Maker of dirty medical device hit with $623 million in penalties for kickbacks

Can the sleaze get any worse with the maker of a dirty medical device that investigators say sickened dozens and played a role in killing 21? Sadly, it can. Federal prosecutors say that the  maker of a flexible scope used in endoscopic exams will pay $623.2 million to settle criminal and civil charges over its payment of kickbacks to unnamed physicians and hospitals.

The penalties against Olympus Corp. of Japan were the largest ever levied under U.S. anti-kickback laws. The company, according to the criminal complaint, forked out kickbacks to bring in $600 million in sales of endoscopes and other medical equipment, earning it more than $230 million in gross profits.

Prosecutors did not name the recipients of the kickbacks but said they included:

  • $400,00 in free equipment for a New York physician who had helped sway a hospital to buy and use Olympus scopes
  • Lavish trips to pricey Tokyo and elsewhere in Japan for three doctors who persuaded their hospitals to switch to the company’s products; the Los Angeles Times says one MD was president of a “prominent professional organization,” brought his wife on the junkets, and got a $10,000 lecture fee, too
  • A $50,000 “research grant” for a hospital that became an Olympus customer

The Times also says the miscreants included: a hospital foundation that got a $100,000 grant because a company exec termed the institution “our #1 account in the U.S. and I have no intention of losing any of it to” a competitor. The paper said the company gave a large Midwestern hospital free use of equipment worth more than $1 million to keep it as a customer. “Consulting payments” also flew out from Olympus to physicians, including one with purchasing sway at a Southeastern hospital; the doctor  pocketed $112,300 between 2006 and 2011.

Separately, an Olympus subsidiary serving Latin America agreed to pay a $22.8 million fine for making improper payments to unnamed parties in Central and Latin America.

The Olympus penalties will be split by the U.S. government, states, and a onetime executive who called out his company’s illegal activities; his whistle-blower lawsuit entitles him to $51 million.

Here’s hoping prosecutors stay hot on the trail of this corrupt situation, which I’ve written about before when a U.S. Senate investigation ripped the company, hospitals, and federal regulators for their abject failure to protect patients from a faulty device that made them sick and killed some of them. Only after Olympus’ horrific conduct was detailed by Senate investigators did the company finally relent and agree to recall,redesign, and replace its dirty devices. I have my doubts about the follow-up here. But it would seem to be just for a lot of doctors to face prosecution, to lose patients, privileges, and licenses, and for some hospitals and foundations to see similar harsh action. More actions in the civil justice system also seem in order to deal with these bad actors.

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