The nation's largest endoscope distributor will pay $623.2 million to resolve civil and criminal allegations that it paid kickbacks to hospitals and doctors in exchange for purchasing its devices, the Justice Department announced Tuesday.
Olympus Corporation of the Americas has agreed to pay a record-setting $310.8 million to settle civil claims that it violated the False Claims Act because its claims were tainted by illegal kickbacks. The sum is the largest ever paid by a medical-device company over violations related to the federal anti-kickback law, according to the government.
Olympus will also pay a $312.4 million criminal penalty over the allegations. The company admitted to paying doctors and hospitals in the form of consulting payments, travel, meals, grants and free endoscopes in exchange for their business, according to the Justice Department.
The company admitted, for example, to paying for three doctors' trips to Japan in 2007 in exchange for their hospital's decision to use Olympus. The company gave another doctor who had a major role in his medical center's buying decisions free of use of $400,000 in equipment.
“Olympus leadership acknowledges the company's responsibility for the past conduct, which does not represent the values of Olympus or its employees,” said Nacho Abia, CEO of Olympus Corporation of the Americas, in a statement. “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.”
He said the company has implemented and will “continue to enhance its robust compliance program.”
Abia also noted that the company's past actions didn't affect patient health or care. He said the settlements will not affect the company's ability to offer its products and services.
According to the Justice Department, the kickbacks helped the company make more than $600 million in sales and gross profits of more than $230 million.
The government alleged that Olympus lacked training and compliance programs when the improper payments occurred. Olympus didn't have a compliance officer position until 2009 and didn't hire an experienced compliance professional until August 2010, according to the government.
The company entered into a deferred prosecution agreement that will allow it to avoid conviction if it follows certain requirements.
The civil settlement resolves a lawsuit originally brought by whistle-blower John Slowik, a former chief compliance officer for the company. In successful False Claims Act cases, whistle-blowers are entitled to a portion of whatever money the government is able to recover. Slowik will receive $51 million.
The company's subsidiary, Miami-based Olympus Latin America, will also pay a separate criminal penalty of $22.8 million for violations of the Foreign Corrupt Practices Act in Latin America. The government alleged the subsidiary paid providers at government-owned facilities in Central and South America to encourage them to buy its products.
Olympus also made news in recent years over infections linked to its duodenoscopes. Scopes made by Olympus and other manufacturers were linked to 25 infection incidents between 2012 and 2015 in the U.S. after as many as 250 patients acquired antibiotic-resistant infections, according to a Senate committee minority staff report released in January.
In January, the U.S. Food and Drug Administration approved the company's redesigned duodenoscopes, which are aimed at lowering the risk of infection. In Februrary, Olympus began recalling its TJF-Q180V model duodenoscope from about 4,400 healthcare facilities.