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Kickback Scheme Rocks Massachusetts Healthcare Industry
Byram Healthcare Centers, Inc. and Hollister, Inc. have agreed to pay $11.44 million and $9.3 million, respectively, to resolve allegations of a kickback scheme that eroded patients’ trust in their medical care. The scheme, which spanned from 2007 to 2014, involved Hollister paying kickbacks to Byram in exchange for marketing promotions, conversion campaigns, and referrals of patients to Hollister’s ostomy and continence care products.
The scandal, which was uncovered through a whistleblower lawsuit filed by two former employees and one current employee of Coloplast, highlights the pervasive problem of commercial bribery in the healthcare industry. ‘We are committed to rooting out commercial bribery, especially in the healthcare industry where the payment of kickbacks erodes patients’ trust in the quality of their medical care,’ said U.S. Attorney Carmen M. Ortiz.
The kickback scheme, which involved the payment of millions of dollars in cash incentives, also threatened the integrity of the healthcare system and siphoned taxpayer dollars from the nation’s healthcare programs. ‘This settlement demonstrates the Justice Department’s continuing determination to prevent manufacturers and suppliers of medical devices covered by federal health care programs from paying or receiving kickbacks,’ said Principal Deputy Assistant Attorney General Benjamin C. Mizer.
The settlements resolve allegations that Byram received kickbacks from Hollister and three other manufacturers of ostomy and continence care products, namely Coloplast Corp., Montreal Ostomy, and Safe N’ Simple. The settlements also resolve allegations that Byram submitted inflated claims to the California Medi-Cal program in violation of the state’s regulation which limits the amount a provider can bill for certain products.
In connection with the False Claims Act settlement, Byram has agreed to pay $127,117 to California and has entered into a corporate integrity agreement with the U.S. Department of Health and Human Services, Office of Inspector General. The settlements are a significant blow to the healthcare industry, which has long been plagued by kickback schemes and other forms of commercial bribery.
The FBI and the Office of Inspector General will continue to aggressively investigate companies that engage in kickback schemes at the expense of both patients and taxpayers. ‘Those who seek to exploit the nation’s healthcare system through bribes or other fraudulent conduct will be held accountable for their actions,’ said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division.
Key Facts
- State: Massachusetts
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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