Philips shells out $35M to settle sleep apnea mask kickback charges with DOJ

Respironics, the sleep and respiratory business of Royal Philips ($PHG), has settled with the U.S. Department of Justice for $34.8 million on kickback charges for its sleep apnea masks. It will pay $34.1 million to the federal government and about $660,000 to state governments based on their Medicaid program participation.

The kickbacks came in the form of free call center services to durable medical equipment suppliers that bought Respironics masks for patients with sleep apnea. The DOJ alleged that the conduct occurred from April 2012 until November 2015.

"The payment of illegal remuneration in any form to induce patient referrals threatens public confidence in the health care system," said Principal Deputy Assistant Attorney General Benjamin Mizer, head of the Justice Department's Civil Division, in a statement. "Americans deserve to know that when they are prescribed a device to treat a serious health care problem, the supplier's judgment has not been compromised by illegal payments from equipment manufacturers.

The settlement is part of an aggressive effort to combat health care fraud. It's under the joint Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative that was announced in May 2009 as a joint effort by the Attorney General and the Secretary of Health and Human Services.

Since the start of 2009, the DOJ has recovered more than $17.4 billion using the False Claims Act on cases involving fraud against federal health programs.

"This office has made a substantial commitment to combating fraud," said U.S. Attorney Bill Nettles of the District of South Carolina. "Our commitment has made this district one of the leaders on behalf of whistleblowers. We hope that those who commit fraud will recognize that it is our goal to make the consequences more than just the cost of doing business."

Philips is in the midst of reorganizing its business to focus on HealthTech, a convergence of healthcare and consumer technologies. It will start to report its earnings in three major businesses next quarter: Connected Care & Health Informatics; Diagnosis & Treatment; and Personal Health.

Sleep and respiratory monitoring will fall under the Personal Health business. Philips' CEO Frans van Houten has already committed to achieving mid- to high-single-digit growth in each of the three new business segments.

- here is the DOJ announcement