March 01--After Olympus Corp. paid to fly three doctors from a prominent California hospital to Japan for a weeklong vacation, one of the physicians thanked the company for providing them with "so much extra entertainment that we did not expect."
The expense-paid trip was just one of the dozens of illegal kickbacks that the Japanese maker of endoscopes paid to American doctors and hospitals for at least five years as it sought to increase sales in its most lucrative market, according to a criminal complaint federal prosecutors released Tuesday.
Prosecutors said Olympus has agreed to pay $623.2 million to settle criminal and civil charges in the case -- the largest amount ever paid by a medical device company for violations of anti-kickback laws.
Among the company's other illegal payments and gifts, the complaint said, were $400,000 worth of endoscopes given to a doctor after he persuaded a New York hospital to buy millions of dollars' worth of Olympus equipment, and the free use of scopes worth $1 million provided to a Midwestern institution.
At one Olympus-sponsored forum, the company paid for doctors' lavish meals, ballooning, winery tours, golf and spa treatments because it was "a great way to network, talk business, socialize without our competitors," an Olympus employee explained, according to the complaint.
Prosecutors did not name the doctors and hospitals that Olympus paid from 2006 to 2011.
Among Olympus products is a $40,000 medical scope recently linked to a series of superbug outbreaks across the country, including one at UCLA Medical Center, where three people died in connection with the device.
Olympus was told by an independent investigator in June 2012 that the design of the device, known as a duodenoscope, made it almost impossible to clean. The company did not warn American hospitals about the problem until after the UCLA outbreak almost three years later.
In January, a Senate investigation found that failures by Olympus, federal regulators and hospitals had allowed the deadly outbreaks to continue long after the device's dangerous design was discovered.
The Senate investigators pointed out that not one of the 16 or more American hospitals where patients were sickened appeared to have properly reported the outbreaks.
On Tuesday, Olympus acknowledged the "past conduct" outlined in the criminal complaint. The company said it had implemented a "robust compliance program."
"Olympus is committed to complying with all laws and regulations, and to adhering to our own rigorous Code of Conduct," Nacho Abia, the chief executive of Olympus Corporation of the Americas, said in a statement.
In a separate criminal case, Olympus also agreed Tuesday to pay $22.8 million to resolve charges it had paid bribes to doctors and health officials in Central and South America.
