Sleep apnea device maker pays nearly $35 million to settle whistleblower’s case

by Ben Vernia | June 16th, 2016

[We’re catching up on some older settlements here at]

On March 23, the Department of Justice announced that Pennsylvania-based Respironics, Inc., has agreed to pay nearly $35 million to settle civil charges, initially brought by a whistleblower under the False Claims Act, that the company provided kickbacks to its suppliers. According to DOJ’s press release:

Respironics Inc., based in Murrysville, Pennsylvania, has agreed to pay $34.8 million to resolve alleged False Claims Act violations for paying kickbacks in the form of free call center services to durable medical equipment (DME) suppliers that bought its masks for patients with sleep apnea, the Department of Justice announced today.

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The Anti-Kickback Statute prohibits the knowing and willful payment of any remuneration to induce the referral of services or items that are paid for by a federal healthcare program, such as Medicare, Medicaid or TRICARE.  Claims submitted to these programs in violation of the Anti-Kickback Statute are also false claims under the False Claims Act.

The United States alleged that Respironics violated the Anti-Kickback Statute and the False Claims Act by providing free services to DME suppliers to induce them to purchase Respironics masks that treat sleep apnea.  Respironics allegedly provided DME companies with call center services to meet their patients’ resupply needs at no charge as long as the patients were using masks that Respironics manufactured; otherwise, the DME companies would have to pay a monthly fee based on the number of patients who used masks manufactured by a competitor of Respironics.  The government alleged that the conduct began in April 2012 and continued until November 2015.

“This office has made a substantial commitment to combating fraud,” said U.S. Attorney Bill Nettles of the District of South Carolina. “Our commitment has made this district one of the leaders on behalf of whistleblowers.  We hope that those who commit fraud will recognize that it is our goal to make the consequences more than just the cost of doing business.”

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

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The Government announced that the whistleblower will receive $5.38 million of the federal portion of the settlement (a 15.7% relator’s share).

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