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Sleep apnea mask manufacturer pays $34M to settle kickback allegations

Prosecutors say Respironics offered free services to suppliers to influence equipment orders

A Pennsylvania manufacturer that specializes in sleep apnea masks has agreed to pay $34.8 million to settle allegations it offered free services to durable medical equipment (DME) suppliers to encourage equipment sales, according to the Department of Justice (DOJ).

Federal prosecutors accused Respironics of setting up call center services for DME suppliers free of charge in order to handle resupply orders from patients on the condition patients were using Respironics masks. DME suppliers were forced to pay a monthly fee for each patient who used a mask manufactured by a competitor, incentivizing suppliers to switch to Respironics masks.

The lawsuit was brought by Gibran Ammer, M.D., who worked for several DME companies. Respironics will pay $34.14 million to the federal government and more than $600,000 to various states.

Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the DOJ's Civil Division, noted in the annoncement that "payment of illegal remuneration in any form to induce patient referrals threatens public confidence in the healthcare system." Wednesday's settlement supports the notion that federal investigators are looking for less traditional kickback schemes in which DME manufacturers offer free services or equipment as opposed to cash payments.

DME fraud has been a longstanding focal point for the federal government, with fraud experts claiming there has been a "pronounced uptick" in medical device manufacturers convincing seniors they need unnecessary equipment. In December, the Centers for Medicare & Medicaid Services responded to concerns about widespread improper payments within the DME industry by issuing a final rule requiring preauthorization for prosthetics, wheelchairs, knee braces and other qualified equipment.

To learn more:
- read the DOJ announcement

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