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Medical Device Maker Pays $18M for Kickback Scheme

The fraud spanned more than six years.

Merit Medical Systems manufactures disposable devices used in interventional, diagnostic and therapeutic procedures, particularly cardiology, radiology, oncology, critical care and endoscopy. 

Last week, the Utah-based medical device maker agreed to pay $18 million to settle allegations over doctor and hospital kickbacks. 

According to the Department of Justice, the manufacturer offered a unique kickback program in exchange for referrals — specifically with patients on federal healthcare programs. The plot caused false claims to the Medicare, Medicaid and TRICARE programs.

Internally, the Merit Medical scheme was known as the Local Advertising Program, and it spanned more than six years. The company compensated physicians, medical practices and hospitals for using Merit products in procedures performed on Medicare, Medicaid, and TRICARE beneficiaries. 

Under the Local Advertising Program, the company provided millions of dollars in free advertising assistance, practice development, practice support, and alleged unrestricted “educational” grants in exchange for the purchase and use of Merit Medical products. 

The products included EmboSphere devices, which were used for uterine fibroid embolization procedures, and its QuadraSphere devices, which were used for other types of embolization procedures.  

The company claimed that the financial assistance was designed to “increase the awareness” of medical treatments. However, the assistance was only given to select healthcare providers to reward past sales, induce future sales, and steer business away from competitors. 

According to the DOJ, the company disregarded multiple warnings that its conduct may violate the Anti-Kickback Statute, including those from MMSI’s own Chief Compliance Officer, Dr. Charles J. Wolf, who eventually blew the whistle on the company.

Of the $18 million in the settlement, $15.21 million will be returned to the federal government, and $2.79 million will be returned to individual states that jointly funded claims submitted to state Medicaid programs. The former compliance officer, Dr. Wolf, will receive $2.65 million from the federal share of the settlement. 

Merit Medical also has to hire a compliance expert and an independent review organization to analyze its systems and transactions.  

In a statement, Acting Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice’s Civil Division said, “When medical devices are used in surgical procedures, patients deserve to know that their device was selected based on quality of care considerations and not because of improper payments from manufacturers.”

In 2018, Merit Medical reported revenue of $882.8 million, up 21.3% from the previous year. 

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