctors in order to encourage the use of company medical devices in lieu of competitors’ devices. Because the fees were payable only when the company’s devices were used, the DOJ was concerned that the ultimate goal was to discourage the use of other devices. 

Because the law imposes criminal liability upon both sides of a situation involving illegal kickbacks [See Section 1128B of the Social Security Act, 42 U.S.C. § 1320a-7b; www.ssa.gov/OP_Home/ssact/title11/1128B.htm] the consequences are enormous, and can include:

  • A felony conviction;
  • Criminal fines and civil penalties;
  • Prison; and
  • Exclusion from federal health care programs. 

Although there are regulatory “safe harbors” that specify certain acceptable situations, it is nevertheless imperative that medical professionals monitor their practice to ensure that all physicians avoid situations where the use of medical devices is essentially conducted on a “pay-to-play” basis.

Finally, keep in mind that the DOJ investigation was triggered by company whistleblowers, which serves as an ever-present reminder that internal compliance programs are an essential tool in the fight against fraud.