Philips Pays $1.2M to Resolve False Claim Act Violation Allegations

PITTSBURGH & CEDAR RAPIDS, Iowa (September 23, 2022)—Philips RS North America LLC, formerly known as Respironics, Inc., a nationwide manufacturer of sleep and respiratory durable medical equipment (DME), has agreed to pay more than $1.2 million to settle allegations that it unlawfully induced referrals for its equipment in violation of the False Claims Act and Anti-Kickback Statute.

The government specifically alleged that, between December 2015 and December 2016, Respironics helped a DME supplier procure a twelve-month, interest-free loan that was fully guaranteed by Respironics. Under the arrangement, Respironics bore the full financial risk of non-collection on the loan in the event the DME supplier defaulted on the loan. The United States contended this arrangement violated the Anti-Kickback Statute and, in turn, the False Claims Act.

“Illegal kickbacks in our federal health care system create an unfair marketplace and the potential for medical decisions to be made based on financial incentive rather than what’s best for the patient,” said U.S. Attorney Timothy Duax. “Our office is committed to the full and fair enforcement of the Anti-Kickback Statute and False Claims Act.”

This payment comes on the heels of a $24 million payment to resolve claims that Rspironice caused DME suppliers to submit claims for ventilators, oxygen concentrators, CPAP and BiPAP machines, and other respiratory-related medical equipment that were false because Respironics provided illegal inducements to the DME suppliers. In that case, Respironics allegedly gave the DME suppliers physician prescribing data free of charge that could assist their marketing efforts to physicians. 

In addition to the civil settlement, Respironics entered into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General. The CIA requires Respironics to implement and maintain a robust compliance program that includes, among other things, review of arrangements with referral sources and monitoring of Respironics’ sales force. The CIA also requires Respironics to retain an independent monitor, selected by the OIG, to assess the effectiveness of Respironics’ compliance systems.

This civil matter arose from an action brought under the whistleblower provisions of the False Claims Act. Pursuant to that Act and the settlement agreement, the whistleblower will share in the United States’ financial recovery.

The claims asserted against Respironics are allegations only; there was no determination or admission of liability.

The case was handled by Assistant United States Attorneys Jacob A. Schunk and Matthew K. Gillespie.