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Olympus to Pay Almost $650M over Kickback Claims

Author: mthibault

2016-03-02

Olympus Corporation of the Americas (OCA), the largest seller of endoscopes in the United States, and a subsidiary will pay almost $650 million over criminal charges and civil claims related to violation of the Anti-Kickback Statute (AKS) and Foreign Corrupt Practices Act (FCPA). This is the largest sum to be paid by a medical device company and the most to be paid for AKS violations, according to a March 1 announcement from the U.S. Attorney's Office for the District of New Jersey.

OCA agreed that criminal charges, which included instances of kickbacks like grant, paid trips, and free use of endoscopes to hospitals and doctors, are true. "These and other kickbacks helped OCA obtain more than $600 million in sales and realize gross profits of more than $230 million," the release stated.

OCA will pay a criminal fine of $312.4 million and according to the release, is taking part in a three-year deferred prosecution agreement that requires the company to make amends, including improved compliance training, a confidential hotline and website for employee and customer whistleblowers, annual certification of the compliance program, and creation of a program to financially penalize company executives for misconduct or lack of compliance oversight. If the company takes these steps, it can avoid criminal conviction.

U.S. Attorney Paul J. Fishman of the District of New Jersey said in the release, "For year, Olympus Corporation of the Americas and Olympus Latin America dropped the compliance ball and failed to have in place policies and practices that would have prevented the substantial kickbacks and bribes they paid. It is appropriate that they be punished for that. At the same time, the deferred prosecution agreement takes into account the companies' cooperation and commitment to fully functional corporate compliance."

OCA will also pay a $310.8 million civil settlement and subsidiary Olympus Latin America will pay $22.8 for criminal FCPA violations.

In a corporate statement, OCA president and CEO Nacho Abia said, "Olympus leadership acknowledges the Company's responsibility for the past conduct, which does not represent the value of Olympus or its employees. Olympus is committed to complying with all laws and regulations and to adhering to our own rigorous Code of Conduct which guides our business processes, decisions and behavior. The Company has implemented and will continue to enhance its robust compliance program."

Throughout 2015, OCA was in the headlines as one of three manufacturers who sell duodenoscopes, a type of endoscope, in the United States. Dozen of cases of carbapenem-resistant enterobacteriaceae (CRE) infections at hospitals around the country were linked to duodenoscopes and the Olympus duodenoscope has been blamed for patient deaths and infections at Los Angeles’s Ronald Reagan UCLA Medical Center. In March 2015, the company released new validated reprocessing procedures for its TJF-Q180V duodenoscope.

OCA has also entered a corporate integrity agreement with the Office of Inspector General at the Department of Health and Human Services (HHS-OIG). Under this agreement, the company's complaince program is required to have a number of components, including compliance duties for management and the board of directors, training that meets standards, rules around consulting, grants, donations, travel expenses, and field assets, and review procedures, among other criteria.

A number of agencies were involved in the OCA cases, including the Department of Justice, the FBI, HHS-OIG Office of Criminal Investigations, and the National Association of Medicaid Fraud Control Units.

Benjamin C. Mizer, principal deputy assistant attorney general in the Justice Department's Civil Division, said in the release, "The Department of Justice has longstanding concerns about improper financial relationships between medical device manufacturers and the health care providers who prescribe or use their products. Such relationships can improperly influence a provider's judgment about a patient's health care needs, result in the use of inferior or overpriced equipment, and drive up health care costs for everybody. In addition to yielding a substantial recovery for taxpayers, this settlement should send a clear message that we will not tolerate these types of abusive arrangements, and the pernicious effects they can have on our health care system."

MD+DI,

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