U.S. Department of Justice Archives - Medical Design Sourcing

Cardinal Health to pay $13M to settle claims it paid kickbacks to doctors

The U.S. Justice Dept. (DOJ) announced that Cardinal Health (NYSE:CAH) agreed to pay more than $13 million to resolve kickback allegations.

Allegations against Dublin, Ohio-based include a violation of the False Claims Act by paying “upfront discounts” to its physician practice customers in violation of the Anti-Kickback Statute.

The Anti-Kickback Statute prevents pharmaceutical distributors from offering or paying any compensation to induce physicians to purchase drugs for use on Medicare patients, according to a DOJ news release. According to the acknowledged facts in the settlement agreement, Cardinal Health failed to meet requirements as the upfront discounts it provided to customers were not attributable to identifiable sales or were purported rebates that had not been earned by Cardinal Health customers.

“Cardinal Health recruited new customers by offering and paying cash bonuses in violation of the Anti-Kickback Statute and False Claim…

Medicrea to pay $2M in alleged Medicare kickback scheme

French medical device manufacturer Medicrea International and its American affiliate Medicrea USA have agreed to pay $2 million to settle alleged kickbacks to physicians and other Medicare Open Payments program violations.

The company agreed to pay $1 million to the U.S. and participating states to resolve civil whistleblower allegations that the company violated the Anti-Kickback Statute and the False Claims Act and similar state statutes, according to a U.S. Dept. of Justice news release. Medicrea will pay an additional $1 million to the U.S. to resolve allegations that the companies violated the Physician Open Payments Program by “failing to fully report those physician-entertainment expenses to the Centers for Medicare and Medicaid,” the DOJ said.

The Anti-Kickback Statute prohibits medical device companies from directly or indirectly paying anything of value to induce the referral of items or services covered by federal healthcare programs. Med…

Hackers targeted medtech and other IP for Chinese government, indictment claims

A federal grand jury in Spokane, Wash. has indicted two Chinese nationals on charges that they hacked into medtech companies and hundreds of other businesses, governments and organizations — in some cases on behalf of the Chinese Ministry of State Security.

The 11-count indictment, which the U.S. Department of Justice announced today, alleges that Li Xiaoyu and Dong Jiazhi for the past 10 years targeted companies in countries with high technology industries, including the United States. They stole terabytes of data.

“China has now taken its place, alongside Russia, Iran and North Korea, in that shameful club of nations that provide a safe haven for cybercriminals in exchange for those criminals being ‘on-call’ to work for the benefit of the state, here to feed the Chinese Communist party’s insatiable hunger for American and other non-Chinese companies’ hard-earned intellectual property, including COVID-19 research,” Assistant Attorney General for National Secur…

Former Merit Medical executive claims physician kickbacks in whistleblower lawsuit

The U.S. has joined in a whistleblower lawsuit filed by the former chief compliance officer of Merit Medical (NSDQ:MMSI), who claims the company ran a fraud scheme involving physician kickbacks.

Dr. Charles Wolf alleges the Salt Lake City-based medical device company engaged in unlawful kickbacks to induce physicians to use more of its Embosphere and QuadraSphere microspheres for embolization and occlusion — as well as off-label uses. The practice ran up expenditures for Medicare, Medicaid and other public healthcare payers.

Merit, according to Wolf, provided paid advertising for loyal users and paid consulting fees in order to influence physicians to use its devices. The company disguised the money as educational in nature, and payments were meant to affect and induce hospitals and physicians to purchase additional equipment, supplies and/or products from Merit, according to Wolf’s complaint, handled by attorneys at Joseph, Greenwald & Laake.

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Chinese company faces federal charges in ‘fake’ N95 respirator case

N95 respirator [Image from the FDA]

A Chinese manufacturer has been charged with producing and exporting to the United States nearly half a million misbranded and defective masks that falsely purported to be N95 respirators, the federal government reported.

King Year Packaging and Printing Co. Ltd. (King Year) faces three counts of violating the Federal Food, Drug and Cosmetic Act (FDCA) and one felony count of making a false statement by filing misleading registration documents with the FDA. The criminal complaint was filed in Brooklyn (N.Y.) federal court.

N95 respirators are designed to filter out 95% of airborne particles and have been in high demand as personal protective equipment for healthcare providers caring for COVID-19 patients.

According to the complaint, from April 6, 2020, to April 21, 2020, King Year manufactured 495,200 defective and misbranded masks that it claimed to be N95 respi…

DOJ charges medtech exec with fraud over COVID-19 tests

The U.S. Dept. of Justice announced that it charged Arrayit president March Schena for alleged involvement with fraudulent claims for allergy and COVID-19 testing.

In a news release, the DOJ alleged that Schena participated in schemes to mislead investors, manipulate Arrayit’s stock price and conspired to commit health care fraud in connection with the submission of over $69 million in false and fraudulent claims for allergy and COVID-19 testing. It is the first criminal securities fraud prosecution related to the COVID-19 pandemic brought by the DOJ.

According to the affidavit in support of the complaint, Schena claimed that Sunnyvale, Calif.-based Arrayit was the only laboratory in the world offering microarray technology that can test for allergy and COVID-19 based on a drop of blood 250,000 times smaller than technology boasted by Theranos.

DOJ said Schena and others paid kickbacks and bribes to recruiters and doctors to run an allergy screenin…