December 13, 2022

Medical Product Manufacturer Self-Reported False Claims Violations and Settled Allegations for $14.5 Million

Medical Product Manufacturer, Coloplast, recently agreed to pay $14.5 million to settle allegations that it violated the False Claims Act in its dealings with the Department of Veteran’s Affairs. The settlement came after the company self-reported that it violated the Trade Agreements Act and the Price Reduction Clause in its contract with the VA.

The Trade Agreements Act, which restricts ordering activities by the Department of Veteran’s Affairs to products manufactured in the United States or certain designated countries, by reporting inaccurate countries of origin for its products resulting in products on its VA contract being manufactured in non-designated countries.

Coloplast further self-disclosed that it failed to apply certain discounts pursuant to a Price Reduction Clause in its contract with the VA which led to the United States being overbilled for medical and pharmaceutical products in violation of the False Claims Act.

The Office of Inspector General (OIG) created the Provider Self-Disclosure Protocol in 1998 to give healthcare providers a method to voluntarily disclose self-discovered evidence of potential fraud. The incentive for providers to self-report is to avoid the costs and disruptions associated with a Government-directed investigation and civil or administrative litigation.

The December 12, 2022 settlement is not the first False Claims Act settlement in which Coloplast has been involved. In December of 2015, Coloplast and a medical products supplier, Liberator Medical Supply, Inc., reached a $3.5 million settlement with the United States Attorney’s Office for the District of Massachusetts to resolve allegations that Coloplast paid illegal kickbacks to Liberator and other medical products suppliers to induce them to promote Coloplast products to their customers.

The 2015 settlement was the result of a whistleblower lawsuit filed by employees of Coloplast who will receive a whistleblower reward for reporting this information.

 

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