Hollister Inc., a manufacturer of disposable healthcare products, and Byram Healthcare Centers Inc., a supplier of medical products, will pay $11.44 million and $9,372,882.50, respectively, to resolve allegations that Hollister paid unlawful kickbacks to Byram and that Byram received unlawful kickbacks from Hollister and several other manufacturers, with the intent to induce Byram to conduct promotional campaigns designed to refer patients to the manufacturers’ products.

The settlements resolve allegations in a whistleblower lawsuit filed by two former employees and one current employee of Coloplast under the qui tam provisions of the False Claims Act.

The whistleblowers’ share of the Hollister and Byram settlements has not been determined.

Claims against two other defendants in the lawsuit, Coloplast Corp. and Liberator Medical Supply Inc., were resolved in December 2015 for a total of $3.66 million.  The settlements announced today bring the total recovery in the case to $24.6 million.  The whistleblowers are pursuing certain additional claims in the case.

The settlement with Hollister resolves allegations that, from 2007 through 2014, it paid kickbacks to Byram in return for marketing promotions, conversion campaigns and other referrals of patients to Hollister’s ostomy and continence care products.

On seven occasions from 2007 through 2012, Hollister allegedly agreed to pay Byram the costs of bonus commissions (sometimes called spiffs) that Byram paid to its sales personnel for each new patient order for a Hollister product.

Each year from 2009 to 2014, Hollister allegedly agreed to pay Byram $200,000, for “catalog funding” that was actually intended to induce Byram’s recommendation of Hollister products to patients.

The settlement with Byram resolves the same catalog funding claims, as well as allegations that, in 2012 and 2013, Byram received numerous kickbacks from Hollister and three other manufacturers of ostomy and continence care products, namely Coloplast Corp., Montreal Ostomy and Safe N’ Simple, in return for Byram’s agreement to conduct promotional campaigns and to refer patients to the manufacturers’ products.

The settlement with Byram also resolves allegations by the United States and the state of California that Byram submitted falsely inflated claims to the California Medi-Cal program in violation of California’s upper billing limit regulation, Cal. Code Regs., tit. 22, § 51008.1, which limits the amount a provider can bill for certain products.

The United States and the state of California allege that, when Byram billed Medi-Cal for Coloplast urology products that Byram sold to Medi-Cal beneficiaries, Byram knowingly failed to account for substantial discounts that Byram knew, at the time it billed the Medi-Cal program, materially reduced the prices it paid for the products.

In connection with the False Claims Act settlement, Byram has also entered into a corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).