Dive Brief:

• Biotronik has agreed to pay $12.95 million to settle allegations it paid kickbacks to physicians to drive use of pacemakers, defibrillators and other cardiac devices. 
• The Department of Justice accused Biotronik of abusing a new employee program by paying physicians to provide “excessive” training and of funding lavish meals, entertainment and travel for certain physicians.
• Biotronik settled the case without admitting liability, enabling it to resolve an issue that has hung over its business since the submission of an action in California more than four years ago.

Dive Insight:

The DOJ allegations fall into two groups. First, the department accused Biotronik of knowingly paying excessive amounts to physicians to induce and reward their use of its cardiac devices. The allegations center on a new employee training program.

According to the DOJ, Biotronik paid physicians a fixed fee of around $400 when one of its own employees received training during a cardiac rhythm management implant procedure. The program was intended to educate employees about the devices and how to assist physicians during implant procedures. The DOJ accused Biotronik of abusing the program.

“At various points during the relevant time period, Biotronik’s compliance and training departments warned that Biotronik’s salespeople had too much influence in the selection of Training Physicians, that the Training program and resulting payments were being overutilized, and that the goal of educating Biotronik employees could be achieved without paying Training Physicians,” the DOJ wrote.

The DOJ went on to accuse Biotronik of allowing trainees to attend an excessive number of sessions without assessing if additional training was needed. In some instances, Biotronik salespeople, including managers, “intentionally prevented otherwise qualified trainees from successfully completing the Training Program, not because they needed additional training, but rather as a means of ensuring that the trainee could attend more trainings,” according to the DOJ.

Physicians allegedly received payments for training sessions that never occurred, for example when no trainee was physically present to observe the procedure. Biotronik adopted new compliance measures in 2017 and reduced its payments. 

The Justice Department accused Biotronik of making false claims for Medicare and Medicaid reimbursement and noted that the company will pay additional amounts to Medicaid programs in a number of states.

The second set of allegations focused on “lavish” meals, entertainment and travel. According to the DOJ, Biotronik frequently did not require sign-in sheets for meals, adequately verify the number or identity of attendees, or confirm the events were for legitimate business purposes. The oversight shortcomings allegedly enabled some Biotronik employees to falsify records and thereby exceed the per-attendee spending limit.   

“Biotronik paid for winery tours, annual office holiday parties, and lavish meals with certain Subject Physicians and their guests at high-end restaurants. Certain Biotronik employees and Subject Physicians recalled that these meals and outings often included little or no legitimate business discussion. Biotronik also paid for one Subject Physician's international business class airfare and honoraria in the thousands of dollars for a short, 30-minute talk at an international conference,” the DOJ wrote.

"The Company is pleased to put this investigation behind us so we can continue in our mission to deliver innovative solutions that save and improve patient lives every day," Biotronik’s president, Ryan Walters, said in a statement.

Biotronik hired a new VP of compliance in April 2021, added compliance measures related to the provision of meals and travel and improved its ability to identify and prevent violations of its policies, the DOJ wrote.