This wasn’t always in the form of direct cash payments (i.e. consulting or speaking fees, free flights, allowing physicians to expenses gifts for family members when traveling on the company’s dime.) Although, Cochlear frequently made these payments as well. However, Cochlear lawyers like Peter L. Edwards and Jim Gale found new and creative kickback schemes that they felt were “gray areas” of the law that they could legally defend. This proved to be their downfall.

Two examples.
(1) Cochlear offered a dummy billing service called OMS that offered to handle all a physician office’s insurance paperwork fro cochlear implant claims for free, but only if the physician and patient signed a contract agreeing to be implanted with a Nucleus device.
(2) Cochlear then operated a Partners Program where it gave physicians “credits” towards free product every time they implanted a Nucleus device and took away credits when they implanted a competitor’s device.

Both of these are blatantly in violation of the Federal anti-kickback statute but back when they were in originated in the mid 1990s, this was a new area of law so Cochlear at the time thought they could get away with it. The problem was that as DOJ enforcement began to make clear that Cochlear’s schemes were illegal, arrogant company management like Ronald E. West and John Hrobsky simply refused to modify or change their practices, since they were so successful in controlling the refereall patterns of physicians and not letting new competitiors gain a foothold in the market. Cochlear has controlled over 70% of the market for its entire existence, and these illegal kickbacks are a big reason why.

Thanks for forwarding. I appreciate the summary and your views. Hope all is well with you.

Regards,

Tony Cutshall