Two hospitals and a heart device manufacturer have paid nearly $4 million to the federal government over charges the manufacturer paid kickbacks to the hospitals to secure business.
St. Jude Medical, Inc., Parma Community General Hospital in Parma, Ohio, and Norton Healthcare in Louisville, Ky., paid $3,898,300 to resolve the allegations.
St. Jude, based in St. Paul, Minn., allegedly paid the two hospitals to secure heart-device business, according to the Justice Department.
Federal investigators say the kickbacks led to the submission of false claims to federal healthcare programs in violation of the False Claims Act. The kickbacks included rebates that were "retroactive" and paid based on a hospital's previous purchases of St. Jude heart-device equipment as well as purchases of heart-device equipment sold by its competitors.
Under the terms of the settlement, St. Jude paid $3,725,000, Parma Community General Hospital paid $40,00 and Norton Healthcare paid $133,300.
"Hospitals should base their purchasing decisions on what is in the best interests of their patients," said Tony West, assistant attorney general for the Civil Division of the Department of Justice. "We will act aggressively to ensure that choices about healthcare are not tainted by illegal kickbacks."
The case was initiated by the filing of an action under the False Claims Act by Jerry Hudson. Under the qui tam, or whistleblower, provisions of the act, private citizens may bring lawsuits on behalf of the United States and share in any recovery. Hudson's share of the settlement will be $640,050.