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Legal & Regulatory Feature

Courtesy of U.S. Department of Justice and Public Domain Pictures

DJO Global Pays $7.62 Million Over “Assumptive Selling” Allegations

Walter Eisner • Tue, February 6th, 2018

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DJO Global Inc., has agreed to pay $7.62 million to the feds to resolve allegations that its subsidiary, Empi Inc. (Empi), submitted false claims to TRICARE for "excessive, unnecessary transcutaneous electrical nerve stimulation (TENS) electrodes that TRICARE beneficiaries did not need or use."

TRICARE is the military's health insurance arm.

The U.S. Department of Justice announced the settlement on January 23, 2018. The agency noted the claims settled by the agreement are "allegations only; there has been no determination of liability."

The gist of the agreement involves allegations that DJO's now defunct subsidiary, Empi Inc., based in Minnesota, submitted the false claims for the therapy that uses low-voltage electrical current for pain relief.

“Assumptive Selling”

The feds claimed that Empi used "inappropriate techniques such as 'assumptive selling' to persuade some TRICARE beneficiaries to seek and accept unjustifiably large quantities of TENS electrodes from 2010 through 2015, with a particularly steep increase in the number of beneficiaries receiving unnecessary quantities in 2014-2015."

Assumptive selling happens when a sales rep contacts a patient and induces them to order a device by acting as though the patient had indicated a need for the device, when that may not have been the case.

DJO shut down Empi in December 2015 after the company cited declining reimbursement rates for its products. At the time, the company issued a press release that stated as result of "ongoing challenges and despite our actions to improve this business over the past few years, we do not expect the sales and profitability of Empi’s products to return to acceptable levels and therefore have developed a plan to exit the Empi business over the next several months.”

DJO had acquired EMPI through a deal engineered by the private-equity firm Blackstone Group.

This case was handled by the Civil Frauds Unit of the U.S. Attorney’s Office for the District of Minnesota, the Justice Department’s Commercial Litigation Branch, and the Department of Defense Office of the Inspector General.

“Service members, veterans, and their families deserve the best available medical care,” said United States Attorney Gregory G. Brooker. “This $7.6 million settlement underscores our commitment to protecting the integrity of federal health care programs and it sends a strong message of accountability to those who would seek to take advantage of those programs.”

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