Physician Settles False Claims Act Accusations Regarding Kickbacks From CareFusion

In a recent False Claims Act settlement between Dr. Charles Denham and the federal government, officials have revealed details of an alleged kickback scheme involving Dr. Denham and the medical corporation known as CareFusion. The case was brought to light following an extensive whistleblower investigation by the Department of Health and Human Services, and it revealed a series of improper payments to Dr. Denham by CareFusion at a time when he was serving in an advisory role reviewing the safety and effectiveness of various medical products, including CareFusion’s widely-used epidermal surgical preparation solution.

As a result of the settlement, Denham, his consulting business Health Care Concepts, Inc., and his research organization, Texas Medical Institute of Technology, have agreed to pay $1 million collectively, but have not admitted any liability in the matter. Dr. Denham has since relinquished his role as a medical product safety advisor in the wake of this situation.

Details of the case involving CareFusion, Inc.

The case against Dr. Denham centers around his tenure as a safety advisor on the Safety Practices Committee – a group organized by the independent National Quality Forum and designed to “improve health and healthcare quality through measurements.” While acting as chairman of the Committee, Dr. Denham reportedly received various cash advances from CareFusion as the Committee reviewed and recommended safety measures with regard to pre-surgical preparations. More specifically, the Committee was reviewing whether CareFusion’s product ChloraPrep was a safe and effective measure to help combat against the introduction of unnecessary bacteria and toxins that can lurk in surgical centers.

Allegedly, the supposedly-impartial Dr. Denham received sizable monthly cash payments from the company and did not disclose the budding financial relationship with the Committee or the National Quality Forum members.

In response, the Department of Health and Human Services said in a comment:

“Quality and patient safety must drive medical recommendations….Doctors that put profits ahead of this core value must be held accountable.  Dr. Denham and his two businesses will be excluded from Medicare, Medicaid, and all federal health programs as part of this settlement.”

In connecting the unlawful kickbacks to the False Claims Act, authorities concluded that the recommendation to healthcare providers to use ChloraPrep, followed by the subsequent invoicing of those providers for reimbursement on behalf of Medicare and Medicaid patients, amounted to an unlawful cloud on each physician’s independent judgment. In other words, the medical product was not used based on a concern for patient safety and infection prevention, but rather in exchange for lucrative payments, thereby triggering False Claims Act liability.

CareFusion recently faced its own liability for involvement in the kickback scheme and was required to pay $40.1 million to settle allegations it paid over $11 million in kickbacks to Dr. Denham. The settlement also resolved allegations that it promoted ChloraPrep for unapproved uses.

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