United States Settles False Claims Act Allegations with Cochlear Americas for $880,000

June 9, 2010 - WASHINGTON – Cochlear Americas, a Colorado-based cochlear implant manufacturer, has agreed to pay $880,000 to resolve allegations that it paid illegal remuneration to health care providers to induce purchases of cochlear implant systems, the Justice Department announced today. Cochlear Americas is a subsidiary of an Australian company, Cochlear Limited.

The settlement resolves a lawsuit brought by a whistleblower, Brenda March, in 2004. The lawsuit, filed in the District of Colorado, alleged that Cochlear Americas violated the Anti-kickback Act and the False Claims Act by paying various forms of illegal remuneration to physicians who prescribed the use of the Cochlear-manufactured devices for Medicare and Medicaid patients.

The United States intervened in the lawsuit in January 2007, and then shortly thereafter, moved to stay the suit, while the United States pursued an administrative civil monetary penalties investigation against Cochlear. The settlement announced today resolves that administrative matter as well as the lawsuit initiated by the whistleblower.

"Today’s actions demonstrate that the United States will not tolerate the payment of kickbacks by any entity involved in providing medical goods and services to beneficiaries of federal health care programs," said Assistant Attorney General Tony West, head of the Justice Department’s Civil Division.

"This office is determined to protect the integrity of the Medicare and Medicaid programs for the citizens of Colorado and of the United States," said David Gaouette, U.S. Attorney for the District of Colorado.

Ms. March brought her suit under the qui tam provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Under the civil settlement announced today, she will receive $176,000.

The settlement announced today was the result of a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the District of Colorado, Affirmative Civil Enforcement Unit; and the U.S. Department of Health and Human Services, Office of Counsel to the Inspector General and Office of Investigations.