Biomet Settles Bone-Stim False Claims Charges for $6 Million

The federal bone growth stimulation investigations notched another settlement marker on October 29, 2014.

While not admitting any liability, Biomet Inc.’s EBI LLC agreed to pay $6.07 million to resolve allegations that EBI violated the False Claims Act (FCA) by paying kickbacks to induce use of its OsteoGen bone growth stimulators and billing federal healthcare programs for refurbished stimulators

Anti-Kickback Act

Between 2001 and 2008, the feds alleged that EBI paid staff at doctors’ offices to influence doctors to order its bone growth stimulators. According to a U.S. Department of Justice announcement, these payments were allegedly provided pursuant to personal service agreements with staff members. The government concluded that these payments violated the Anti-Kickback Act and resulted in false billings to various federal healthcare programs, including Medicare. The settlement also resolves EBI’s disclosure that it received federal reimbursements for bone growth stimulators that had been refurbished.

Whistleblower

The settlement resolves in part an allegation made by Yu Yue, a former EBI products manager, named in a lawsuit filed in federal court in New Jersey. The lawsuit was filed under the qui tam, or whistleblower, provisions of the FCA, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. Yue’s share has not yet been determined, according to the government.

Medical Product Outsourcing (MPO) reported on November 10 that Biomet is still dealing with another FCA case initiated in 2005 that charges the company with defrauding Medicare by getting patients to buy its products rather than renting them. That case, which targets several other device makers, resulted in a $42 million judgment against Orthofix International NV two years ago.

August Flentje, acting deputy assistant attorney general for the Justice Department’s Civil Division, said the Biomet settlement shows the department’s commitment to protecting patients. “Medical device companies must not use improper financial incentives to influence the decision to use their products, ” he said in a statement.

Carmen Ortiz, U.S. Attorney of the District of Massachusetts, said, “This settlement demonstrates our resolve in ensuring that patients receive, and the government pays for, health care that is based on sound medical judgment, not compromised by kickbacks.”

The Ft. Wayne Journal Gazette reported that a Biomet official didn’t return a request for comment.

The Justice Department says it has recovered more than $23 billion in False Claims Act cases since January 2009, including almost $15 billion in settlements related to alleged fraud against federal health care programs.