Washington, DC - MiMedx Group Inc. (MiMedx), a biopharmaceutical company based in Marietta, Georgia that manufactures and sells human tissue grafts, will pay $6.5 million to resolve allegations that it violated the False Claims Act by knowingly submitting false commercial pricing disclosures to the United States Department of Veterans Affairs (VA), the Justice Department announced Monday.
“Today’s settlement demonstrates our continuing vigilance to ensure that those doing business with the government charge a fair price for their goods,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “Government contractors will not be permitted to profit improperly at the expense of taxpayers.”
This settlement resolves allegations that MiMedx knowingly submitted false statements and disclosures to the VA regarding MiMedx’s commercial pricing practices, enabling MiMedx to charge the VA inflated prices for its human tissue graft products. Prior to the United States’ disclosure to MiMedx of its investigation, MiMedx made a disclosure to the VA Office of Inspector General regarding its commercial sales practices. In the settlement, the United States acknowledged MiMedx’s cooperation.
“Charging inflated prices for medical products is unlawful and unethical,” said U.S. Attorney Erica MacDonald for the District of Minnesota. “This settlement underscores the obligation of government contractors to be fair and truthful in their dealings with the United States and to prevent wasted taxpayer dollars.”
“Our nation’s veterans deserve the best healthcare products and services available and the American taxpayers deserve fair and honest pricing from government contractors,” said Michael J. Missal, Inspector General for the U.S. Department of Veterans Affairs. “This settlement underscores VA OIG’s commitment to protecting the integrity of the VA’s healthcare system and procurement processes.”
The allegations resolved by the settlement were first brought in a lawsuit filed by former MiMedx sales representatives under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The qui tam case is captioned United States of America ex rel. Jess Kruchoski and Luke Tornquist v. MiMedx Group, Inc., 17-cv-00187 (D. Minn.). As part of this settlement, they will receive $1,625,000 as their share of the government’s recovery.
This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Minnesota, and the Office of Inspector General of the Department of Veterans Affairs. The claims resolved by the settlement are allegations only, and there has been no determination of liability.