DFine to pay $2.39M fine to DOJ after whistleblower reports surgeon kickbacks |

DFine to pay $2.39M fine to DOJ after whistleblower reports surgeon kickbacks



Whistleblower Costs DFine $2.39 Million for Kickbacks (written by Walter Eisner @ OTW)

A whistleblower has struck San Jose, California-based DFine Inc.

The U.S. Department of Justice (DOJ) announced on October 26 that DFine Inc. has agreed to pay $2.39 million to resolve allegations under the False Claims Act that the company paid kickbacks to “induce physicians to use certain of the company’s devices.”

The government said DFine paid physicians up to $500 per patient to participate in customer surveys known as User Preference Evaluations (UPE). Each UPE survey required use of a new DFine device in a patient. Thus this was an “illegal kickback to induce [physicians] to use the company’s vertebral augmentation devices.”

The government alleges that DFine provided improper remuneration in the form of “travel expenses, lavish dinners, entertainment and promotional speaker fees” to doctors located in Chicago and Little Rock, Arkansas. The government further alleges that DFine “solicited physicians to convert their business from a competitor’s product and/or persuade the physicians to continue using DFine products.”

“Decisions about devices used to treat serious spinal conditions should be based on the best interests of the patient, not on whether the manufacturer is going to pay a kickback,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “These sorts of improper financial incentives not only undermine the integrity of medical decisions, they also waste taxpayer funds and are unfair to competitors who are trying to play by the rules.”

This action was initiated by the filing of a qui tam, or whistleblower, action under the False Claims Act by Brian Eberhard. The act permits a whistleblower to file a lawsuit on behalf of the government and share in any recovery. In this case Eberhard will receive approximately $250,000.

Also as part of the settlement, DFine has agreed to enter into an expansive corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. That agreement provides for procedures and reviews to be put in place to “avoid and promptly detect conduct similar to that which allegedly gave rise to this matter,” stated the government announcement.

The Justice Department has used the False Claims Act to recover more than $5.9 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 exceed $7.8 billion.

The company issued the following statement regarding the settlement.

“DFine fully cooperated with the investigation and continues to deny all of DOJ’s unproven allegations. The terms of the agreement specifically state that DFine and its employees admit no wrongdoing, liability or illegal activity. The decision to settle prior to completing the full investigation was a very difficult one, but one we felt was best for the company based upon the significant disruption and associated costs to continue the investigation, as well as the uncertainty regarding its duration.”

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