Allegations of Illegal Kickbacks & Medicare Fraud Force C.R. Bard to Settle

Amidst allegations of Medicare fraud and illegal kickbacks, an international medical device company has agreed to settle a False Claims Act lawsuit this week. C.R. Bard Inc. will pay the federal government $48.2 million to settle the allegations contained in a whistleblower lawsuit that was originally filed in 2006.

C. R. Bard designs, manufactures, packages, distributes and sells medical, surgical, diagnostic and patient care medical devices around the world. They sell products to hospitals, individual physicians and extended care facilities. Bard also sells products directly to alternate site facilities and medical specialty distributors, along with providing products through central and surgical supply divisions within certain hospitals. C. R. Bard was founded in 1907 and is headquartered in Murray Hill, with operations based in Covington, Georgia.

Allegations of False Claims Act Violations

According to official court documents, C.R. Bard, along with its urological division and wholly owned subsidiary, ProSeed Inc., allegedly overpriced products sold to Medicare patients and paid illegal kickbacks to both doctors and hospitals. The company allegedly provided these illegal kickbacks in order to bribe and entice physicians to order their products, even though they were sold at inflated prices. Bard is specifically accused of selling overpriced brachytherapy seeds, which are used to treat prostate cancer. The brachytherapy seeds are permanently implanted within a patient’s prostate and are then used to deliver a specific dose of radiation to cancer cells.

Due to the fact that customers are able to order radioactive seeds from any company they choose, Bard’s nationwide brachytherapy sales force would allegedly “specialize” illegal kickback offers to coax physicians and hospitals into using their brachytherapy seeds. They would simply assess each customer’s needs, then offer doctors or hospitals anything they wanted. For example, some of the illegal kickbacks that Bard provided came in the form of unrestricted “grant” money, monetary rebates, advertising and free medical equipment. These illegal kickbacks eventually enticed customers to purchase brachytherapy seeds solely from Bard, despite the fact that their prices were higher than other companies.

From 1998 to 2006, Bard allegedly increased the costs of brachytherapy seeds, which were sold to treat Medicare patients suffering from prostate cancer. The company used a portion of the fraudulent profits in order to pay for their illegal kickback scheme. Due to the overinflated pricing of their brachytherapy seeds, Bard effectively caused the submission of false and fraudulent claims to Medicare. Between 1998 and 2006, Medicare paid the indicated price on each claim it received for brachytherapy seeds, so neither the doctors nor hospitals were adversely affected by the pricing scheme. Submitting false claims to Medicare, a government-sponsored healthcare insurance provider, is a violation of the False Claims Act.

The Qui Tam Lawsuit

The original qui tam, or whistleblower, lawsuit against Bard was filed in the federal district court of Atlanta in 2006. Julie Darity, the whistleblower in this compliant, formerly worked as a contracts administration officer in Bard’s Georgia facility. Darity was employed by the company for approximately 18 years and was given several employee recognition awards during her time with Bard.

According to Darity, after learning that Bard was overpricing brachytherapy seeds and paying illegal kickbacks, she voiced concern to her supervisors. Darity also provided information about the fraudulent activity through the company’s internal compliance system. When nothing was done to rectify the situation, Darity consulted with a False Claims Act attorney and filed a whistleblower lawsuit.

“I was following the company’s ethics policy when I complained about all of the enticements sales reps were offering customers to get them to buy the brachytherapy seeds,” Darity said. “Rather than stopping these sales tactics, the company continued to allow sales reps to offer inducements and rewarded them very generously.”

“The government attorneys and investigators were fabulous, particularly Assistant U.S. Attorney Neeli Ben-David,” Darity went on to say. “They understood that the Bard sales tactics were costing Medicare millions of dollars and had to be stopped. Ms. Ben-David spent years working on my case, and she personally reviewed thousands of documents related to the Bard kickbacks.”

For providing the government with critical insider information about Bard’s fraudulent activity, Darity will be awarded $10,134,600 as her share of the civil settlement. She also received an additional settlement from Bard due to allegations that the company retaliated against her after providing information to the government. Under the whistleblower protection laws of the False Claims Act, workplace retaliation is illegal. The amount of the retaliation settlement is confidential.