Byram Healthcare and Hollister, Inc. to Pay $20.9 Million to Resolve Kickback Allegations
Last month the Justice Department announced that Hollister, Inc., and Byram Healthcare Centers Inc., had agreed to pay $11.44 million and $9,372,882.50, respectively to resolve allegations that Hollister – a supplier of medical products – paid kickbacks to Byram – a manufacturer – and that Byram received kickbacks from Hollister and several other companies. Moreover, the government alleges that Hollister intended to induce Byram to conduct promotional campaigns in an effort to refer patients to the manufacturer’s products. The settlement with Byram also calls for the company to play $127,117.50 to the State of California to resolve allegations that Byram submitted falsely inflated claims to the state’s Medicaid (Medi-Cal) program in violation of California regulations.
“This settlement demonstrates the Justice Department’s continuing determination to prevent manufacturers and suppliers of medical devices covered by federal health care programs from paying or receiving kickbacks,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.
The settlement with Hollister resolved allegations that from 2007 through 2014 it paid kickbacks to Byram in return for marketing promotion and referrals of patients to Hollister’s healthcare products. Furthermore, on seven occasions from 2007 – 2012, Hollister allegedly agreed to pay Byram the cost of bonus commissions that Byram then paid to its sales personnel for each new patient order for a Hollister product. Hollister – for each year between 2009 and 2014 – is also alleged to have agreed to pay $200,000 for “catalog funding” that was intended to induce Byram’s recommendation of Hollister products to patients.
The settlement with Byram resolved claims that it also participated in the catalog funding claims and that it – from 2012 to 2013 – received numerous kickbacks from Hollister and three other manufacturers of healthcare products. In return the companies – Coloplast Corp, Montreal Ostomy and Safe N’ Simple – agreed to promote Byram’s products and to refer patients to Byram’s products. The settlement also resolved allegations that Byram submitted false claims to California Medi-Cal in violation of the program’s upper billing limit regulation, Cal. Code Regs., tit. 22, § 51008.1. The United States and California alleged that when Byram billed Medi-Cal for products it sold to Medi-Cal beneficiaries it knowingly failed to account for discounts it knew would reduce the prices it paid for the products. In conjunction with the False Claims Act settlement, Byram entered into a corporate integrity agreement with the HHS-OIG.
“Health care product manufacturers that financially reward suppliers in exchange for the referral of business can improperly direct patients to certain products over others,” said Special Agent in Charge Phillip M. Coyne of HHS-OIG. “We will continue to investigate such wasteful business arrangements.” The settlement also resolves allegations in a whistleblower lawsuit filed by former and current employees of Coloplast. The settlement falls under the Qui tam provisions of the False Claims Act which allows private parties to sue on behalf of the government and to share in any recovery. Claims against defendants in the lawsuit, Coloplast Corp. and Liberator Medical Supply Inc., were resolved in December 2015 for a total of $3.66 million. The announced settlements brought about the recovery in the case to $24.6 million. The whistleblowers are pursuing certain additional claims in the case. If you have knowledge of fraud that has been committed against governmental agencies you should report it and consult a Qui tam attorney. A Qui tam lawyer can explain your rights and protections under the law.