Cardinal Health to pay $13M to settle claims it paid kickbacks to doctors

The U.S. Department of Justice announced that Cardinal Health (NYSE:CAH) agreed to pay more than $13 million to resolve kickback allegations.

Allegations against Dublin, Ohio-based Cardinal Health include a violation of the False Claims Act by paying “upfront discounts” to its physician practice customers in violation of the Anti-Kickback Statute.

The Anti-Kickback Statute prevents pharmaceutical distributors from offering or paying any compensation to induce physicians to purchase drugs for use on Medicare patients, according to a DOJ news release. According to the acknowledged facts in the settlement agreement, Cardinal Health failed to meet requirements as the upfront discounts it provided to customers were not attributable to identifiable sales or were purported rebates that had not been earned by Cardinal Health customers.

“Cardinal Health recruited new customers by offering and paying cash bonuses in violation of the Anti-Kickback Statute and False Claims Act. Kickback schemes, such as this one, have the potential to pervert clinical decision-making and are detrimental to our federal health care system and taxpayers,” U.S. Attorney Rachael S. Rollins said in the release. “We commend Cardinal Health for resolving this matter cooperatively.”

Rollins, HHS Office of Inspector General Special Agent in Charge Phillip M. Coyne and Boston FBI Special Agent in Charge Joseph R. Bonavolonta made the announcement of the settlement agreement yesterday. Assistant U.S. Attorneys Evan Panich and Lindsey Ross of Rollins’ Affirmative Civil Enforcement Unit handled the matter.

The False Claims Act settlements resolve allegations initially brought in through lawsuits filed by whistleblowers under the qui tam provisions of the act. In connection with the announced settlement, the relators will receive approximately $2.6 million of the recovered funds in the settlement.

“Pharmaceutical distributors are expected to play by the rules and not engage in illegal arrangements,” Coyne said. “Working with our law enforcement partners, we will continue to investigate kickback schemes that threaten the integrity of our federal health care system, no matter how those schemes are disguised.”

Cardinal Health did not immediately respond to a request for comment on the settlement. This story may be updated.