Health Law Daily Wrap Up, ANTI-KICKBACK PROHIBITION—D. Mass.: Orthopedic device maker must face fraud claims over sales commissions to independent contractors, (Oct 26, 2026)

By Ravindra Kumar Singh, B.L.

Sales representatives’ operating-room presence, promotional meals, and efforts to sell costlier devices raised triable questions about unlawful kickbacks despite otherwise lawful commission arrangements.

An orthopedic medical device manufacturer failed to secure summary judgment on federal False Claims Act (FCA) claims alleging that commissions paid to independent contractor sales representatives violated the Anti-Kickback Statute (AKS) and resulted in improper government reimbursements. A federal district court in Massachusetts found that commission-based compensation did not automatically constitute an unlawful kickback, but evidence of the representatives’ relationships with surgeons and promotional practices could establish intent to influence medical purchasing decisions improperly. The court also permitted a related Colorado false claims claim to proceed, while granting summary judgment on the remaining state and local claims, the federal false-certification theory, and a conspiracy claim (United States ex rel. Langer v. Zimmer Biomet Holdings, Inc., No. 21-cv-11293-PBS (D. Mass. Oct. 21, 2026)).

Sales force restructuring. Zimmer Biomet manufactures and markets orthopedic devices used in surgical procedures. After the 2015 merger of Zimmer Holdings and Biomet, the company reorganized its sales force, converting sales representatives in directly managed territories into independent contractors beginning January 2016.

A former sales representative challenged the arrangement after declining to sign an independent contractor agreement and subsequently leaving the company. He alleged that commission payments to independent contractors constituted illegal remuneration under the AKS and rendered resulting Medicare and Medicaid reimbursement claims fraudulent.

The former representative filed a qui tam action in August 2021 under the federal FCA and numerous state and local equivalents. Neither the federal government nor any state intervened, although the federal government participated in oral argument on the summary judgment motion.

After an earlier unsuccessful motion to dismiss, Zimmer Biomet sought summary judgment, arguing that the commission arrangements were lawful and that the former representative lacked sufficient evidence of fraudulent claims, unlawful intent, and causation.

Commissions. The AKS prohibits knowingly and willfully offering remuneration to induce referrals or purchases of items reimbursable by federal healthcare programs. Although the statute protects qualifying payments to bona fide employees, its employee safe harbor does not extend to independent contractors.

The former representative argued that commissions paid to independent sales agents were unlawful when intended to encourage promotion of products reimbursable through federal healthcare programs. The court rejected that interpretation because it would effectively criminalize ordinary commission arrangements without requiring improper influence over healthcare decisions.

Instead, the court adopted the approach reflected in decisions from the Fifth, Seventh, and Ninth Circuits, distinguishing lawful marketing compensation from payments designed to improperly influence physicians.

In United States v. Cockerell, 140 F.4th 213 (5th Cir. 2025), the appellate court distinguished legitimate advertising compensation from unlawful inducements. Similarly, United States v. Sorensen, 134 F.4th 493 (7th Cir. 2025), recognized the distinction between aggressive marketing and exploiting relationships with healthcare providers to influence treatment decisions.

The court concluded that a desire to increase sales, standing alone, did not establish unlawful intent. However, the inquiry did not end with the compensation structure because the surrounding conduct could reveal an improper purpose.

Surgeon relationships. Applying guidance from the HHS Office of Inspector General (OIG), the court identified several characteristics of Zimmer Biomet's arrangements that could support an inference of unlawful inducement.

Representatives received percentage-based commissions, maintained close relationships with surgeons, and attended operations, potentially influencing purchasing decisions. Some encouraged surgeons to buy costlier devices, occasionally interacted with patients, and provided meals to physicians and their staff. Zimmer Biomet also covered surgeons’ travel expenses for workshops, while the former representative had accompanied surgeons on company-owned or chartered private aircraft. Collectively, these practices could support a finding that commissions encouraged improper influence rather than legitimate marketing.

The court emphasized that the OIG's advisory guidance was not binding law but provided useful factors for evaluating potentially abusive compensation arrangements. Accordingly, a reasonable jury could find that Zimmer Biomet paid commissions with the unlawful intent required by the AKS.

Knowledge of potential violations. Zimmer Biomet maintained that it could not have knowingly violated the AKS because it publicly disclosed its arrangements, independent contractor sales representatives were common throughout the medical device industry, and federal authorities had previously reviewed its business practices without objecting.

The company also cited compliance policies that prohibited improper financial relationships with healthcare providers. Nevertheless, the record contained evidence supporting a contrary inference.

During litigation involving an independent distributor in the 1990s, Zimmer itself had argued that volume-based payments violated the AKS. An OIG advisory opinion subsequently identified potentially abusive features of that arrangement.

The former representative also repeatedly raised concerns about the legality of commission payments before leaving Zimmer Biomet in 2016. Similar concerns emerged during subsequent employment litigation involving the company's classification of sales representatives. Although federal authorities knew that Zimmer and Biomet used independent contractors, the court found insufficient evidence that regulators had expressly approved the particular promotional practices now challenged.

The combination of earlier litigation, internal warnings, and the disputed sales practices created a triable question concerning whether Zimmer Biomet understood that its conduct was unlawful.

Evidence of government claims. Zimmer Biomet separately argued that the former representative had failed to identify an actual false claim submitted for federal reimbursement.

The court disagreed. Using company sales and procedure records alongside federal reimbursement information, the former representative identified a Medicare claim paid for a hip replacement involving a Zimmer Biomet product in a territory served by independent contractor representatives.

Although the evidence did not identify the individual representative or establish the precise commission paid, a jury could reasonably infer that the sale generated a commission. The court also rejected the manufacturer's argument that the former representative's failure to provide an earlier damages calculation required judgment in its favor. The necessary government claims information became available only after discovery closed.

Causation and certification distinguished. The court considered two separate routes for establishing FCA liability based on an AKS violation.

Under 42 U.S.C. § 1320a-7b(g), a claim resulting from an unlawful kickback constitutes a false claim. This theory requires proof that the kickback was a but-for cause of the submitted reimbursement claim.

Evidence of the representatives' promotional and clinical activities, combined with their potential influence over surgeons, sufficiently supported that causal connection for trial.

However, the former representative could not proceed under the alternative false-certification theory. Although Medicare claim forms generally require certification of compliance with applicable laws, he did not produce evidence showing what any healthcare provider actually certified when seeking reimbursement for Zimmer Biomet products.

The court therefore granted summary judgment on that theory.

State law claims. The former representative abandoned claims under 16 state and local laws. Claims under another 10 states failed because he had not produced evidence of actual reimbursement claims, and his proposed reliance on future data or statistical extrapolation was insufficient.

Illinois claims also failed for lack of evidence identifying a specific reimbursement claim.

Colorado was different. The former representative identified a Medicaid payment for a knee replacement involving a Zimmer Biomet product sold in a territory served by independent contractors. That evidence permitted the Colorado claim to proceed alongside the surviving federal claims.

The court also rejected Zimmer Biomet's renewed argument that the FCA's public disclosure bar foreclosed the lawsuit, concluding that the former representative qualified as an original source because he provided independent information that materially supplemented publicly available allegations.

The case is No. 21-cv-11293-PBS.

Judge: Saris, P.

Attorneys: Abraham R. George, U.S. Attorney's Office, for the U.S. Alexandra Watson Bailey (Hogan Lovells Cadwalader US LLP) for Zimmer Biomet Holdings, Inc.

Companies: Zimmer Biomet Holdings, Inc.

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