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Covidien to pay over $17 million for allegedly providing illegal remuneration

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Staff Writer | March 12, 2019
Covidien has agreed to pay $17,477,947 to resolve allegations that it violated the False Claims Act.
America   The United States alleged that Covidien violated the Anti-Kickback Statute
Covidien was providing free or discounted practice development and market development support to physicians located in California and Florida to induce purchases of Covidien’s vein ablation products, the Department of Justice announced.

The United States alleged that Covidien violated the Anti-Kickback Statute and, correspondingly, the False Claims Act by providing practice development and market development support to health care providers located in California and Florida from Jan. 1, 2011, through Sept. 30, 2014, to induce those providers to purchase ClosureFAST^TM radiofrequency ablation catheters that were billed to Medicare and to the California and Florida Medicaid programs.

ClosureFast catheters are used in procedures that treat venous reflux disease, a disease often marked by the presence of varicose veins.

The practice and market development support Covidien provided included customized marketing plans for specific vein practices; scheduling and conducting “lunch and learn” meetings and dinners with other physicians to drive referrals to specific vein practices; and providing substantial assistance to specific vein practices in connection with planning, promoting, and conducting vein screening events to cultivate new patients for those practices.

The Anti-Kickback Act prohibits the payment of remuneration to induce the referral or use of items or services paid for by federal health care programs.

Remuneration includes not only cash payments but also offers or payments made “in kind.”

Under the settlement agreement, Covidien will pay an additional $1,474,892 to California and $1,047,160 to Florida for claims settled by these state Medicaid programs.

The Medicaid program is a jointly funded federal and state program.

The settlement resolves allegations contained in lawsuits filed by Erin Hayes and Richard Ponder (former sales managers for Covidien) and Shawnea Howerton (a former employee of one of Covidien’s customers), which are pending in federal court in San Francisco, California.

The lawsuits were filed under the whistleblower provisions of the False Claims Act, which permit private individuals to sue on behalf of the United States for false claims and to share in any recovery.

Mr. Hayes and Mr. Ponder will receive $3,146,030 as their share of the federal recovery.

The settlement was the result of a coordinated effort by the Civil Division of the Department of Justice, the U.S.

Attorney’s Office for the Northern District of California, the Department of Health and Human Services Office of Inspector General, and the Federal Bureau of Investigation, as well as the California Attorney General’s Office and the Florida Attorney General’s Office.

Covidien cooperated in the government’s investigation, including by sharing the results of its extensive internal investigation and by assisting in the development of a sophisticated damages model, and received credit for its cooperation.