The U.S. Attorneys Office for the Southern District of California announced that Phillips Respironics, a manufacturer of durable medical equipment based in Pennsylvania, has paid $2,471,359.25 to resolve allegations that it violated the False Claims Act by giving kickbacks to sleep laboratories.

The Anti-Kickback Statute prohibits paying money or giving goods to induce referrals for medical services or items covered by a federal health care program, such as Medicare, Medicaid or TRICARE. Claims submitted to these programs in violation of the Anti-Kickback Statute give rise to liability under the False Claims Act.

The settlement resolves allegations that from 2016 through 2021, Philips RS North America LLC f/k/a Philips Respironics, Inc. provided sleep labs with free masks used to treat and diagnose sleep-related respiratory disorders to induce the labs’ physicians to write referrals or prescriptions for Respironics-brand masks that suppliers would fill and bill to federal health care programs.

“Respironics’ improper inducements corrupted the integrity of federal healthcare programs, including the Department of Defense’s (DoD) TRICARE program,” said Bryan D. Denny, Spec ial Agent-in-Charge of the DoD Office of Inspector General, Defense Criminal Investigative Service (DCIS), Western Field Office. “DCIS will continue to pursue those who defraud or attempt to defraud TRICARE, because those deceptive actions ultimately harm those defending our country and their families.”

This settlement was the result of a coordinated effort by the U.S. Attorney’s Office for the Southern District of California; the Defense Criminal Investigative Service; the Department of Health and Human Services, Office of Inspector General and Office of Counsel to the Inspector General; the Defense Health Agency Office of General Counsel; the Civil Division of the United States Department of Justice; and the National Association of Medicaid Fraud Control Units.

This case was prosecuted by Assistant U.S. Attorney Dylan M. Aste. The claims resolved by the settlement are allegations only, and there has been no determination of liability.

The kickback allegations are separate from the ongoing issues surrounding the recall of millions of Philips CPAP machines initiated in June 2021, due to concerns about a toxic sound abatement foam. Approximately 5.5 million CPAP, BiPAP, and mechanical ventilator devices are affected globally, due to concerns about potential health risks associated with the sound abatement foam used in these machines. The specific models and serial numbers involved can be found on the FDA website.

The degraded foam can potentially release particles, chemicals, and volatile organic compounds (VOCs) that users can inhale or swallow. These exposures may lead to irritation, inflammation, headaches, chest discomfort, and other respiratory problems. In some cases, more serious risks like lung cancer and other long-term health effects are also a concern.

Multiple lawsuits have been filed against Philips in the US and other countries, alleging negligence and harm caused by the defective devices.

In September 2023, Philips agreed to a partial $479 million settlement to compensate US patients for financial damages related to the recall.

Bellwether trials, intended to set precedents for future lawsuits, are now expected to begin in 2025.