Respironics, a sleep and respiratory care company owned by Royal Philips, has agreed to pay $34.8 million to settle claims it paid kickbacks to the suppliers of its sleep apnea masks, according to a statement released by the U.S. Department of Justice on Wednesday.

From April 2012 until last November, the Murrysville, Pennsylvania-based company provided free customer support through its medSage call center to the suppliers whose customers used Respironics masks. Meanwhile, suppliers that sold masks made by competitors had to pay for the service, according to the Department of Justice.

The masks can be covered by Medicaid or Medicare programs and it's against the law to induce medical suppliers to use a particular company's product for any government-covered medical service.
"The payment of illegal remuneration in any form to induce patient referrals threatens public confidence in the health care system," said principal deputy assistant attorney general Benjamin C. Mizer, head of the Justice Department's Civil Division, in the statement. "Americans deserve to know that when they are prescribed a device to treat a serious health care problem, the supplier's judgement has not been compromised by illegal payments from equipment manufacturers."

The kickback accusations emerged two years ago when Dr. Gibran Ameer, a South Carolina pharmacist who has worked for various medical supply companies, filed a whistleblower claim citing violations under the provisions of the False Claims Act.

For Philips Respironics, a spokesperson for the company said it had a "good-faith belief that the Fit for Life program offered a permissible bundled discount of Respironics' masks and resupply services under the appropriate discount safe harbors."

But according to the Associated Press, since suppliers paid nothing extra for the Respironics masks but were charged 99 cents a month for each patient who used the call center regarding a non-Respironics mask, the government called that explanation "fictitious."

The federal government will receive more than $28.7 million from the settlement and Ameer will receive $5.4 million under provisions of the False Claims Act which allow private citizens a share of the settlements from fraud they expose against the government. Philips Respironics will also pay an additional $660,000 to cover claims by state Medicaid programs.

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