Abbott: Physician Teaching Payments Intended to Change Hospital Purchases

Abbott Laboratories agreed to pay $5.475 million in the Abbott vascular device settlement to resolve kickback allegations involving physician teaching payments intended to influence hospital purchases. The Justice Department said the two whistleblowers, both former Abbott employees, would receive more than $1 million collectively as part of the resolution.

The Justice Department announced the settlement on December 27, 2013. Those employees brought the allegations in a qui tam case under the False Claims Act. Their account concerned the company’s payments to physicians and the hospital business those payments allegedly sought.

Teaching Payments With a Purchasing Expectation

The government alleged that Abbott knowingly paid prominent physicians for teaching assignments, speaking engagements and conferences with the expectation that they would arrange for their affiliated hospitals to buy Abbott products.

The speaking fee went to a doctor. The business Abbott allegedly wanted belonged to the hospital.

The government also alleged that Abbott caused false claims to Medicare for procedures in which those products were used. The alleged payments put the manufacturer’s sales interests into health care decisions that should turn on a patient’s needs. The alleged chain ended with procedure bills sent to taxpayer-funded Medicare.

The Products Behind the Vascular Device Settlement

The settlement covered allegations involving carotid, biliary and peripheral vascular products. The Justice Department’s announcement explains their different uses: carotid products increase blood flow to the head, peripheral vascular products increase blood flow to other parts of the body, and biliary products treat obstructions in bile ducts.

Why the Hospital Purchase Matters

The government alleged that Abbott paid physicians for teaching, speaking and conference work with the expectation that they would steer their hospitals’ orders to Abbott products.

The Journal of Forensic and Investigative Accounting’s 2020 paper A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud explains that healthcare kickbacks can buy purchasing and recommending decisions as well as prescriptions. That distinction matters in a device business where a physician’s choice can become a hospital’s order.

Speaker Fees and the Business They Brought

Another device case shows why the choice of paid speaker and the audience can matter. LivaNova agreed to a settlement of $1.87 million with the United States and Georgia over allegations that it paid speaker fees to high-referring epilepsy physicians for events attended primarily by the doctors and their own staff.

LivaNova’s allegations concerned the referral business of the paid speakers and who attended their events. Abbott’s concerned the hospital purchases that paid physicians were expected to arrange. Both accounts put the business sought from the physician at the center of the payment question.

A Separate Abbott Vascular Case Had a Different Outcome

A separate Abbott case in Texas concerned allegations that Abbott and Guidant promoted biliary stents for use in vascular procedures and caused improper Medicare claims. The court’s account of that case describes a former Guidant sales representative’s allegations about promotion, kickbacks and device authorization. Abbott, the court noted, had bought Guidant. A jury found for Abbott on a claim concerning Guidant’s conduct. That verdict concerned a different alleged practice from the teaching payments resolved here.

What a Device Insider Sees

A device sales representative may know the hospital’s orders and product use, while someone running physician programs may know why a doctor was paid. We examine physician-payment records alongside hospital orders, product-use records and billing, looking for the decisions linking them.

Someone involved in physician programs may hold a different part of the story: why a particular doctor received a paid assignment and what the manufacturer expected from that relationship. We work with the insider to connect those commercial decisions to the purchasing and billing records.

What Is the Whistleblower Reward?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In Abbott’s case, the Justice Department said the two former employees would receive more than $1 million collectively. Their inside account connected the paid physician work to the business the manufacturer allegedly expected in return.

You Know What the Teaching Payment Was Meant to Buy

If you saw physician teaching assignments used to secure a hospital’s device business, tell our whistleblower experts what the company expected in return. We develop the case with you and bring in medical device kickback whistleblower lawyers who understand physician payments, institutional purchasing and Medicare claims. We remain your partners as that inside knowledge becomes your strongest whistleblower case.