Last year, medical device maker CareFusion agreed to pay the government $40.1 million to settle False Claims Act (FCA) allegations that it paid kickbacks to healthcare providers to use its ChloraPrep device. According to DOJ, CareFusion paid $11.6 million in kickbacks to Dr. Charles Denham while he served as the co-chair of the Safe Practices Committee at the National Quality Forum (NQF). The NQF is a non-profit organization that reviews, endorses, and recommends standardized healthcare performance measures and practices.
At the time of the announcement, many healthcare fraud experts criticized DOJ for not pursuing FCA claims against Dr. Denham, the primary recipient of the alleged CareFusion kickbacks. However, a few days ago, the Justice Department closed the enforcement gap, when it announced the resolution of the qui tam action filed against Dr. Denham.
The settlement requires Dr. Denham to pay the government $1 million. The DOJ maintained that Dr. Denham failed to disclose to the committee, or any other individual or component of the NQF, that he was receiving payments from CareFusion. DOJ also alleged that Dr. Denham solicited and received payments from CareFusion in exchange for influencing the recommendations of the NQF and for recommending, promoting and/or arranging the purchase of CareFusion’s product ChloraPrep. According to DOJ, this conduct caused the submission of false or fraudulent claims for ChloraPrep to federal healthcare programs.
At first blush, the $1 million settlement check seems like a pittance compared to the $11.6 million that CareFusion allegedly paid Dr. Denham over the years. However, the FCA theory of liability deployed in this case was outside of the norm for DOJ and damages may have been difficult to assess. With that being said, the fact that DOJ took the unprecedented step in pursuing an action against the alleged kickback recipient is noteworthy.