Olympus will pay $646 million plus interest to resolve two kickback investigations

Medical device company and endoscope manufacturer Olympus Corp. of the Americas has agreed to pay a total of $646 million plus interest to resolve two separate government investigations related to providing physicians and hospitals with kickbacks.

Olympus will pay $312.4  million criminal penalty and $310.8 million to settle civil claims. In addition, its Latin American medical business, Olympus Latin America Inc., will pay $22.8 million for violations of the Foreign Corrupt Practices Act.

The company entered into a three-year deferred prosecution agreement (DPA) that lets the company avoid criminal charges if it complies with certain requirements.

According to the complaints against Olympus, there were several examples of how the company won new business by providing kickbacks to physicians and hospitals.

For instance, Olympus once gave a hospital a $5,000 grant to go through with a $750,000 sale. And Olympus paid for three doctors to travel to Japan after the doctors’ hospital decided to switch from a competitor’s services to Olympus.

“For years, Olympus Corporation of the Americas and Olympus Latin America dropped the compliance ball and failed to have in place policies and practices that would have prevented the substantial kickbacks and bribes they paid,” Paul J. Fishman, U.S. attorney of the District of New Jersey, said in a prepared statement. “It is appropriate that they be punished for that. At the same time, the deferred prosecution agreement takes into account the companies’ cooperation and commitment to fully functional corporate compliance.”

“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,” Benjamin C. Mizer, principal deputy assistant attorney general of the Justice Department’s civil division, said in the same statement. “Such relationships can improperly influence a provider’s judgment about a patient’s health care needs, result in the use of inferior or overpriced equipment, and drive up health care costs for everybody. 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.”

Nacho Abia, Olympus Corp. of the Americas president and CEO, said in a separate statement Olympus has improved its existing compliance measures as a result of these investigations.

“Olympus leadership acknowledges the Company’s responsibility for the past conduct, which does not represent the values of Olympus or its employees,” Abia said. “Olympus is committed to complying with all laws and regulations and to adhering to our own rigorous Code of Conduct which guides our business processes, decisions and behavior. The Company has implemented and will continue to enhance its robust compliance program.”