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From Securities Regulation Daily, March 1, 2016

Medical equipment company to pay $22.8 million in FCPA criminal settlement

By Kevin Kulling, J.D.

A Latin American subsidiary of a large U.S. medical equipment company will pay $22.8 million to resolve criminal charges that it violated the Foreign Corrupt Practices Act by making illegal payments to health care practitioners at government owned health care facilities in Central and South America. In addition to the fine, Olympus Latin America, Inc. (OLA) entered into a deferred prosecution agreement (DPA), agreed to retain a compliance monitor, and implement a number of compliance measures.

Olympus Corp. of the Americas (OCA), an OLA affiliate, also agreed to settle separate civil and criminal charges involving a scheme that paid kickbacks to U.S. doctors and hospitals, the Department of Justice said in a press release announcing the settlements. OCA will pay over $620 million to resolve the criminal and civil claims against it.

Charged conduct. According to the OLA criminal complaint, between 2006 and 2011 OLA implemented a plan to increase medical equipment sales in Central and South America by providing payments to health care practitioners at government owned health care facilities. Payments included cash, money transfers, personal grants, personal travel, and free or heavily discounted equipment. The primary method OLA employed to deliver the illicit benefits was through “training centers,” which were nominally set up to educate and train doctors, but which OLA used to provide benefits to pre-selected practitioners. OLA and others paid nearly $3 million to practitioners to induce the purchase of Olympus products and recognized more than $7.5 million in profits as a result, according to the DOJ.

The settlement. DOJ said that the FCPA resolution was based on a number of factors, including that OLA did not voluntarily disclose the misconduct in a timely manner. Regardless, OLA received a 20 percent reduction on its penalty for its cooperation, which included an extensive internal investigation, translation of numerous foreign language documents, and assistance in collecting, analyzing, and organizing voluminous evidence, according to the settlement and press release.

The DPA is in effect for three years and the firm must retain a compliance monitor.

OCA settlement. OCA, the largest distributor of endoscopes and related equipment, was charged with conspiracy to violate the Anti-Kickback Statute (AKS), which prohibits payments to induce purchases paid for by federal health care programs. OCA also entered into a Corporate Integrity Agreement (CIA) and a settlement agreement with a three year deferred prosecution agreement that will allow it to avoid conviction if it complies with the reform and compliance requirements outlined in the agreement.

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