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Johnson & Johnson Subsidiary Pays $9.75M to Settle Qui Tam Whistleblower Lawsuit over Alleged Kickbacks

iStock-1316693815-300x200A medical device sales representative who filed the False Claims Act lawsuit received a $1.37 million whistleblower award.

Johnson & Johnson (NYSE: JNJ) orthopedics and neurosurgery medical device unit DePuy Synthes has agreed to pay $9.75 million to resolve allegations it violated the False Claims Act by providing illegal kickbacks to an orthopedic surgeon as an incentive for using its products.

According to the U.S. Department of Justice, the company gave more than $100,000 worth of spinal surgery devices and tools to the Massachusetts doctor, which he  used in surgeries on private patients overseas between July 2013 and February 2018.

The illegal kickbacks, which allegedly violated the Anti-Kickback Statute or AKS, were exposed by a former DePuy sales representative whose territory included the hospital where the doctor worked. He filed a False Claims Act whistleblower lawsuit and received a $1.37 million award as part of the settlement.

Bags stocked with surgical supplies

Acquired by Johnson & Johnson in 2012, Raynham, Massachusetts-based DePuy is a leading maker of orthopedic surgical devices, such as artificial hips, shoulders, and materials for foot, ankle and knee reconstruction. The company is also the world’s second-largest spinal device maker by market share, with $2.9 billion in revenue for that category in 2021.

The whistleblower alleged that DePuy gave the doctor thousands of dollars of free surgical tools, implants, and supplies, including cages, rods, screws and plates, which he took with him to foreign countries and used in surgeries on private patients. The doctor would travel once a quarter, and DePuy would allegedly “stock and furnish” bags for him “filled” with surgical tools, supplies, and implants.

All told, the doctor allegedly performed more than 20 surgeries with products DePuy supplied for free in various Middle Eastern countries, including Bahrain, Kingdom of Saudi Arabia, Kuwait, Lebanon, the United Arab Emirates, and Qatar, according to the settlement. DePuy furnished the supplies to reward the doctor for using its implants and instruments in surgeries performed in the United States which were paid for by Medicare and Medicaid, the Justice Department alleged.

Prohibited kickbacks and the False Claims Act

Patients rely on medical professionals to make decisions without their judgment being compromised by improper economic incentives which can result in lower quality or medically unnecessary care.

The AKS prohibits the payment or receipt of remuneration—which is construed to include anything of value, regardless of form—to induce or reward patient referrals or to generate medical business paid for by federal health care programs including Medicare or Medicaid. Examples of kickbacks prohibited by the AKS include cash, gifts, vacations, meals, rebates, free products, or “sham” consulting fees, as well as certain sales, credit, or leasing arrangements. Violations can result in civil and criminal penalties, including fines and prison time.

Claims for payment submitted to federal healthcare programs that result from violations of the AKS are legally false under the False Claims Act, which imposes substantial liabilities on parties who knowingly submit or cause to be submitted false claims for payment to the federal government or its agencies. The False Claims Act’s qui tam provisions authorize whistleblowers (also known as “qui tam relators”) to sue violators on the government’s behalf and receive a portion of the recovery. Qui tam relators are generally paid whistleblower awards of 15-30% of the lawsuit’s proceeds.

Speak with a whistleblower attorney

Whistleblowers perform an important function in holding wrongdoers accountable. If you would like to blow the whistle on AKS violations or other activities defrauding the federal government or its agencies, it is important to speak with an experienced whistleblower attorney. Reach out to health care fraud whistleblower attorney Mark A. Strauss to arrange for a free and confidential consultation. All communications are protected by the attorney-client privilege.

Note that you cannot receive a qui tam whistleblower award unless you file a False Claims Act lawsuit; merely reporting misconduct to a government tip-line is not sufficient.