CareFusion gives up $40M to settle surgical product kickback lawsuit

CareFusion ($CFN) will fork over more than $40 million to resolve a whistleblower lawsuit alleging it paid a doctor to boost sales, and also promoted unapproved uses, for one of its surgical products.

The U.S. Department of Justice civil division announced the $40.1 million settlement, which stems from allegations against the San Diego, CA-based med tech company dating back to 2008.

A CareFusion spokesperson told FierceMedicalDevices via email that execs reached a deal with the government because "it was in the best interest of the company and our shareholders to settle this matter."

According to the government, the deal resolves, in part, allegations that CareFusion paid $11.6 million in kickbacks to Dr. Charles Denham, who at the time co-chaired the Safe Practices Committee at the National Quality Forum, a non-profit group that endorses and recommends standardized healthcare practices. CareFusion had been accused of using the money to encourage Denham to recommend and help facilitate the use of ChloraPrep, a product that helps prepare a patient's skin for surgery.

As well, the settlement addresses allegations that CareFusion promoted ChloraPrep for uses not approved by the FDA, from September 2009 through August 2011, according to the deal announcement.

The U.S. Attorney's office touted the settlement as part of its ongoing fight against healthcare fraud. It got wind of the matter by way of a whistleblower lawsuit filed by Cynthia Kirk, a former vice president of regulatory affairs for CareFusion's Infection Prevention division. She'll get $3.26 million as part of the settlement deal, according to the announcement.

Beyond the settlement, CareFusion is focusing much of its attention right now on M&A issues. Earlier in January, the company won U.S. and Chinese approval for its $500 million bid to acquire GE Healthcare's ($GE) Vital Signs segment, which gives it access to a larger share of the anesthesia devices and disposables market.

- read the U.S. Attorney's office announcement
- here's Reuters'  take

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