Merit Medical Systems to Pay $18M to Settle Kickback Allegations

Utah-based MSSI for more than six years allegedly paid millions of dollars in kickbacks to healthcare providers in the form of free advertising, practice development, practice support, and purported unrestricted "educational" grants.

Medical device maker Merit Medical Systems Inc. will pay $18 million to settle whistleblower allegations that it paid kickbacks to hospitals and physicians to use their products, the Department of Justice said.

According to federal prosecutors in New Jersey, South Jordan, Utah-based MSSI used a scheme known as the Local Advertising Program that for more than six years paid millions of dollars in kickbacks to healthcare providers in the form of free advertising, practice development, practice support, and purported unrestricted "educational" grants to induce them to purchase MMSI products, which the providers used on procedures for Medicare, Medicaid and TRICARE beneficiaries.

"Paying kickbacks to doctors in exchange for referrals undermines the integrity of federal healthcare programs," said Acting Assistant Attorney General Jeffrey Bossert Clark of DOJ's Civil Division.

"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 because of improper payments from manufacturers," Clark said.

MMSI issued a statement saying it agreed to the settlement "in order to avoid distraction from its core mission, and the cost of litigating the matter to success."

"The settlement agreement does not constitute a finding of wrongdoing by Merit or its management, and it expressly recognizes that Merit denies the allegations," the company said in a media release.

The products included MMSI's EmboSphere devices, used for uterine fibroid embolization procedures, and its QuadraSphere devices, used for other types of embolization procedures.

MSSI claimed that its financial assistance was designed to "increase the awareness" of medical treatments, but DOJ alleged that the device maker provided the aid only to some healthcare providers to reward past sales, induce future sales, and steer business to MMSI and away from MMSI's competitors.

DOJ also alleged that MMSI ignored numerous warnings that its conduct violated the Anti-Kickback Statute, including warnings from MMSI's own chief compliance officer.

Under the settlement, MMSI will pay $15.21 million to the federal government, and $2.79 million to states that funded Medicaid claims involving MMSI devices.

The whistleblower, Charles J. Wolf MD, the former chief compliance officer of MMSI, will receive $2.65 million from the federal share of the settlement.   

Along with the civil settlement, MMSI entered into a five-year Corporate Integrity Agreement with the Department of Health and Human Services-Office of Inspector General.