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Recent FCA Settlement Shows That What’s Old Is New in Health Care Fraud Enforcement

Last week, the U.S. Attorney’s Office for the District of Massachusetts announced that it had entered into an agreement with a Massachusetts-based medical device manufacturer to settle allegations that the Company had violated the False Claims Act by purchasing lavish meals for physicians to induce them to use heart pumps manufactured by the Company.

The government's allegations are not particularly novel, but do serve as an important reminder to health care providers and suppliers that it is important to institute, and remain vigilant about, sound compliance practices across all areas of their business.  These allegations also make clear that the government continues to be focused on providers’ and suppliers’ sales and marketing practices.

Specifically, the government alleged that the Company tried to induce physicians to use its heart pumps (valued at more than $20,000 apiece) by buying them meals at high-end restaurants across the country, including Menton in Boston, Nobu in Los Angeles, Spago in Beverly Hills, and Eleven Madison Park in New York City.

The government also alleged that the Company engaged in the following related practices at these lavish meals – and that Company managers approved expenses for all of these meals:

  • Paying for physician’s meals in circumstances where guests ordered “alcohol in an amount inconsistent with legitimate scientific discussion;”
  • Paying for the meals of physicians’ spouses even though the spouses had no legitimate business purpose for attending the meal;
  • Paying for meals where the per-attendee cost exceeded the Company’s internal $150-per-person limit (in some cases paying as much as $450 for one individual); and
  • Paying for meals where employees misrepresented the number of attendees or listed fake names for people who did not attend, with the purpose of making the per-attendee cost go down.

The Company agreed to pay $3.1 million to resolve the allegations against it.

We have heard anecdotally from government attorneys at conferences and in other public venues that “what’s old is new” in health care fraud enforcement and that the government will continue to look closely at the sales and marketing practices to ensure that physicians and other providers are making treatment decisions based on the best interests of their patients.  Accordingly, even as the enforcement landscape changes and new potential risk areas are constantly coming to light, health care companies and providers should continue to engage in strong compliance practices to avoid putting themselves at unnecessary risk.

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Samantha advises clients on regulatory and enforcement matters. She has deep experience handling violations of the federal ant-kickback statute and FCA investigations for clinical laboratories and hospitals.