Not Just Recalls: Philips Tangles With Law Enforcement

This is a sidebar to the main story on the recall of Philips breathing devices.

The FDA isn’t the only federal agency Philips has tangled with in the last year. The Department of Justice (DOJ) also had its eye on the company over kickback allegations originally brought by a whistleblower employee.

Philips agreed to pay $24 million earlier this month to settle those claims, which appear to be unrelated to the problems that led to the recall.

The DOJ alleged that Philips Respironics paid kickbacks to durable medical equipment (DME) suppliers to induce referrals for their devices. That, in turn, led to the submission of “false claims” to Medicare, Medicaid, and Tricare, the DOJ argued.

“Respironics allegedly gave the DME suppliers physician prescribing data free of charge that could assist their marketing efforts to physicians,” according to a DOJ press release.

“By paying kickbacks to obtain patient referrals, DME manufacturers are prioritizing financial incentives over patient needs, which undermines the integrity of federal health care programs,” Tamala Miles, special agent in charge at the Department of Health and Human Services Office of Inspector General (HHS-OIG), said in a statement.

A spokesperson for Philips also confirmed the settlement with DOJ via email, stating that the agency “alleged that market data which Philips Respironics shared with certain DME customers during a period ending in early 2020 constituted an improper inducement to those DME customers to purchase Respironics products.” He added that the company “agreed to settle the claim to avoid the required time, resources and expense of litigating the claim.”

The spokesperson said that Philips Respironics is not acknowledging any alleged facts, liability, or wrongdoing in the claim.

“Settling this claim allows us to put this matter behind us and maintain our focus on our customers and the patients they serve,” David Ferguson, business leader for Philips Respironics, said in an emailed statement. “We maintain a comprehensive compliance program and we will work with the relevant authorities to satisfy the terms of the settlement. This agreement should have no impact on our customers or the patients they serve.”

Philips entered a corporate integrity agreement with HHS-OIG that requires “review of arrangements with referral sources and monitoring of Respironics’ sales force,” according to DOJ.

Jeremy Orling, the Respironics employee who originally brought the whistleblower suit, will receive about $4.3 million of the federal settlement amount, DOJ said.

DOJ had also interacted with Philips after the FDA conducted an inspection of “certain Philips Respironics’ facilities in the U.S. in 2021” according to the company’s spokesperson. Following that and “subsequent inspectional observations,” the DOJ, acting on behalf of the FDA, “recently began discussions with Philips regarding the terms of a proposed consent decree to resolve the identified issues,” the spokesperson said.

“Given the early stages and confidentiality of the discussions, Philips cannot provide further information at this time,” the spokesperson added.

Neither the FDA nor DOJ provided any comment to MedPage Today about an investigation or consent decree.

However, an FDA spokesperson told MedPage Today in an email that the agency is “continuing to take actions related to assuring that Philips takes appropriate steps to correct the product, addressing concerns and questions raised by patients and health care providers about device replacement, and working with other manufacturers and government partners to try to help make available more CPAP and BiPAP machines.”

That has included a March 2022 notification order to Philips Respironics requiring it to notify patients and others of its June 2021 recall, the spokesperson said. In an announcement of that order, Jeff Shuren, MD, JD, director of FDA’s Center for Devices and Radiological Health, said the order came after “frustration expressed by patients and [DME] suppliers” for not having heard about the recall.

The order allowed FDA to “mandate that Philips Respironics improve its communication about the recall and the serious risk posed by the foam used in the recalled products with patients and the public and to ensure that individuals who rely on these essential devices are receiving the important information they need from the company,” said Shuren.