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Medline Settles Whistleblower Lawsuit for $85 Million

Illinois-based medical supply company Medline has agreed to pay $85 million to settle a whistleblower lawsuit alleging it paid kickbacks to hospitals and companies that buy supplies paid for by Medicare and Medicaid, Reuters reported. The lawsuit was filed by a former Medline employee, Sean Mason, under the whistleblower provision of the False Claims Act (FCA), a federal statute that allows people who are not affiliated with the government to file actions against federal contractors they accuse of committing claims fraud against the government.

Medicare FraudIn the complaint, Mason said Medline offered kickbacks to win new business but falsely labeled these expenses as rebates, junkets, expensive gifts, and charitable donations. “Illegal inducements were paid to Medline’s very largest customers, including HCA and HealthSouth, under contracts negotiated and administered through Medline’s national accounts division,” Mason said in the complaint.

Mason will receive $23.4 million, or 27% of the total settlement, for initiating the lawsuit.

Milberg LLP, which represents the whistleblower, called the settlement one of the largest involving alleged violations of the FCA in which the federal government chose not to get involved.  Milberg partner Kirk Chapman told Reuters that the settlement shows that the government’s decision not to intervene in false claims cases “does not mean that they do not have any merit.”

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