The Department of Justice announced that San Diego-based medical equipment giant, ResMed has agreed to pay $37.5 million to the federal government and more than $2 million total to various states to settle claims that it offered unlawful kickbacks to providers that sold its sleep apnea (CPAP) therapy machines.
The terms of the settlement were first revealed in July 2019 following allegations made by a number of whistleblowers, including former sales representatives for ResMed. Under the agreement, the five lawsuits brought by whistleblowers under provisions in the False Claims Act, which allows private citizens to sue on behalf of the government, will be suspended. Although, the whistleblowers will share more than $6.2 million.
ResMed has faced a series of allegations in regard to its sales efforts for its CPAP devices. The accusations included that the company had arranged and guaranteed third party, no-interest loans for medical device suppliers to buy its sleep apnea machines; provided free or below cost sleep apnea equipment to sleep labs for use in diagnosing patients; installed these machines at no charge; gave doctors who were not sleep specialists free home-testing machines; and provided free call center services as well as other assistance to medical device suppliers for re-ordering sleep apnea masks for their clients.
“Improper kickbacks don’t always involve bags of cash or free trips to Hawaii,” said Stephen Hasegawa, a whistleblower attorney for former ResMed sales rep Thomas Baker. “Services provided by vendors also can be kickbacks if they have some value to customers,” he added.
Despite this, the company has settled without acknowledging any wrongdoing. The reason for this, according to a spokesperson is that these particular sales tactics targeted by government investigators have not been used by the company in years.
“That said, we are pleased to put this matter behind us and avoid the expense, inconvenience, and distraction it would cause to gain the favorable outcome we deserve,” ResMed said in a statement. “This settlement – the broad terms of which were disclosed in ResMed’s Q4FY19 earnings statement four months ago – is in the best interest of ResMed’s customers, investors, employees, and most important, millions of patients worldwide whose quality of life relies on the products and services ResMed provides."