A Massachusetts federal court rejects a per se rule against commission-based independent contractor reps -- but the ruling may prove an outlier, and it is not a green light for 1099 commissions.

In Brief: Can Medical Device Companies Pay Independent Contractor Sales Reps on Commission?
Possibly, but it is risky: no AKS safe harbor applies, courts in several circuits treat volume-based commissions as remuneration intended to induce, and field conduct can create liability.

In United States ex rel. Langer v. Zimmer Biomet Holdings, Inc., No. 21-cv-11293-PBS (D. Mass. Oct. 21, 2026), the district court held that paying commissions to 1099 sales reps does not by itself violate the federal Anti-Kickback Statute (AKS) and that liability requires an intent to improperly influence physicians’ medical decision-making. That holding is a single district court ruling at summary judgment, and it may prove an outlier: the Fourth Circuit, the D.C. Circuit in Vertex Pharmaceuticals Inc. v. HHS, and the federal government read the AKS more broadly, and courts following that approach are likely to treat volume-based commissions to contractors as remuneration paid to induce purchases. Even under Langer’s narrower test, the relator’s False Claims Act (FCA) claims are headed toward trial because there was evidence that reps were present in the operating room, provided meals and private jet travel to surgeons, and upsold premium products. Device companies should not read Langer as a safe harbor for 1099 commission models.

Medical device manufacturers have long relied on commission-based sales reps, many engaged as independent contractors. That model sits in tension with the AKS because the employee safe harbor protects payments to bona fide employees, not contractors. On October 21, 2026, Judge Patti B. Saris of the District of Massachusetts addressed the question in United States ex rel. Langer v. Zimmer Biomet Holdings, Inc., No. 21-cv-11293-PBS. Industry should resist the temptation to treat the decision as a win: its central holding departs from the approach of other courts and the government, and even under its own standard the defendant now faces trial.

Key Takeaways

• Langer is not a green light. The court held that commissions to 1099 reps are not per se kickbacks, but that view may prove an outlier; the Fourth Circuit, the D.C. Circuit, and the government read “remuneration” and “induce” broadly enough to reach volume-based commissions paid to contractors.
• Field conduct is the battleground. Operating-room presence, meals, private jet travel, and “upselling” premium products were enough to send intent to a jury.
• Notice builds scienter. Prior litigation positions and ignored internal complaints supported a triable finding of willfulness.
• Classification carries dual risk. 1099 status forfeits the AKS employee safe harbor and invites misclassification claims.
• Vertex cuts the other way. In a separate decision, Vertex Pharmaceuticals Inc. v. HHS, the D.C. Circuit read the AKS more broadly and enforced the statutory 60-day deadline for OIG advisory opinions.

Background: Zimmer Biomet’s Shift to 1099 Sales Reps
Zimmer Biomet converted its direct-territory W-2 reps to 1099 contractors in 2016 to save money and “reinvigorate the independence and entrepreneurial spirit” of the sales force. All reps were paid commissions on a percentage of sales. The relator, a former rep who refused to sign the contractor agreement and raised AKS concerns internally, filed this qui tam action; the government declined to intervene.

What Did the Court Hold in Langer v. Zimmer Biomet?
1. Are commissions to 1099 sales reps a kickback?
The “improper influence” standard With no First Circuit guidance to follow, the court rejected the Fourth Circuit-style approach urged by the relator and the government, under which commissions to contractors promoting reimbursable products would essentially always satisfy intent. It instead followed the Fifth, Seventh, and Ninth Circuits: lawful pay for sales efforts is distinct from payments reflecting “a wrongful effort to unduly influence the decisions of doctors.” Quotas and commission pay, standing alone, “merely evince a lawful intent to compensate sales representatives for marketing services that drive sales.”

