US device groups pay $6m to clear whistleblowers' allegations

Two US medical device companies, EBI and Biomet have agreed to pay the United States $6.07 million to "resolve" whistleblower allegations that they used kickbacks to induce doctors to purchase the companies' bone growth stimulators.

The settlement this week stems from a whistleblower complaint filed by a former employee of Biomet, Yue Yu, pursuant to the qui tam provisions of the False Claims Act.

Ross Feller Casey, LLP, a Philadelphia-based personal injury law firm with a national reputation, represented Yu in the matter. Following Yu's filing, the government intervened in the case and Brian J. McCormick, Jr. of Ross Feller Casey worked with government lawyers to litigate and ultimately settle the case.

"Decisions about medical devices should be based on the best interests of the patient, not on whether the manufacturer pays a kickback," said McCormick, who has a large and successful whistleblower practice. "These sorts of improper financial incentives undermine the integrity of medical decisions, waste taxpayer funds and are unfair to competitors who play by the rules."

Yu alleged that the defendants, which also operate under the name Biomet Spine & Bone Healing Technologies, caused false claims to be submitted to Medicare and Medicaid by using illegal kickbacks, including remuneration to staff in doctors' offices under personal service agreements to induce orders of OsteoGen bone growth stimulators. The U.S. concluded that these payments violated the Anti-Kickback Act. The settlement also resolved allegations that EBI was reimbursed for stimulators that had been refurbished.

The settlement was the result of a coordinated effort among the Department of Justice's Civil Division, the U.S. Attorney's Office for the District of Massachusetts, and the U.S. Attorney's Office for the District of New Jersey. Under the settlement, Yu will receive an award from the federal government, as well as from four states that also settled with Biomet.