C. R. Bard: The Brachytherapy-Seed Kickback Settlement

In the C. R. Bard 2013 brachytherapy seed settlement, Bard agreed to pay $48.26 million to resolve allegations that kickbacks to customers and physicians caused false Medicare claims. The alleged conduct ran from 1998 to 2006. A former manager for brachytherapy contracts administration brought the whistleblower case. Someone who knew the contracts could see the sales arrangement behind the treatment bill.

Bard, a New Jersey medical-products company, sold brachytherapy seeds to hospitals for prostate-cancer treatment. The seeds are a form of radiation therapy. The Justice Department announced the civil settlement on May 13, 2013.

What Bard Allegedly Offered to Sell the Seeds

The government alleged that Bard offered grants, rebates with a promised minimum, conference fees, marketing assistance and free medical equipment to customers and physicians to induce purchases of its seeds. Its allegation under the Anti-Kickback Statute was that these benefits influenced what they bought. A supplier competing on the merits of its product faced a rival allegedly rewarding the people choosing it.

The promised minimum in the rebates is a telling detail. The government’s account describes a financial benefit offered to the buyer alongside the seeds. Paired with free equipment and help marketing a customer’s business, the allegation reaches beyond the price on a product invoice. The commercial relationship itself was part of what Bard allegedly offered to win the order.

That is a useful distinction in healthcare fraud. A 2020 paper in the Journal of Forensic and Investigative Accounting, A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud, describes kickbacks paid in cash or in kind, through economic relationships more complex than a simple payment for services. Applied to Bard’s alleged arrangements, the question is what the customer gained across the relationship and what business the manufacturer expected in return.

How Does Reimbursement Work for Medical Devices?

Hospitals buy devices and submit claims for the care in which they are used. In Bard’s case, the Justice Department said hospitals submitted bills to Medicare for the seeds and alleged that Bard’s kickbacks made those bills false.

The buyer and the person influencing the purchase can be different. In its Special Fraud Alert on physician-owned entities, the Department of Health and Human Services’ Office of Inspector General explains that physicians may make or strongly influence both the brand and type of implantable device an institution buys. That commercial structure helps explain why the Bard allegations concerned benefits to physicians as well as customers.

The alleged chain ran from Bard’s benefit, through the decision to buy and use Bard seeds, to the hospital’s Medicare bill. The government pursued Bard under the False Claims Act for allegedly causing those claims.

How Much Is a Whistleblower Claim Worth?

The Justice Department announced a $10.1 million whistleblower share of Bard’s civil settlement for the former contracts-administration manager. She brought the qui tam case that led to the recovery.

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

The former manager’s role is as useful to a device insider as the award. Contracts administration sits close to the terms on which a manufacturer wins business. Someone who understands the sales arrangement may hold an essential part of the story before the hospital’s billing records enter it.

What Evidence Is Needed to Prove Fraud?

For allegations like Bard’s, the evidence connects the manufacturer’s benefit to the purchasing decision, the use of the product and the claim to Medicare. We look at what the benefit was meant to accomplish and how the company’s own records connect it to the business it sought.

The forensic-accounting paper explains why an insider’s knowledge can matter even where the financial transactions leave records:

We examine the commercial paperwork with you alongside the purchases and hospital claims. Who approved the benefit, what the customer was promised and what purchase it was intended to secure give the transaction its meaning. We bring the device-sales account and the billing account together so the case explains the manufacturer’s decisions as well as the claims that followed.

Free Equipment in the Olympus Case

The whistleblower complaint against Olympus America describes another alleged use of free equipment to influence hospital business. The whistleblower alleged that the commercial description concealed the benefit:

The same complaint alleged that Olympus paid physicians for using and promoting its products under the description of speaker payments. Both allegations put the purpose of the arrangement ahead of its commercial label. Equipment use and speaking engagements were different benefits, allegedly directed toward the same end: more product business.

That allegation gives a device insider a concrete comparison with Bard’s alleged free-equipment benefits. The question is what the customer received and which purchase the arrangement was intended to influence. A loan agreement, a discount and a grant can tell different versions of the same sales story.

You Know What the Customer Was Offered

If you saw benefits tied to device purchases, speak to one of our Whistleblower Experts about the business those benefits were meant to win. We work with you to build the case around the manufacturer’s decisions and the claims they caused. We bring in medical-device whistleblower lawyers who know hospital billing and kickback cases, and stay beside you throughout the case.