Durham biotech firm to pay $3.6M fine to resolve False Claims Act violations
Bioventus, a Durham biotech company that makes treatments for knee and joint pain, has agreed to pay the U.S. government more than $3.6 million to resolve allegations that it violated the False Claims Act.
The fine was announced by U.S. Attorney Matthew G. T. Martin of the Middle District of North Carolina in Greensboro.
The complaint filed by the U.S. government against Bioventus dates back to 2017, according to a news release. The government alleged that sales representatives for Bioventus had committed fraud against the government by “routinely forging physician notes and certificates of medical necessity” to get medical reimbursements that should have been non-reimbursable, according to a news release. That activity stretched from Oct. 1, 2012, through Dec. 31, 2018, according to Martin.
Under Medicare, Medicaid and Tricare, reimbursable services must be “medically reasonable and necessary,” the complaint states.
The Middle District of North Carolina said Bioventus filed a self-disclosure in 2018 to report the issue to the Office of Inspector General of the U.S. Department of Health and Human Services.
Bioventus disclosed to the Middle District that its sales representatives would sometimes complete Section B of the certificates of medical necessity for its Exogen device, an ultrasonic bone growth simulator. Medicare requires that section must be completed by a treating physician or the physician’s office.
Martin said Bioventus reported that information after it discovered its representatives were sometimes completing those forms. The company then fully cooperated with the government’s investigation of the self-disclosure, Martin said in a release.
“Medicare funds must only be appropriately dispensed for medically necessary purposes and to those who comply with all rules and regulations,” Martin said in a statement. “We appreciate Bioventus’s disclosure of these issues and hope this matter reminds other Medicare enrollees that they must have internal controls in place to ensure proper compliance with Medicare. Better to catch it and self-disclose than for us to discover it and come calling”
IPO filed this month
A spokesman for Bioventus said the company wouldn’t comment on the matter but noted the company had revealed the incident to investors in its filing for an initial public offering earlier this month.
The company raised $104 million through that IPO, and shares of the company now trade on the Nasdaq stock exchange.
Bioventus, founded in 2011, has several products that treat issues like joint pain, such as the injectable treatments Durolane and Gelsyn-3. The company also makes bone graft substitutes that are used in surgeries.
In 2019, Bioventus had $340.1 million in sales, a 6.5% increase from 2018.
However, it did see declines in revenue last year during the coronavirus pandemic. During the first nine months of 2020, the company saw sales drop by $20 million, compared to the same period in 2019 due to the “disruption caused by the COVID-19 pandemic.”
The company employs 680 people worldwide, with a majority of those being in the U.S. Its headquarters are in south Durham, and it also has a manufacturing facility in Cordova, Tenn.
Around 150 of these employees are based in Durham.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
US Complaint against Bioventus by Zachery Eanes on Scribd
