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Philips to pay $24.8M CPAP Machines Settlement

Philips Respironics will pay more than $28.4 million to resolve allegations raised in an employee’s whistleblower lawsuit. The company stands accused of engaging in an illegal kickback scheme. The allegations say Philips defrauded Medicare and Medicaid, as well as other health insurance programs. According to the whistleblower’s allegations in the complaint, Philips was paying illegal kickbacks to entice medical equipment suppliers to submit insurance claims for Philips CPAP and other breathing devices.

Millions of recalled Philips DreamStation, CPAP, BiPAP and ventilator machines may release toxic foam particles and chemicals into users.

In addition, earlier this month, just over a year after Philips issued a recall for millions of CPAP and BiPAP machines, the company issued another major recall of more of its CPAP devices. This recall came after a plastic component in the device was found to be incompatible; so that it could possibly release carcinogenic chemicals into the airways of unsuspecting users. That recall could lead to additional Philips CPAP litigation besides that which has already been filed over last year’s recall.

44 Philips CPAP Deaths disclosed

In late August 2022, the FDA’s public update on the Philips CPAP recall disclosed that from May 1, 2022 to July 31,2022, more than 48,000 adverse event reports were reported to FDA. Those reports included 44 deaths linked with the breakdown of the PE-PUR foam in the recalled Philips CPAP devices.

A U.S. Department of Justice  press release announced the $28.4M settlement earlier this month. A whistleblower brought the suit claiming Philips violated the False Claims Act. The company allegedly broke federal law by offering financial incentives to medical equipment suppliers. The plan was to entice users to submit insurance claims for CPAP and other breathing devices.

Besides illegal kickbacks, Philips was accused of giving suppliers physician prescribing data to help them market company products to other physicians.

Despite the settlement, Philips still faces more DOJ investigations into the 2021 recall of the company’s CPAP machines. That recall affected millions of sleep apnea users and the devices they used for years. Those machines contained a toxic sound abatement foam linked to cancer, lung damage, and other respiratory problems. Philips has been accused of trying to hide or downplay the size of the problem, while the company continued to profit from sales of the defective machines.

Philips CPAP Recall

On April 26, 2021, Philips issued an update regarding its efforts to address issues it identified in many Philips Sleep and Respiratory Care products. Philips also ceased all sales of its DreamStation 1 CPAP products in the US, updating that recall in June 2021. Because it is considered a voluntary recall by FDA, the action is listed as a “safety notification.”

Millions of Philips’ sleep apnea and ventilator machines were named in the recall, but most involved the DreamStation, a first-generation production line within a 5-year service life. Philips issued the recall for machines that contained a sound-abatement foam made of polyester-based polyurethane. The problem was that material could degrade and release inhalable particles and chemicals. Philips estimates that some four million devices could be affected in the U.S. alone.

“Paying illegal remunerations to induce patient referrals undermines the integrity of our nation’s health care system,” said Principal Deputy Assistant Attorney General Brian M. Boynton, who heads the Justice Department’s civil division. He spoke in a press release that trumpeted the Philips Respironics whistleblower lawsuit settlement. Mr. Boynton added: “To ensure that the goods and services received by federal health care program patients are determined by their health care needs, rather than the financial interests of third parties, we will pursue any individual or entity that violates the prohibition on paying kickbacks, including DME manufacturers.”

The settlement means Respironics will pay $22.62 million to the federal government, along with $2.13 million to different states affected by the kickbacks. Philips has also entered into a five-year Corporate Integrity Agreement which requires independent monitoring of the company’s compliance systems. It also faces a review of arrangements with referral sources and a monitoring of the company’s sales force.

The settlement resulted from a whistleblower lawsuit filed by Jeremy Orling. The former Philips employee will receive roughly $4.3 million as a reward for reporting the fraud. His reward will come from the qui tam provisions of the False Claims Act.

Philips CPAP Investigation and Litigation

The Philips Respironics settlement with the government does not address or resolve potential liability the company is expected to face following the recall of faulty CPAP, BiPAP, and ventilators. They contained a polyester-based polyurethane (PE-PUR) sound abatement foam known (now) to break down and degrade inside the breathing machines. That breakdown releases toxic chemicals and particles into the air pathways that include the users’ lungs.

Thousands of former users are seeking settlements from the company with CPAP recall lawsuits.

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