DePuy subsidiary settles kickback allegations for $9.75 million

by Ben Vernia | January 22nd, 2023

The Department of Justice announced on January 20 that a subsidiary of the orthopedic device company DePuy had agreed to pay nearly $10 million to settle a whistleblower’s charges that the company paid kickbacks to a Massachusetts surgeon. According to DOJ’s press release:

Medical device manufacturer DePuy Synthes, Inc. (DePuy), a subsidiary of Johnson & Johnson, has agreed to pay $9.75 million to resolve allegations it violated the False Claims Act by paying kickbacks to an orthopedic surgeon based in Massachusetts to induce his use of DePuy products.

The settlement announced today resolves allegations that DePuy violated the Anti-Kickback Statute (AKS) and caused the submission of false or fraudulent claims to Medicare by paying the orthopedic surgeon kickbacks in the form of free spinal implants and tools for use in surgeries that the surgeon performed overseas to induce that surgeon to use DePuy products in surgeries performed in the United States. As part of the settlement, DePuy has admitted that from at least July 2013 through February 2018, DePuy, acting through certain former sales representatives, gave the Massachusetts surgeon thousands of dollars’ worth of free DePuy implants and instruments, including cages, rods, screws, plates, and surgical instrumentation, that the surgeon used to perform surgeries overseas for patients who were not federal health care beneficiaries. Of the $9.75 million to be paid by DePuy, approximately $7.23 million will be returned to the federal government, and approximately $2.52 million will be returned to Massachusetts, which jointly funded claims for surgeries involving DePuy devices that were submitted to the Massachusetts Medicaid program.

The AKS prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare and other federally funded programs. The statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives and are instead based on the best interests of their patients.

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The government announced that the whistleblower, a former DePuy sales representative, will receive approximately $1.37 million of the federal portion of the settlement (a 19% relator’s share), and approximately $478,000 of Massachusett’s portion (a 12% relator’s share), for a combined $1.85 million.

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