Minneapolis-based Coloplast Corp. is paying $3 million to settle allegations that the company made illegal payments to cause thousands of senior citizens to switch to its bowel and bladder devices.
Former Coloplast President Kimberly Herman and two other insiders filed a federal whistleblower lawsuit against the company, accusing it of violating the federal anti-kickback statute that outlaws paying for Medicare referrals.
Such payments incentivize overuse and can increase health care costs for the whole system.
Coloplast Corp., the U.S. subsidiary of Denmark-based Coloplast A/S, was not required to admit any wrongdoing as part of the settlement. A written statement from the company said the decision to settle was "driven solely by business considerations."
"We are satisfied that we're finally able to bring the case to a close with a settlement that makes it possible for us to continue our activities in the U.S., including dealer partnerships, at the same level as prior to the investigation," Coloplast CEO Lars Rasmussen said in a Dec. 23 statement.
The statement came one day after the U.S. attorney's office in Boston announced that Coloplast would pay $3.16 million to settle kickback allegations in the 2011 whistleblower suit that was filed by Herman and her co-plaintiffs and later joined by the Justice Department.
The lawsuit said that starting in 2009, Coloplast made illegal payments to third-party suppliers to induce them to run promotional campaigns designed to refer patients to company devices or increase sales involving people who were current patients.
Coloplast Corp. makes several types of products, including ostomy products for survivors of colorectal or bladder cancers whose intestines have been redirected to an opening in the abdominal wall, as well as urinary-incontinence catheters for patients with spinal cord injuries, MS and prostate-cancer surgery. Patients are generally 65 or older.
