Olympus Corp. of the Americas (OCA), which is the largest distributor of endoscopes in the country, has agreed to pay over $632 million to settle criminal and civil complaints stemming from the practice of disbursing kickbacks to hospitals and doctors. The scheme was designed to bribe medical providers to use the company’s endoscopes according to a press release from the Justice Department’s Criminal Division.

The civil part of the case stems from a lawsuit filed by the former compliance officer at OCA, John Slowik, pursuant to the False Claims Act at the federal level and in multiple states. Under the Federal False Claims Act, whistleblowers are authorized to initiate a lawsuit on behalf of the federal government and share in the financial recovery. The Department of Justice elected to intervene in the case and alleged that OCA engaged in a scheme violating the Anti-Kickback Statute, which forbids payment to doctors and hospitals that induce purchases paid for by federal health care programs like Medicare. The settlement includes an admission by OCA that it engaged in practices in violation of the statute, such as providing kickbacks that motivated the submission of false claims to Medicare and Medicaid. The medical supply distributor will pay $267.3 million to the federal government and $43.5 million to various states to resolve the civil portion of the legal action. The whistleblower will receive over $51 million for his role in disclosing the wrongdoing and bringing the legal action.

The settlement of the criminal portion of the suit will result in OCA agreeing to pay an additional $312.4 million in criminal penalties. The combined civil and criminal penalties amount the largest payout under the Anti-Kickback Statute and the most substantial amount paid by a medical device company in history. The subsidiary of OCA also has agreed to pay $22.8 million to settle criminal allegations under the Foreign Corrupt Practices Act (FCPA) in Latin America.

The criminal complaint alleged a number of specific practices that comprised the kickback/bribery scheme, which include the following:

  • Stalled a $50,000 research grant pending another medical facility’s decision to purchase OCA equipment
  • Physician in a key position at New York’s medical center being granted access to $400,000 OCA equipment for his private practice in exchange for influencing purchase of OCA equipment
  • Provision of a $5,000 grant to a hospital as an incentive to facilitate purchase of $750,000 in medical devices
  • Providing three physicians with a trip to Japan to reward the doctors for changing to OCA equipment

The Anti-Kickback Statute is designed to prevent improper relationships between medical device companies and health care providers that involve financial enticement to discount the patient’s medical needs and ignore lower cost alternatives. When such financial bribes encourage the use of overpriced medical equipment, the price of health care rises for all consumers. The recovery represents a substantial recoupment of public funds and a warning to medical equipment companies against such unethical and unlawful practices.

In addition to record financial penalties, OCA has agreed to the following conditions:

  • Implementation of a program requiring executives to forfeit up to three years of performance pay if they engage in similar misconduct.
  • Mandatory improvement of its compliance program and training
  • Board of Directors and CEO annually certifying the compliance program is functioning properly
  • Establishment of a confidential hotline for employees and patrons to report misconduct.

If you have become aware of fraud or other misconduct by your employer, our Mississippi Qui Tam Lawyer represents whistleblowers who disclose illegal and unethical conduct that depletes public funds. At Barrett Law, we are here to help. Contact our firm today at 800-707-9577 to schedule your free consultation, so we can answer any questions you may have regarding filing your claim.