January 27, 2023

False Claims Act: Illegal Kickbacks

On Friday, January 20, the Department of Justice released a statement that medical device manufacturer DePuy Synthes, Inc., a subsidiary of conglomerate Johnson & Johnson, agreed to pay approximately $9.75 million to settle allegations that DePuy violated the Anti-Kickback Statute and False Claims Act by providing an orthopedic surgeon with $100,000 worth of free products in order to induce the surgeon to use the company’s products in his procedures. Federal prosecutors alleged that from July 2013 through February 2018, Depuy provided free items such as cages, rods, screws, plates, modular access and retraction systems to the surgeon and caused the submission of fraudulent claims to Medicare by paying these kickbacks. The prosecutors claimed that these kickbacks provided the surgeon an inducement to use DePuy products during procedures involving Medicare and Medicaid patients.

The Anti-Kickback Statute prohibits the exchange, or offer to exchange, anything of value in an effort to induce or reward the referral of business reimbursable by federal health care programs. This statute was enacted so that the judgments of medical providers would be focused on the best interests of their patients and would not be compromised. The statute thus prohibits medical device manufacturers from providing free items to induce doctors into using their devices.

This suit was filed under the qui tam also known as the whistleblower provision of the False Claims Act by a former sales representative of DePuy. The whistleblower is expected to receive approximately $1.37 million as a result of his efforts in reporting healthcare fraud. The healthcare industry remains the primary driver of civil fraud enforcement activity in the United States. Millions of patients depend on our healthcare system to make decisions that are in the patient’s best interests. Whistleblowers, like the sales representative here, continue to make it possible for the government to hold medical manufacturers and providers alike accountable for their misconduct.


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