A Texas jury last week awarded more than $30 million in damages and more than $1 billion in punitive damages to six plaintiffs who sued Johnson & Johnson for defective metal-on-metal hips made by its DePuy unit. It’s the third largest jury award in 2016.
A study in the Journal of Bone and Joint Surgery last month identified five cases of catastrophic trunnion dissociation in Stryker Accolade TMZ Femoral Hip Stems. What does that mean in lay terms? It means that the hip implant device fails painfully in a small percentage of patients with certain risk factors approximately 7 to 7.5 years after surgery. And the $1.4 billion settlement for patients with defective Stryker hip implants following hip replacement surgery may not be the end of the lawsuits for the company.
Earlier this week, medical device manufacturer Olympus agreed to pay the largest ever civil False Claims Act settlement by a medical device manufacturer to resolve a lawsuit over violations of the federal anti-kickback statute. In addition to the record $310.8 million, they also agreed to pay $312.4 million in criminal penalties. A reward of around $51 million will go the whistleblower in the case.
It must be the last weekend before Christmas because health care companies are looking to resolve government investigations into their wrongdoing before we leap into the new year! In the last two days, we’ve now seen four multi-million dollar settlement announcements in False Claims Act cases.
Over the past few years, our personal injury lawyers have been representing more clients in cases of defective or improperly used medical devices. Although part of this may be due to an expansion of our interests in this area, health technology is a growing part of the practice of medicine and this no doubt has something to do with the fact that we are seeing more defective products in potential medical malpractice cases.
The Department of Justice is reportedly nearing settlements with hundreds of hospitals over their fraudulent billing of Medicare for defibrillators. Medicare covered the $40,000+ defibrillators for the primary prevention of arrhythmia unless they were implanted within 90 days of bypass surgery or 40 days of a heart attack. Doctors implanted the medical devices in patients and then fraudulently billed Medicare in spite of the guidelines.
This is expected to be the largest settlement in terms of the number of hospitals and the amount for a group of hospitals. In 2013, 55 hospitals settled a national investigation for $34 million into the use of cement in fractured vertebrae, a procedure known as kyphoplasty. The government is reportedly using data mining techniques this time around to assist them in their investigation.
The cardiac investigation dates back to at least 2012, when Modern Healthcare reported that the Justice Department was simultaneously emailing hundreds of hospitals with questionnaires concerning their use of the devices. At that time, Modern Healthcare obtained a document from the DOJ called the “Medical Review Guidelines/Resolution model”. It divided the possible scenarios for hospital billing of patients into categories which included those covered by the National Coverage Determination and/or excluded from the investigation, that the government had used its discretion to determine it would not bring enforcement (referred to as buckets), and those which would be included in an enforcement action.
The enforcement action(s) included certain coding errors, patients who were previously qualified but did not have an implantation until they were not within the coverage window, and those where it was not medically indicated. The calculation identified that the hospitals would be charged for the difference between the code they used and the correct code, as well as a per hospital multiplier of damages based on a variety of factors including knowledge, compliance efforts and patient harm.
At least six healthcare systems have already publicly reported the amount of their settlements to shareholders. Tenet announced a settlement of $12.1 million and HCA indicated their number was $15.8 million.
It will be interesting to see how the credit for this victory is shared. It seems likely that there are a number of whistleblowers out there, insiders who reported their hospital to the federal government through a qui tam lawsuit and may be in line for a reward as part of the settlement. The False Claims Act requires the DOJ to pay eligible relators between 15 and 25 percent of the award (in cases like this one where the government has not declined to intervene in the case). However, there are various rules such as the first to file rule and public disclosure which could limit those payments.
1,444 companies paid 1,100 teaching hospitals and 607,000 physicians nearly $6.5 billion in 2014. It is the first full year of data concerning the financial ties between doctors and the pharmaceutical companies and medical device manufacturers that are paying them. The data counts the value of meals as well as payments for speeches, consulting and research.
Pfizer is believed to have made the most payments with $234 million in research payments and general outlays of $53.3 million. Some companies like Johnson & Johnson and Merck reported payments from several different entities.
The data comes from the release of the second annual Open Payments report by the Centers for Medicare and Medicaid Services today. Last year, CMS released information for payments from August 1 until December 31, 2013. Physicians and teaching hospitals received $3.43 billion in payments during the last 5 months in 2013.
The release of this information was authorized by the Affordable Care Act in 2010. The provision, called the Sunshine Act, requires manufactures to disclose their payments to physicians and teaching hospitals. The effort is to bring transparency, or sunshine, to the ties that might impact a doctor’s prescribing decisions and inform their patients of them.
As we represent several health care whistleblowers in False Claims Act litigation that has been unsealed, and have seen several other settled and currently pending cases, we know that drug and device companies do cross the bounds when marketing their products. The allegations we have seen allege that payments for speaker programs were in effect kickbacks in violation of the Anti-Kickback Statute and the Stark Law. Many of these payments were for “sham” speak programs that had few or no attendees as well as little, if any, educational value. Companies were also expressly tying the participation of physicians in their speaking programs, for which they receive compensation, to the amount of product that they prescribed.
Patients should be aware of these tactics of marketing medical products, check the data and speak to their physician about their medications.
An annual report by the Departments of Justice and Health and Human Services identified more than $100 million in fines issued against medical device companies in 2014, according to FierceMedicalDevices. The total includes fines against Carefusion for off-label marketing, Boston Scientific’s Guidant for defective cardiology devices, Medtronic for kickbacks to doctors for pacemakers and Abbott Labs for encouraging the submission of false claims for surgeries to Medicare.
The False Claims Act is one of the primary tools in the government’s arsenal to fight fraud by medical device manufacturers. It has helped the government recover billions of dollars lost to fraud over the past 25 years. It also authorizes the Department of Justice to pay rewards of between 15 and 30 percent of the government’s recovery to whistleblowers who file a qui tam lawsuit and provide evidence of health care fraud.
In other news, recalls of medical devices have fallen by more than 50% in the first quarter of 2015 compared to Q4 2014, when there was a record 968, according to analysis by Regulatory Affairs Professional Society covered by FierceMedicalDevices. The 426 recalls was the second lowest total from the FDA’s data, which includes information going back to 2013. It reversed a trend of gains in three straight quarters.
The total number of devices recalled is not reflected in this information, however. It only measures the number of different models recalled. One model number recall could implicate hundreds or thousands of different devices.
The fall in recalls comes at the same time that medical device manufacturer Olympus has been caught up in the controversy over contaminated duodenoscopes leading to CRE superbug infections. The spread of deadly infections linked to the device and its decision not to seek FDA clearance when it sealed the elevator wire channel has already resulted in patient lawsuits seeking compensation for damages. Our law firm is investigating patient claims of infections caused by these devices.