Risk & Compliance

Olympus Fined $623M Over Bribery Scheme

The medical device maker was accused of paying bribes and kickbacks to doctors and hospital administrators to win new business.
Matthew HellerMarch 2, 2016

Olympus Corp. of the Americas has agreed to pay $623 million to settle charges it bribed doctors and hospitals to buy its medical devices as part of a scheme that generated more than $600 million in sales.

The settlement announced Tuesday resolves both criminal and civil claims and is the largest ever paid by a medical device company for violating the federal anti-kickback statute. A former Olympus employee who brought a whistleblower suit against the company will receive $51 million of the settlement.

John Slovik, Olympus’s former chief compliance officer, alleged Olympus ignored his complaints about its policy of disguising payments to hospitals as grants and lavishing expensive trips and entertainment on doctors and hospital administrators in order to sell equipment. He was terminated in 2010.

According to federal prosecutors, Olympus won new business by giving doctors and hospitals consulting payments, foreign travel, lavish meals, millions of dollars in grants and free endoscopes.

“The Department of Justice has longstanding concerns about improper financial relationships between medical device manufacturers and the health care providers who prescribe or use their products,” Principal Deputy Assistant Attorney General Mizer said in a news release.

“In addition to yielding a substantial recovery for taxpayers, this settlement should send a clear message that we will not tolerate these types of abusive arrangements, and the pernicious effects they can have on our health care system,” she added.

Among Olympus’s illegal payments and gifts, prosecutors said, was a trip for three doctors to travel to Japan in 2007 as a quid pro quo for their hospital’s decision to switch from a competitor to Olympus. a Another doctor with a major role in a New York medical center’s buying decisions received free use of $400,000 in equipment for his private practice.

“These and other kickbacks helped OCA obtain more than $600 million in sales and realize gross profits of more than $230 million,” the Justice Department said.

The settlement includes a $312.4 million criminal penalty and an additional $310.8 million to settle civil claims under federal and state False Claims Acts.

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