Medical device maker EndoGastric Solutions Inc. will pay about $5.25 million to settle a False Claims Act whistleblower lawsuit. The company was accused of paying kickbacks and misleading health care providers about how to bill federal health care programs. Redmond, Wash.-based EndoGastric manufactures and sells a device called EsophyX, which is intended to treat gastroesophageal reflux disease as an alternative to a more invasive procedure. The government accused EndoGastric of encouraging health care providers to bill for the less invasive EsophyX procedure using codes applicable to the more invasive method, which provided for a higher level of reimbursement and caused the government to pay more than it should have.
EndoGastric also agreed to enter into a corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. Pursuant to the agreement, EndoGastric will launch a series of additional compliance measures. Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division, said in a statement:
Health care providers that cause the government to pay more than it should for medical devices not only cost us money as taxpayers, they raise the cost of health care for everyone. Medical device manufacturers must deal fairly and honestly with federal health care programs if they want to participate in them.
Relator Glenn Schmasow filed the qui tam lawsuit on behalf of the government in June 2012, accusing EndoGastric of conducting a fraudulent marketing and inducement campaign that caused up-coded claims to be presented to the Medicare program for reimbursement.
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