Veloxis Resolution Highlights Payment and Reporting Risks

By Amanda Johnston

On August 10, 2026, the Department of Justice announced a coordinated criminal and civil resolution with Veloxis Pharmaceuticals Inc. involving kickbacks to healthcare professionals (HCPs) and specialty pharmacies relating to Envarsus XR, a kidney transplant immunosuppression drug. Veloxis entered into a 36-month deferred prosecution agreement (DPA) in connection with a criminal Information charging the company with conspiracy to commit violations of the federal Anti-Kickback Statute (AKS). Veloxis separately agreed to resolve False Claims Act (FCA) and Open Payments claims. 

The resolution includes a $10.04 million criminal penalty, $34.45 million to resolve FCA allegations, a $1.55 million civil penalty to resolve Open Payments allegations, which DOJ describes as the largest Sunshine Act recovery to date, and a five-year Corporate Integrity Agreement (CIA) with HHS-OIG. In total, Veloxis agreed to pay more than $46 million. 

Unlike many civil healthcare settlements, Veloxis made extensive admissions regarding the underlying conduct. Under the DPA, Veloxis accepted responsibility for the conduct described in the Statement of Facts and agreed that the facts were true and accurate. The Civil Settlement Agreement likewise includes admissions concerning HCP and specialty pharmacy kickbacks, falsified expense reporting, and inaccurate Open Payments reporting. The FCA and Open Payments legal claims themselves were resolved through settlement. 

For pharma and medtech companies, the resolution provides a practical case study in how HCP engagements, expense reporting, Open Payments, and third-party service arrangements can create AKS exposure and related FCA risk.

HCP Payments and Expense Controls

Veloxis admitted that it paid kickbacks to HCPs through lavish meals, alcoholic beverages, expensive trips, resort stays, gifts, and purported consulting fees to induce HCPs to prescribe, recommend the purchasing or ordering of, or arrange for prescriptions of Envarsus. 

The DPA’s Statement of Facts describes resort-based advisory boards, expenses for spouses and guests, and consulting payments for work that was not actually performed. In total, Veloxis paid HCPs more than $800,000 in consulting fees and related expenses from 2016 through 2023. The Statement of Facts specifies that certain HCPs received thousands of dollars for consulting work that was not performed. 

Expense reporting was also central to the conduct. Veloxis admitted that employees knowingly falsified expense reports by adding non-attendees to reduce the apparent per-person cost, omitting physician attendees, and categorizing certain physician expenses as non-physician expenses. The DPA provides specific examples in which physicians were omitted from expense reports at least in part to avoid Open Payments reporting requirements. In one instance, Veloxis paid expenses associated with an HCP’s spouse despite an internal policy expressly prohibiting payments for an HCP’s spouse. 

Consulting documentation presented similar concerns. One consulting agreement provided only a vague description of the work to be performed. The HCP later submitted invoices for work not performed and for hours exceeding the contractual maximum. Veloxis approved and paid the invoices even though an employee described the billing internally as “massive overbilling.” 

Open Payments Became an Enforcement Issue

Veloxis admitted that falsified expense reports affected its Open Payments submissions, resulting in the company underreporting or failing to report the true amounts of certain physician payments and transfers of value. 

Veloxis separately agreed to pay a $1.55 million civil penalty to resolve allegations that it knowingly failed to report certain physician payments to CMS. DOJ describes the payment as the largest Sunshine Act recovery since the law was enacted in 2010. 

The resolution comes amid increased attention to Open Payments compliance. CMS states that reporting entities may be audited to ensure that reported data are accurate, complete, and submitted on time, and that civil monetary penalties may be imposed for failures to report information in a timely, accurate, or complete manner. Gardner Law has also recently discussed CMS’s proposal to treat certain failures to timely provide requested documentation during an Open Payments audit as a “failure to report” for civil monetary penalty purposes. 

The Veloxis resolution illustrates an important point for manufacturers: Open Payments accuracy depends on the integrity of underlying expense and payment data. An accurate annual aggregation process cannot correct source records that do not reflect what actually occurred.

Specialty Pharmacy Payments

Veloxis also admitted that from July 1, 2017, through March 31, 2023, it knowingly and willfully paid specialty pharmacies thousands of dollars in kickbacks through per-patient and per-month payments to induce them to purchase Envarsus instead of competing drugs, including a cheaper generic. 

Written “Enhanced Services Agreements” characterized the payments as compensation for data and adherence services. Veloxis admitted, however, that it paid pharmacies regardless of whether specified data were provided, typically did not review or use data that were provided, and did not know or confirm whether the pharmacies actually performed the purported adherence services. 

Although the case involved specialty pharmacies, the underlying compliance question is relevant to medtech and pharma companies whenever they pay third parties capable of influencing product purchasing or utilization: What is the company paying for, and can it demonstrate that it actually received the contracted services?

Practical Implications for Companies

Companies should consider whether their existing controls would identify the types of conduct admitted in the Veloxis resolution:

• Confirm that HCP consulting services are actually performed. Veloxis paid certain HCPs for work that was not performed and approved invoices exceeding contractual limits. Companies should require sufficiently defined services and documentation to substantiate the work performed before payment. 
• Test advisory board, meal, and travel controls. The Statement of Facts describes resort stays, high-cost meals and alcohol, and expenses for spouses and guests. In one instance, Veloxis paid for a three-night resort stay for an HCP and her husband in connection with a one-day advisory board, and the Statement of Facts states there was no bona fide work-related justification for the extended stay. Companies should test whether actual expenses and attendance are consistent with company policies and the legitimate purpose of the engagement. 
• Audit the accuracy of underlying expense data. Veloxis admitted that employees added non-attendees, omitted physician attendees, and falsely categorized certain physician expenses. The DPA also describes examples in which expense records were manipulated to reduce apparent per-person spending and avoid Open Payments reporting. Monitoring should test underlying attendee lists, event classifications, and expense records, not simply whether an expense received approval. 
• Trace Open Payments reporting back to source records. Veloxis admitted that falsified expense records resulted in underreporting or failures to report the true amounts of certain physician transfers of value. Manufacturers should consider testing selected reported payments against underlying expense, event, and payment documentation. 
• Verify third-party services before payment. Veloxis admitted paying specialty pharmacies under service agreements without confirming that contracted adherence services were performed and regardless of whether required data were provided. Companies should ensure that payments to third parties correspond to documented services that are actually delivered. Particular scrutiny is appropriate where payments are calculated on a per-patient or other utilization-linked basis and the recipient can influence product purchasing, as occurred in the Veloxis specialty pharmacy arrangements. 

The DPA’s compliance requirements reinforce these lessons. Veloxis must conduct periodic reviews and testing of its compliance policies and procedures and ensure that compliance and control personnel have sufficient access to relevant data for timely and effective monitoring or testing. The DPA also requires root-cause analysis and appropriate remediation based on identified misconduct and monitoring results. 

"The Veloxis resolution highlights the compliance risk that can arise when practice does not match policy. Manufacturers should test whether their controls can identify when HCP engagements, third-party services, expense records, and Open Payments data do not accurately reflect what actually occurred."

Amanda Johnston, Partner

How Gardner Law Can Help

Gardner Law advises pharmaceutical, medical device, and other life sciences companies on HCP engagements, AKS compliance, Open Payments, third-party arrangements, and compliance monitoring and auditing.

Companies interested in assessing their HCP payment, expense, Open Payments, or third-party contracting controls should contact Gardner Law for assistance with a targeted compliance review.