Biomet EBI: Office-Staff Payments and Federal Billing for Refurbished Devices

In the Biomet EBI bone growth settlement, EBI LLC and Biomet Inc. agreed to pay $6.07 million to resolve office-staff kickback allegations and EBI’s disclosure that it received federal reimbursements for refurbished stimulators. The alleged staff payments ran from 2001 to 2008. The government said EBI paid people inside doctors’ offices to influence which device the doctor ordered.

The Department of Justice announced the settlement on October 29, 2014. EBI LLC, doing business as Biomet Spine and Bone Healing Technologies, was the Parsippany, New Jersey company selling bone growth stimulators to help repair fractures that were slow to heal. Its parent, Biomet Inc., was based in Warsaw, Indiana.

A former EBI product manager brought the False Claims Act qui tam case in federal court in New Jersey. The settlement resolved part of that qui tam case and also addressed EBI’s own disclosure about federal reimbursement for refurbished devices.

Office-Staff Payments Behind Bone Growth Stimulator Orders

The United States alleged that EBI used personal service agreements to pay doctors’ office staff to influence orders for its bone growth stimulators. The doctor’s order was the commercial objective, but the staff member was the alleged payment recipient. A review confined to money paid directly to physicians would miss the recipients at the center of this allegation.

For an insider familiar with an arrangement like this, the useful account connects what the agreement said someone would do with what the manufacturer actually expected from the relationship. A staff member, sales employee or product manager may know what the company wanted in return for a payment and how the agreement related to device orders.

The government concluded that the payments violated the Anti-Kickback Act and resulted in false billings to federal health care programs, including Medicare.

Federal Reimbursement for Refurbished Bone Growth Stimulators

The settlement also resolved EBI’s disclosure that it received federal reimbursements for refurbished bone growth stimulators, according to the Justice Department. That disclosure brought the company’s own account of reimbursement into the case alongside the office-staff allegations.

The 2020 Journal of Forensic and Investigative Accounting paper A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud describes a factually false reimbursement request as one that misstates the services or goods provided. For an insider reviewing refurbished-device billing, that distinction focuses attention on what the payer was told about the product.

Orthofix: Same Product Category, Different Allegations

The Orthofix bone growth stimulator case covers different allegations, including false certificates of medical necessity and failure to advise patients about renting devices.

What Evidence Is Needed to Prove Fraud?

For allegations like EBI’s, the evidence connects the staff payment or the device’s condition to an order and a federal reimbursement claim. We work with insiders to establish those connections and what the people making the decisions knew.

Personal service agreements and payment records can describe a paid relationship. Orders and the surrounding communications may explain what the business expected from it. A manufacturer employee may know the purpose of an agreement while practice staff know how orders were handled.

For refurbished-device billing, inventory and refurbishment records may explain a unit’s history, while order and billing records show what the payer was told. We examine those connections with the person who knows how the product moved through the business. Knowing what a record means inside the company can be as useful as knowing where it sits.

How Much Is a Whistleblower Claim Worth?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know How the Order Became a Claim

If you saw staff payments steering bone growth stimulator orders or refurbished stimulators billed to federal health programs, speak to one of our Whistleblower Experts about how those orders became claims. We build your strongest medical device whistleblower case with you and bring in medical-device whistleblower lawyers who understand sales incentives and reimbursement. We stay beside you from that first account through the pursuit of a recovery.