Cololplast to Pay Millions to Settle Kickback Allegations

The FBI and DOJ accused Coloplast of paying kickbacks to five companies to help promote its products.

Brian Buntz

Coloplast has had a rough year in 2015. In September, it announced plans to pay nearly nearly half a billion dollars to settle vaginal mesh lawsuits. That same month, it was one of the worst-performing medical device companies of the year. Although its stock has recovered since then, legal woes continue to haunt the firm at the close of the year.

The company has agreed to pay $3,160,000 to settle kickback allegations against the firm brought by the U.S. Attorney's Office.

The U.S. government accused Coloplast of paying illegal kickbacks to five different companies: Byram Healthcare Centers, CCS Medical, Liberator Medical Supply, Liberty Medical, and Handi Medical. According to the complaint, Coloplast sought to to use the kickbacks to induce those companies' sales personnel to hawk its products.

"The payment of kickbacks to induce purchases of medical supplies undermines our federal health care programs, ultimately distorting consumer purchasing decisions, and increasing health care costs," U.S. attorney Carmen M. Ortiz was quoted as saying in an FBI press release. "Investigating claims of misguided business practices, at the expense of patient health, will continue to be a top priority in our healthcare enforcement efforts."

One of the companies receiving kickbacks, Liberator Medical Supply, Inc., has agreed to pay $500,000 for its alleged participation in the scheme. Much of Liberator's sales were related to Medicare reimbursement. The half-a-million settlement covers allegations that it received price concessions from Coloplast in exchange for promotion of Coloplast ostomy products to its customers.

"Both [Coloplast and Liberator] acted with their own self-interests in mind, putting profits over patient care," explained Harold H. Shaw, special agent in charge of the FBI, Boston Field Division in a statement. "The decision on which medical products to refer should be based on what is best for the patient, not on cash incentives or rebates."

While both of the aforementioned firms have settled government allegations filed against them, the whistleblowers' shares have not been determined yet.

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