ResMed: The Free Services Behind the Kickback Settlement

In the ResMed kickback settlement, ResMed Corp. agreed to pay more than $37.5 million to resolve False Claims Act allegations that it paid kickbacks through free services, equipment and financing offered to durable medical equipment suppliers, sleep labs and other health care providers. A call center that costs nothing, a machine supplied below cost, an equipment loan with no interest: the government challenged benefits that could look like ordinary sales support inside the business.

The Department of Justice announced the settlement on January 15, 2020. ResMed Corp., based in San Diego, manufactured equipment for sleep apnea and other sleep-related disorders.

The announcement described the Anti-Kickback Statute as barring payments for referrals of items or services covered by federal programs such as Medicare, Medicaid and TRICARE.

What Were the Alleged Kickbacks?

The government alleged four arrangements that put something of value into the hands of businesses or physicians who could direct equipment sales. The value took different forms at different points in the patient relationship, from the test that led to treatment to the replacement supplies ordered afterward.

Free Call Centers and Resupply Services

ResMed allegedly provided suppliers with free telephone call-center and patient-outreach services that helped them order resupplies for patients with sleep apnea. If so, the manufacturer was paying for work the supplier otherwise had to fund.

One of the two South Carolina whistleblower complaints described a more specific bargain. It alleged that ResMed paid a customer’s renewal-service costs when the customer’s sales reflected a dominant ResMed market share. Quarterly reports allegedly tracked patient numbers, market share and the money the supplier saved.

The complaint reproduced an employee question-and-answer document about the resupply promotion:

In the whistleblower’s account, the supplier’s access to the promotion depended on the equipment business it delivered. The complaint also reproduced an internal email raising concern that giving away outreach services would improperly induce suppliers to recommend ResMed products.

Masks, Diagnostic Machines and Installation for Sleep Labs

ResMed allegedly supplied sleep labs with free or below-cost positive airway pressure masks and diagnostic machines, along with free installation. Those were tangible costs of operating a sleep-testing business that the manufacturer allegedly absorbed.

The government treated the equipment and installation as benefits to a referral source. For a sleep-lab insider, the relevant relationship extends beyond the invoice for the machine: it includes who supplied the benefit and where patients went for equipment afterward. We examine those connections together.

Durable Medical Equipment Financing With No Interest

ResMed allegedly arranged interest-free loans from outside financial institutions so suppliers could purchase its equipment, and backed all payments due on those loans. The financing benefit was tied to buying the manufacturer’s products.

That arrangement put the lender, supplier and manufacturer in the same transaction. An invoice shows what the supplier bought. The loan and the manufacturer’s payment commitment show who made the purchase cheaper to finance. Both belong in the account of the alleged benefit.

Can a Doctor’s Office Get a Kickback for Referrals?

Yes. A kickback can be free equipment rather than cash. Here, the government alleged that ResMed gave ApneaLink home sleep-testing devices to physicians who were not sleep specialists.

The New York whistleblower complaint went further, describing how the test could feed an equipment order. It alleged that the software printed a ResMed order form when a physician printed the automatically scored test report:

The complaint alleged that the form offered one treatment option, a ResMed Autoset machine, and carried the direction “Do not substitute.” In that account, the free testing device printed its own maker’s order form, with the product already chosen and a space for the physician’s signature.

Why Free Resupply Support Mattered

The CPAP business continues after the machine rental ends. A patient can own the device and still need replacement masks, cushions, tubing, filters and headgear. Patient contact is therefore part of selling equipment over time, which explains the value of the outreach services described in the complaint.

Medicare’s CPAP rental structure transfers ownership after 13 paid months. The rental has an endpoint while the replacement-supply relationship continues.

The manufacturer’s own accounts show the importance of that business. ResMed’s fiscal 2026 annual filing reported that masks and other consumables supplied 42% of Sleep and Breathing Health revenue and grew faster than devices. That later snapshot shows the value of repeat supply sales to the manufacturer.

Five Qui Tam Cases, One Settlement

The settlement resolved five qui tam cases brought by whistleblowers. That complaint came from the chief operating officer of a home healthcare software company whose services included patient outreach for resupply. He had participated in discussions about ResMed acquiring the business.

The Justice Department said the whistleblowers would collectively receive roughly $6.2 million from the settlement. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Oversight Reached Pricing and Referral Arrangements

ResMed entered a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General.

The Justice Department described additional controls around product pricing and sales, plus internal and external monitoring of arrangements with referral sources. The oversight reached the commercial relationships at the center of the allegations: what the manufacturer charged, what it supplied and what it offered businesses that could send equipment orders its way.

What an Insider May See in the Business Records

The most useful account connects the benefit to the equipment business it was meant to generate. In the resupply allegations, that connection ran through promotional terms, supplier sales and reports showing market share and savings. In the financing allegation, it ran through the equipment purchase, the interest-free loan and ResMed’s backing of the payments.

We connect the manufacturer’s offer to the equipment orders and the healthcare claims that followed.

A sales employee may understand the conditions attached to a promotion. An operations employee may know which accounts received the free service. A finance employee may understand the loan or the cost the manufacturer absorbed. That knowledge gives the paperwork meaning. Our work with an insider is to connect what happened inside the business to the healthcare claims it generated.

The Pattern in Other Sleep-Equipment Cases

Respironics faced a closely related allegation in its 2016 settlement: free call-center services for suppliers that bought its sleep-apnea masks. The common commercial lever was a service offered to the supplier to influence its product purchases.

Pacific Pulmonary Services‘ 2017 settlement addressed alleged reciprocal referrals with sleep-testing clinics. Patient care coordinators allegedly sent patients to clinics in exchange for equipment referrals back to the supplier.

You Know What the Free Offer Was Worth

If you saw free resupply services, testing equipment or financing tied to equipment sales, speak with our whistleblower experts about the arrangement you know from inside the business. We work with you to build your strongest case, bring in healthcare kickback whistleblower lawyers who understand manufacturer and supplier relationships, and stay beside you through the pursuit of a recovery.