Medline Industries (“Medline”) recently settled an $85 million whistleblower lawsuit that alleged it was paying fraudulent kickbacks to hospitals and other purchasers that buy medical supplies paid for by Medicare and Medicaid. The whistleblower, Sean Mason who is a former Medline employee, will receive $23.4 million of the settlement. This settlement represents one of the largest alleged violations of the False Claims Act in which the government did not intervene.
Mason worked at Medline from 1998 to 2005 as a distribution service manager and director of account implementation. His position gave him personal knowledge of the company’s fraudulent activities. In his complaint, Mason alleged that Medline offered kickbacks to win new business and falsely labeled the kickbacks as “rebates.” Medline also offered expensive gifts and made charitable donations to gain business.
Medline Industries is the nation’s largest privately held manufacturer of healthcare products. It manufactures and distributes over 100,000 products to hospitals, extended care facilities, surgery centers, home care dealers and agencies. Medline has claimed that there were “no allegations that Medline caused financial harm to [its] customers or that any government program paid more for [its] products.”
It is always a shame when businesses try to profit at the expense of taxpayers. Although Medline thinks it didn’t financially harm any of its customers, clearly someone had to pay for the “rebates” and expensive gifts it was giving away to induce more business. By inducing purchasers with kickbacks to contract with Medline, Medline took away their choice to negotiate and obtain the best products at the best prices. Since Medicare and Medicaid monies were involved in reimbursement, this amounted to fraud against all taxpayers. Medline’s “rebates” and kickbacks did not provide the government with the choice to obtain the best possible products or prices pursuant to Medicaid and Medicare guidelines.
Mason’s effort and persistence in exposing and fighting Medline paid off with his $23.4 million monetary reward. If you have personal knowledge or observe fraud being committed against the government at your place of employment, call our experienced Whistleblower Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you decide if you have a qui tam whistleblower case under the False Claims Act.
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