Semler Scientific AndCipria Pay $37 Million To Resolve Medical Device Fraud Allegations

Semler Scientific and Bard Peripheral Vascular Pay $37 Million to Resolve Medical Device Fraud Allegations

Semler Scientific Inc. ("Semler Scientific") and Bard Peripheral Vascular Inc. ("Bard Inc.") have agreed to pay nearly $37 million to settle allegations that they violated the False Claims Act ("FCA") by promoting medical devices that were not eligible for Medicare reimbursement as if they met coverage and billing requirements. The case highlights how whistleblowers continue to play a critical role in exposing medical device fraud and protecting federal healthcare programs.

What is Medical Device Fraud under the FCA?

The FCA allows whistleblowers to file qui tam lawsuits against entities that defraud government programs, such as Medicare and Medicaid. The Act provides that any person who knowingly submits, or causes to submit, fraudulent ("false") claims to the government is liable for three times the government's damages. FCA liability can also arise in situations where someone knowingly misrepresents a product or procedure to submit a false claim or submits claims that improperly avoids an obligation to pay the government based on false statements.

Fraud under the FCA shows up in many different ways. Medical device fraud can arise in situations where someone bills procedures using unapproved or unnecessary devices, uses deceptive marketing practices, or engages in illegal kickbacks. To help ensure that Medicare and Medicaid are paying for necessary and approved devices, governmental agencies, such as the Centers for Medicaid and Medicare, along with the Federal Drug Administration ("FDA") outline mandatory stipulations for procedures and devices covered by Medicare.

Key Allegations Against Semler Scientific and Bard Inc.

Semler Scientific and Bard Inc. are alleged to have violated the FCA by knowingly causing, and conspiring to cause, the submission of false claims to Medicare for photoplethysmography tests performed using the FloChec and QuantaFlo devices in connection with the diagnosis of peripheral arterial disease ("PAD"). Providers traditionally diagnose PAD by conducting a test called an ankle brachial index ("ABI") to estimate the severity of the blockage in a patient's limbs. To qualify for Medicare reimbursement, devices used to diagnose PAD may not use photoplethysmography and must also be able to perform an ABI.

Both devices manufactured, marketed and distributed by Semler, the FloChec and the QuantaFlo, do not perform an ABI and also use photoplethysmography. The Department of Justice ("DOJ") alleges that Semler was aware that the testing conducted by the devices did not satisfy the requirements on Medicare. Nevertheless, Semler allegedly represented healthcare providers that Medicare reimbursed customers for the tests provided, even after Semler received concerns from third parties about reimbursement. Bard Inc. served as Semler's distributor from 2012 to 2022 and is also alleged to have submitted false claims in relation to the FloChec and the QuantaFlo.

The DOJ Penalizes False Claims to Medicare

Semler Scientific has agreed to pay $29.75 million, and its former distributor, Bard, has agreed to pay $7.2 million to resolve allegations that they violated the False Claims Act. In addition to the settlement, Semler has entered into a five-year Corporate Integrity Agreement with the United State Department of Health and Human Services Office of Inspector General, which obligates Semler to undertake substantial internal compliance reforms.

This settlement illustrates the government's emphasis on combating medical device fraud. The DOJ has continuously emphasized the importance of Medicare billing regulations to ensure that taxpayer dollars and the limited resources available for our healthcare system are used honestly. The DOJ has stated that medical device companies that misrepresent the capabilities of their product and encourage providers to bill for services that don't meet the coverage requirements will be investigated.

Role of Whistleblowers in Combating Medical Device Fraud

Under the FCA, whistleblowers, also known as relators in qui tam cases, are afforded strong legal protections for playing a critical role in exposing healthcare fraud. The FCA prohibits employers from retaliating against employees who report misconduct to ensure that individuals who report fraud cannot be demoted, fired, harassed, or otherwise discriminated against for their actions.

Whistleblowers play a crucial role in exposing bad actors and protecting tax-payer dollars. Those who come forward with information regarding fraud against government programs can receive 15-30% of the judgment or settlement for their contributions to the case. The allegations in Semler Scientific were originally brought in a lawsuit filed by Robert Kane and Franklin West under the qui tam provisions of the FCA. Mr. Kane and Mr. West will receive approximately $6.5 million as their share of the recovery.

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