The Respironics division at Philips (NYSE:PHG) agreed to pay $34.8 million to settle U.S. Justice Dept. claims that it paid kickbacks in the form of free call center services to induce suppliers into buying its sleep apnea masks.
Today’s settlement resolves a whistleblower lawsuit filed by South Carolina pharmacist Dr. Gibran Ameer, who worked for medical equipment suppliers that bought the Respironics masks.
Federal prosecutors said Respironics violated the federal False Claims Act with its “Fit for Life” program from April 2012 to November 2015, provided to suppliers so long as their patients used its masks.
“Americans deserve to know that when they are prescribed a device to treat a serious health care problem, the supplier’s judgment has not been compromised by illegal payments from equipment manufacturers,” Benjamin Mizer, head of the Justice Department’s civil division, said in prepared remarks.
A spokesman for Amsterdam-based Philips said the accord offers “heightened clarity and transparency” for regulators and customers, claiming that Respironics “continues to have a good-faith belief that the Fit for Life program offered a permissible bundled discount of Respironics’ masks and resupply services under the appropriate discount safe harbors.”
Respironics has offices in Murrysville, Pa. Philips acquired the business in March 2008 for $5.1 billion.
The Justice Dept. said $34.14 million of the settlement will go to the federal government, and the remainder to various state governments. Ameer will receive $5.38 million from the federal government’s share, prosecutors said.
The FCA lets whistleblowers bring claims on behalf of the federal government and share in recoveries.