The Whistleblower Lawyer

Medical Device Fraud and Whistleblowers

Medical Devices

Medical device companies invent and produce items that are crucial to those who need them, such as surgical implants of various types, defibrillators, and pacemakers. The U.S. market for such devices is the largest in the world. It’s a $148 billion industry made up of thousands of small companies—over 80 percent of them have fewer than 50 employees. Yet, for all the good they do, these companies can get caught up in the same types of fraud as others in the medical fields.

What Constitutes Medical Device Fraud?

Medical device fraud includes such actions as:

  • Kickbacks to healthcare facilities or to doctors
  • Off-label marketing (selling the device for purposes not approved by the FDA)
  • Not reporting adverse (negative) patient events
  • Deliberately marketing a defective product
  • Violating accepted manufacturing processes
  • Billing the government for more money than is allowed under the law.

Where there is fraud involving government funds, whistleblowers can play a part in bringing them to justice. A number of False Claims Act cases have been brought successfully against medical device companies. Here, we are spotlighting a March, 2016, case that is an enormous and historic settlement against one company.

Olympus Corporation’s $646 Million Settlement

Olympus Corporation of the Americas (OCA), the largest distributor of endoscopes and related medical devices in the United States, will pay two different fines totaling $646 million to resolve charges against them: $623 million for a kickback scheme related to doctors and hospitals, and $23 million for activities in Latin America involving the Foreign Corrupt Practices Act (FCPA). This FCA settlement is noteworthy both because the amount is the largest one that a medical device company has ever been charged with paying, and because the total amount is the biggest ever paid in U.S history because of Anti-Kickback Statute (AKS) violations.

Some criminal complaints were brought against OCA, which the company agreed were true. These complaints involved obtaining new business and providing remuneration for sales by giving kickbacks to doctors and hospitals. Such kickbacks were comprised of foreign travel, payments for consulting, extravagant meals, grants totaling millions of dollars, and free endoscopes.

OCA entered into a deferred prosecution agreement that enables it to avoid conviction if it fulfills certain reform and compliance obligations. Some of the requirements are:

  • Boosting its compliance training and establishing an effective compliance program
  • Providing a confidential website and phone hotline to help employees report wrongdoing
  • Annual certification by the CEO and Board of Directors that the compliance and reporting program is working
  • Implementation of a program that requires executives who commit wrongdoing or who do not promote compliance to lose performance pay for up to three years.

The person who blew the whistle, John Slowik, worked as OCA’s first-ever chief compliance officer starting in 2009. Once on board, he found out that OCA’s success was based on kickbacks. OCA fired him in 2010. Mr. Slowik is supposed to receive approximately $44 million from the federal portion and $7 million from the state portion of the recovery resulting from the civil settlement.

This win was an enormous one for whistleblowers and a victory for all of us who want to see strict compliance with regulations and medical device companies being held accountable for their actions.

Working with whistleblowers tirelessly to shed light on fraudulent practices.

If you think you have the facts needed to bring a whistleblower case, the experienced whistleblower attorneys at the Louthian Law Firm can review your case and help you file the appropriate disclosure statement. Under some circumstances, the government will intervene, or join in your lawsuit.

Your chances of succeeding are greater if your whistleblower claim is substantive, clear, and to the point. Because of this, meeting with a qualified whistleblower attorney can increase your chances of winning. The Louthian Law Firm can help you form your claim so that the government will be more inclined to intervene in your case; government intervention can sometimes increase the chances of recovering reward money. Even if the government decides not to intervene, it could still be a good idea to pursue your case without government involvement. Our strong support system can assist you through every step of the process.

For a free, confidential evaluation of your case, call the Louthian Law Firm today at 1-803-454-1200 or, if you prefer, you can fill out our online contact form.


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