Medical Device Maker Biotronik Inc. Agrees to Pay $12.95 Million to Settle Allegations of Improper Payments to Physicians | Takeover bid


Biotronik Inc. (Biotronik), an Oregon-based medical device maker, has agreed to pay $12.95 million to resolve allegations that it violated the False Claims Act by causing false claims to be submitted to Medicare and Medicaid by paying bribes to physicians to induce their use of Biotronik’s implantable heart devices, such as pacemakers and defibrillators.

“Paying bribes to doctors to influence their selection of medical devices undermines the integrity of federal health care programs,” said Senior Assistant Deputy Attorney General Brian M. Boynton, Division Chief Civil Service from the Department of Justice. “When medical devices are used in surgical procedures, patients deserve to know that their device was selected based on quality of care considerations and not improper payments from manufacturers.”

“Bribing doctors is illegal because it imposes hidden costs on the health care system and taints the doctor-patient relationship,” said Acting U.S. Attorney Stephanie S. Christensen for the Central District of California. “The resolution of this case concludes a long investigation that demonstrates our commitment to take strong action when patient care takes a back seat to generating profits.”

“The valuable taxpayer dollars that fund Medicare and Medicaid are intended to support the delivery of the most appropriate health services to beneficiaries. Paying bribes to medical providers to induce them to use certain devices can improperly divert these dollars and harming quality to patients,” said Special Agent in Charge Timothy DeFrancesca of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “HHS-OIG remains committed to working with fellow law enforcement to protect the integrity of federal health care programs and the services they cover.”

Federal anti-bribery law prohibits offering or paying anything of value to induce referrals for items or services covered by Medicare and other federally funded programs. The law aims to ensure that the judgments of medical providers are not compromised by inappropriate financial incentives.

The settlement announced today resolves allegations that Biotronik engaged in a kickback program to pay certain privileged physicians to induce and reward their use of Biotronik pacemakers, defibrillators and other cardiac devices. In particular, Biotronik allegedly abused a new employee training program by paying physicians for an excessive number of trainings and, in some cases, for training events that never took place or had little or no no value for trainees. Biotronik is said to have made the payments despite concerns raised by its own compliance department, which warned that vendors had too much influence in selecting doctors to arrange training for new employees and that training payments were being overused. The settlement also resolves allegations that Biotronik violated anti-bribery law when it paid for doctors’ holiday parties, winery tours, lavish meals without a legitimate business purpose, and airline tickets. international business class and fees in exchange for brief appearances at international conferences.

Medicaid is jointly funded by the states and the federal government. The states of Arizona, California, Illinois, Missouri and Nevada paid a portion of the Medicaid claims at issue and will receive a total of approximately $933,400 from the settlement with Biotronik.

The civil settlement includes the resolution of claims brought under the who tam or the whistleblower provisions of the False Claims Act by Jeffrey Bell and Andrew Schmid, both of whom were previously employed as independent sales representatives for Biotronik. Under these provisions, a private party can sue on behalf of the United States and receive a portion of any recovery. Mr. Bell and Mr. Schmid will receive approximately $2.1 million as their share of the recovery in this case. The who tam the case is subtitled United States ex rel. Bell, et al. vs. Biotronik, Inc. et 2:18-cv-1895 (CD Cal.).

The resolution achieved in this case is the result of a coordinated effort between the Civil Division of the Department of Justice, the Commercial Litigation Branch, the Fraud Section, and the U.S. Attorney’s Office for the Central District of California. HHS-OIG participated in the investigation.

The case was handled by Fraud Section trial prosecutors Breanna Peterson and Jonathan Hoerner and Assistant U.S. Attorney Karen Paik for the Central District of California.

The investigation and resolution of this case illustrates the government’s focus on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources regarding potential fraud, waste, abuse, and mismanagement may be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The claims resolved by the settlement are allegations only and no liability has been determined.


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