ResMed Resolves False Claim Act Allegations

BIRMINGAHAM, Ala. (January 15, 2020)—The Department of Justice announced Wednesday, Jan. 15, 2020 that ResMed Corp. agreed to pay more than $37.5 million to resolve alleged False Claims Act violations. The company was accused of paying kickbacks to durable medical equipment (DME) suppliers, sleep labs and other health care suppliers.

The settlement resolves allegations that ResMed provided durable medical equipment (DME) companies free call center and other outreach services for patients with sleep apnea that helped the providers order resupplies; that the company gave sleep labs free and below-cost positive airway pressure masks and diagnostic machines and installaction; that the company arranged for and guaranteed payments of interest-free loans used to buy ResMed equipment; and provided free home sleep testing devices called “ApneaLink” to non-sleep specialist physicians.

“Paying any type of illegal remuneration to induce patient referrals undermines the integrity of our nation’s health care system,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “When a patient receives a prescription for a device to treat a health care condition, the patient deserves to know that the device was selected based on quality of care considerations and not on unlawful payments from equipment manufacturers.”

The Anti-Kickback Statute prohibits the knowing and willful payment of any remuneration to induce the referral of services or items that are paid for by a federal health care program, such as Medicare, Medicaid or TRICARE. Claims submitted to these programs in violation of the Anti-Kickback Statute give rise to liability under the False Claims Act.

In a statement issued Wednesday, January 15, ResMed denied that it had violated the law and said the terms of the settlement were first announced in July 2019.

“ResMed has not violated any laws; its business practices are conducted in full accordance with U.S. laws and regulations. That said, we are pleased to put this matter behind us and avoid the expense, inconvenience, and distraction it would cause to gain the favorable outcome we deserve,” ResMed Chief Administrative Officer and Global General Counsel David Pendarvis said in the statement.

ResMed’s fourth quarter earnings statement, issued in July, disclosed the history of the case for stockholders. “Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business,” it read. The statement concluded that ResMed tentatively agreed to a civil resolvement of the claims.

“This settlement does not impact our ability to sell products in the United States, nor does it impact the reimbursement of our products by federal health programs. We have always acted in good faith with patients and our valued customers, and we do not expect this to impact our relationship with either,” said Perdarvis.

ResMed has entered into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General. The CIA requires, among other things, that ResMed implement additional controls around its product pricing and sales and that ResMed conduct internal and external monitoring of its arrangements with referral sources.

The agreement resolves five lawsuits originally brought by whistleblowers under the qui tam, or whistleblower, provisions of the False Claims Act. The whistleblowers will collectively receive a roughly $6.2 million share of the settlement.

The lawsuits resolved by this settlement are captioned United States, et al., ex rel. Ameer v. ResMed, Inc., et al., Case No. 2:15-CV-04842-MBS (D.S.C.); United States, et al., ex rel. Baker v. ResMed, Inc., et al., Case No. 3:16-CV-00987-MBS (D.S.C.); United States, et al., ex rel. Ross v. ResMed, Inc., Case No. 16-CV-1988-W (JLB) (S.D. Cal.); United States ex rel. Meyer v. ResMed, Inc., et al., Case No. 17-CV-12-MWB (N.D. Iowa); and United States, et al., ex rel. Ottavio, et al. v. ResMed, Inc., Case No. CV 17-5734 (E.D.N.Y.).

The claims resolved by the settlement are allegations only, and there has been no determination of liability.