A Danvers medical device company has agreed to pay $3.1 million to the federal government to settle allegations that sales representatives violated an anti-kickback statute to get doctors and nurses to use the firm’s heart pumps on Medicare patients.
The alleged kickbacks by Abiomed Inc. consisted of lavish meals, with plenty of alcohol, at some of the country’s swankiest restaurants, including Menton in Boston, Spago in Beverly Hills, Nobu in Los Angeles, and Eleven Madison Park in Manhattan, according to federal prosecutors. On one occasion, Abiomed picked up the check for a meal that would have cost each guest more than $450 — far more than the company’s own guideline of no more than $150 a guest.
Abiomed managers reimbursed sales representatives even though the guests had included doctors’ spouses and there was “little to no scientific discussion,” according to the settlement agreement signed by the company and prosecutors in the office of US Attorney Andrew E. Lelling.
In some cases, the sales representatives padded the number of attendees to reduce the charge per person and made little effort to conceal that names were bogus. One one occasion, a diner was identified as Mike Anesthesia.
It was all part of a 2012 to 2015 effort by Abiomed to get doctors and hospital staff to use its Impella heart pumps — and it allegedly violated a federal anti-kickback statute.
“We expect today’s settlement with Abiomed to serve as a warning to medical device manufacturers who try to improperly influence the treatment decisions of physicians,” said Lelling.
“Providing doctors with lavish meals, or meals that focus on entertainment rather than education or science, can impair a physician’s independent medical judgment – something each and every patient is entitled to.”
In a statement, a spokeswoman for Abiomed said, “After nearly four years, we are putting this matter behind us to focus on our heart recovery mission and to continue investing in innovation, education and clinical support to ensure we help improve patient outcomes.”
Abiomed makes and markets heart pumps that help blood flow. Doctors also use the devices to perform the heart’s pumping function during cardiac surgery.
The case stems from a whistle-blower complaint by Max Bennett, a former Abiomed employee who lives in Orlando. He will receive $542,500 from the settlement. Bennett worked as director of clinical operations for Abiomed for a month in the fall of 2012 until he was fired, according to his complaint.
Bennett’s lawyer, Rory Delaney, of Boston, said his client was fired after he complained to superiors about practices of sales representatives that he believed violated the federal anti-kickback statute and False Claims Act. Bennett has a wrongful-termination lawsuit against Abiomed pending in federal court, Delaney said.
Delaney said the misleading documentation submitted by sales representatives for reimbursements wasn’t designed to deceive managers but to give everyone cover.
“It creates a paper trail and gives deniability to the company,” he said. “The name Mike Anesthesia is going to make somebody smile. It’s not going to deceive anyone.”
In a filing with the Securities and Exchange Commission on Thursday, the company said the settlement “contains no admission of liability” and that “resolving this matter was in the best interests of its patients, customers, shareholders and employees.”
The settlement didn’t rattle investors. Abiomed’s share price rose $3.22 on Thursday, closing at $288.60 on the Nasdaq exchange, an increase of just over 1 percent.
The company, which has a market value of more than $12 billion, was founded in Danvers in 1981 as Applied Biomedical Corp. Abiomed employs about 850 people worldwide, including 350 at its headquarters, research, and production site in Danvers.
Michael Minogue, who joined Abiomed as chief executive in 2004, told the Globe in 2016 that he had changed the focus of Abiomed over two decades from installing artificial hearts to building a portfolio of heart pumps.
“We needed to get smaller and minimally invasive,” he said. “[So] we took the concept of the artificial heart, cut it in half, and put the pump outside the body. So for people who had an acute event where their heart needed temporary support, they could use that pump in order to help the heart rest and recover.”
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