In two separate cases settled this week, Philips will pay the U.S. Department of Justice a total of about $29 million, resolving allegations of wrongdoing in its medical device sales.
The larger of the two settlements was announced by the DOJ on Thursday. It’ll see Philips RS North America, a subsidiary of the Dutch devicemaker that was formerly known as Respironics, pay the Justice Department more than $24 million.
In that case, the Pittsburgh-based durable medical equipment manufacturer was accused of paying kickbacks to suppliers of its products. According to the DOJ, Respironics sent illegal payments to its suppliers in return for their filing claims with government reimbursement programs—including Medicare, Medicaid and the military-focused Tricare—for ventilators, oxygen concentrators, CPAP and BiPAP machines and other respiratory devices.
The equipment maker also allegedly gave its suppliers free access to physician prescribing data that could help them tailor their marketing efforts to specific physicians.
In its settlement deal, Respironics agreed to pay $22.62 million to the federal government, plus another $2.13 million to certain states whose Medicaid programs were affected by the alleged kickback scheme. About $4.3 million of the government’s share will go to the former Respironics employee who filed a whistleblower complaint with the DOJ.
The Philips subsidiary also struck a five-year agreement with the U.S. Department of Health and Human Services. Under those terms, it’ll be required to conduct regular reviews of its sales force and its arrangements with referral sources—and that compliance program will in turn be overseen by an independent monitor selected by the HHS’ office of the inspector general.
In an emailed statement sent by Philips to Fierce Medtech, David Ferguson, business leader for its Respironics division said, “Settling this claim allows us to put this matter behind us and maintain our focus on our customers and the patients they serve. We maintain a comprehensive compliance program, and we will work with the relevant authorities to satisfy the terms of the settlement. This agreement should have no impact on our customers or the patients they serve.”
The other settlement was announced earlier this week. It concerns Philips’ Massachusetts-based North American entity, which has agreed to pay $4.2 million to the DOJ.
According to the agency, between 2012 and 2018, Philips sold mobile patient monitoring devices to the U.S. military that hadn’t been tested or certified for use in aircraft environments. That testing is required for all medical devices sold to the military to ensure that they won’t interfere with aircraft operation, or vice versa.
In the settlement agreement, Philips admitted that while the MP2 monitoring devices were originally certified for their airworthiness at the start of their military contracts, the company proceeded to make modifications to the devices that weren’t disclosed to its military partners—preventing them from determining whether the MP2 systems needed to be retested.