Biotronik Inc., an Oregon-based medical device manufacturer, has agreed to pay $12.95 million to resolve allegations that it caused the submission of false claims to Medicare and Medicaid, the Department of Justice announced. Biotronik allegedly used a new employee training program to implement a kickback scheme to pay physicians for unnecessary or nonexistent training, rewarding their use of the manufacturer’s cardiac devices. The department said that Arizona, California, Illinois, Missouri, and Nevada paid for a portion of the Medicaid claims at issue. They will receive $933,400 from the settlement.
Dive Insight
The DOJ allegations fall into two groups. First, the department accused Biotronik of knowingly paying excessive amounts to physicians to induce and reward their use of its cardiac devices. The allegations center on a new employee training program.
One of the primary schemes alleged by the relators was that Biotronik paid $400 per procedure to implant physicians to “train” Biotronik employees in the operating room. But these employees who were trained would be “trained” up to 100 times; essentially, these Biotronik employees’ only job was to be in the room during a procedure so that an implanting physician would receive an extra $400 every time the physician implanted a Biotronik device. With implanting physicians performing as many as ten or more implants a day, Biotronik was assured that the physicians it was paying would remain loyal implanting physicians.
The second set of allegations focused on “lavish” meals, entertainment, and travel. According to reports, Biotronik frequently did not require sign-in sheets for meals, adequately verify the number or identity of attendees, or confirm the events were for legitimate business purposes. The oversight shortcomings allegedly enabled some Biotronik employees to falsify records, thereby exceeding the per-attendee spending limit.
Biotronik paid for winery tours, annual office holiday parties, and lavish meals with certain Subject Physicians and their guests at high-end restaurants. Certain Biotronik employees and Subject Physicians recalled that these meals and outings often included little or no legitimate business discussion. Biotronik also paid for one Subject Physician’s international business class airfare and honoraria in the thousands of dollars for a short, 30-minute talk at an international conference.
The United States filed its notice to intervene in the case in 2021 after a lengthy and detailed investigation into Biotronik and its practices that confirmed the whistleblowers’ allegations. A settlement has subsequently been negotiated to resolve the claims of the United States and several states in exchange for a $12.95 million payment by Biotronik. The California Department of Insurance will receive a separate payment of $855,000.
Bottom line
As a result of the announced settlement, the whistleblowers will receive a $2.6 million share of the federal and state portion of the recovery and half of the California Department of Insurance’s recovery. Biotronik will also be paying $500,000 in statutory attorney’s fees and costs and a total of $750,000 to resolve the relators’ individual employment claims.
