AG Curtis Hill Reaches Settlement With Medical Device Manufacturer Over Alleged Kickbacks

Attorney General Curtis Hill announced today that Indiana has joined with other states and the federal government to reach an agreement in principle with a Utah-based medical device manufacturer to settle allegations that the company offered unlawful kickbacks to health care providers in order to induce them to purchase its medical devices.

Merit Medical Systems (Merit) will pay the states and the federal government $18 million – $5.58 million of which will go to Medicaid programs – to resolve civil allegations that Merit’s unlawful promotion of its medical devices caused false claims to be submitted to government health care programs. As part of the settlement, Indiana Medicaid will receive $285,584 in restitution and other recoveries.

Merit markets and sells embolotherapeutic devices used to treat abnormal connections between arteries and veins, symptomatic uterine fibroids and hypervascular tumors.

Specifically, the settlement resolves allegations that from Sept. 1, 2010 to March 31, 2017, Merit offered health care providers millions of dollars through its Local Advertising Program in free advertising assistance, practice development, practice support, and purportedly unrestricted “educational” grants to induce the health care providers to purchase and use Merit products in medical procedures performed on Medicaid beneficiaries. 

Merit used its Local Advertising Program to reward its high-volume customers with patient referrals and financial advertising support, but removed those customers from the program if they did not convert to or increase their use of Merit’s devices in their uterine fibroid embolization procedures.

This settlement arises from a 2016 action filed in the U.S. District Court for the District of New Jersey under the federal False Claims Act and various state false-claims statutes.

“Paying unlawful kickbacks to doctors so they use certain products for procedures undermines the integrity of Indiana’s health care programs,” Attorney General Hill said. “Hoosiers – especially the most vulnerable Hoosiers – deserve to know that their health care professionals are selecting devices based solely on quality, and not based on kickbacks.”

A National Association of Medicaid Fraud Control Units team participated in the settlement negotiations with Merit on behalf of the states. In addition to Indiana, this team included representatives from the Offices of the Attorneys General for the states of California, Illinois, New York, Oklahoma, and Virginia.

The Indiana Medicaid Fraud Control Unit receives 75% of its funding from the U.S. Department of Health and Human Services under a federal grant. The remaining 25% is funded by the State of Indiana.