This was the highest dollar amount in U.S. history paid for this sort of wrongdoing by a medical device company.
This article was originally published by HCPro's Patient Safety Monitor March 2, 2018.
The Department of Justice (DOJ) charged Olympus Corp. this month with paying millions of dollars in kickbacks to hospitals and doctors to buy its products.
The company, which owns 85% of the U.S. endoscope market, has agreed to pay $646 million to resolve the criminal charges and civil charges brought against it. The sum is the largest total amount paid in U.S. history for violations involving the Anti-Kickback Statute by a medical device company.
“Olympus Corp. of the Americas’ and its subsidiaries’ greed-fueled kickback scheme threatened the impartiality of medical decision-making and the financial integrity of Medicare and Medicaid,” said Special Agent in Charge Scott J. Lampert of the U.S. Department of Health and Human Services in a statement.
The DOJ says that by using kickbacks, Olympus’ U.S. division (OCA) made over $600 million in sales and $230 million in profits. The company admits to the charges, which include the folling:
- Holding up a $50,000 research grant until a hospital signed a deal to purchase Olympus equipment
- Giving a doctor with a major role in a New York medical center’s buying decisions free use of $400,000 in equipment for his private practice.
- Paying off doctors with hot air balloon rides, winery tours, spa treatments, lavish meals and rounds of golf at an Olympus sponsored forum.
- Paying for a trip for three doctors to travel to Japan in 2007 as a quid pro quo for their hospital’s decision to switch from a competitor to Olympus.
- Giving a hospital a $5,000 grant to facilitate a $750,000 sale.
- Giving a week-long, paid vacation in Japan to the physician president of a professional organization and his spouse for three years in a row. The president was also paid a $10,000 honorarium to give a single lecture during each trip.
“The Department of Justice has longstanding concerns about improper financial relationships between medical device manufacturers and the health care providers who prescribe or use their products,” said Principal Deputy Assistant Attorney General Mizer. “Such relationships can improperly influence a provider’s judgment about a patient’s health care needs, result in the use of inferior or overpriced equipment, and drive up health care costs for everybody.”
The OCA division’s settlement is split between $312.4 million for criminal penalties and an additional $310.8 million to settle civil claims under the federal and various state False Claims Acts. Mizer said in addition to yielding a substantial recovery for taxpayers, the settlement will send a clear message that these types of abusive arrangements will not be tolerated.
Charges for Olympus’ Latin American Division
In addition, The DOJ is charging Olympus’ Latin American (OLA) division $22.8 million over a separate criminal charges involving the Foreign Corrupt Practices Act (FCPA).
Between 2006 and 2011, OLA spent nearly $3 million in cash, money transfers, personal grants, personal travel and free or heavily discounted equipment to get providers at government-owned facilities to buy Olympus products. OLA admits it delivered this illicit kickbacks benefits to pre-selected practitioners at “training centers,” nominally set up to educate and train doctors. In total, OLA actions earned them $7.5 million in profits.
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