Medical Equipment Fraud/Device Fraud typically starts with the manufacturer, from failure to report adverse events, to off-label marketing, to providing financial inducements/kickbacks. This often results from c-suite pressure exerted on company employees, particularly the marketing and sales departments, to produce results and cultivate business.
One-third of the market share for medical devices is owned by Medtronic Inc., General Electric Company (GE), and St. Jude Medical Inc. Cardiac rhythm management devices (defibrillators, pacemakers, etc.) are the largest source of revenue for both Medtronic and St. Jude, whereas GE focuses on the manufacturing of diagnostic imaging technologies like CT and MRI machines. When measured in terms of therapeutic area, spending is highest in the following three markets: spinal, cardiovascular, and neuromodulation.
The failure to report adverse events to the FDA as required by law, may be a violation of the False Claims Act. Device fraud can also include manufacturing equipment and devices that deviate from the product’s PMA, or 510-K, or that are made in violation of Good Manufacturing Practices
Medical Equipment Fraud/Device Fraud also occurs when companies align themselves with physicians in a variety of kickback schemes. These relationships could include hiring physicians as “consultants” to help in the designing, testing, or developing of new products. These arrangements can violate the anti-kickback statute, particularly if they implicitly take into account the volume or value of referrals. These schemes can not only involve physicians, but also hospitals and hospital systems.