2. Why the case survived summary judgment: the OIG suspect characteristics
Applying the OIG’s suspect characteristics as “useful guideposts,” the court found that a reasonable jury could infer unlawful intent from the collective weight of the evidence:
 

OIG suspect characteristic	Evidence in Langer
Compensation based on percentage of sales; amount of compensation	Reps paid almost exclusively by commission
Direct contact with ordering physicians	Reps interact directly with surgeons who order products
Agent in a position of exceptional influence	Reps present in the operating room during procedures
Direct contact with beneficiaries	Evidence of occasional patient interaction
Nature of the marketing activity	Meals, dinners with leadership, private jet flights, surgeon travel expenses, and “upselling” premium products because they cost more

3. Willfulness, causation, and the claims that remain
Willfulness was triable because Zimmer itself had argued in litigation in the 1990s that volume-based contractor payments violated the AKS, and the relator and a misclassification plaintiff later raised the same concern. General government awareness of the 1099 model was not “explicit approval.” The case proceeds on the FCA “resulting from” causation theory and a Colorado state-law claim; the court distinguished Omni Healthcare, Inc. v. MD Spine Solutions LLC, 761 F. Supp. 3d 356, 369 (D. Mass. 2025), aff’d, 160 F.4th 248 (1st Cir. 2025), where there was no evidence of improper influence, and granted summary judgment to Zimmer Biomet on the false certification theory and most state-law claims.

Why Langer Matters for Medical Device Companies
Langer offers an argument, not a safe harbor. Outside the District of Massachusetts, and potentially on appeal, companies should expect many courts to treat commissions tied to sales volume as remuneration within the AKS, leaving intent and willfulness as the principal battlegrounds. Because 1099 reps fall outside the employee safe harbor (42 U.S.C. § 1320a-7b(b)(3)(B)), that is a fact-intensive fight that often cannot be won before trial. And even under Langer’s favorable standard, the decisive evidence was not the contract but expense reports, case-coverage records, internal emails, and the messaging used to convert W-2 reps to contractors.

W-2 Employee vs. 1099 Independent Contractor Sales Reps: Risk Comparison

Issue	W-2 employee reps	1099 independent contractor reps
AKS treatment	Eligible for the bona fide employee safe harbor	No safe harbor; arrangement judged on intent and the OIG factors
FCA/qui tam exposure	Lower on the compensation-structure theory	High; many courts treat volume-based commissions to contractors as remuneration, and relators target commission structure plus field conduct
Wage-and-hour/misclassification	Standard employment obligations	Risk of misclassification claims (e.g., Karl v. Zimmer Biomet Holdings, Inc., No. 18-cv-04176 (N.D. Cal. filed July 12, 2018)); state tests vary, and some, such as Massachusetts, apply a strict “ABC” test
Control and compliance	Direct supervision, mandatory training, discipline	Must still train, monitor, and discipline, but heavy control strengthens misclassification claims
Cost and flexibility	Benefits, payroll taxes, less flexibility	Lower fixed cost; flexibility to use sub-reps and family-run distributorships

The control tension is real: the training, monitoring, and discipline that reduce AKS risk can look like the “control” that supports misclassification claims. Frame and document them as regulatory compliance requirements, not direction of how the work is done.

AKS Compliance Checklist for Commission-Based Device Sales Teams

1. Do not treat Langer as authorization for 1099 commission models; if reps must have clinical influence, consider W-2 employment so the safe harbor applies.
2. Reduce OIG “suspect characteristics,” for example by blending salary with commissions or avoiding incentives that reward premium-product upselling.
3. Route all health care professional (HCP) meals and travel through centrally approved, documented channels, consistent with the AdvaMed Code of Ethics, and bar reps from flying with surgeons.
4. Limit the rep’s operating-room role in writing to technical support at the surgeon’s request, and prohibit recommending products because they cost more.
5. Make compliance training mandatory for 1099 and W-2 reps alike, and audit contractor expense and case-coverage data.
6. Escalate internal AKS complaints to counsel, document the analysis, and never tell employees to stop raising concerns.
7. Keep litigation and regulatory positions consistent with your AKS analysis, and if seeking an OIG advisory opinion, submit a complete record up front given the statutory 60-day deadline enforced in Vertex.
8. When converting reps, vet conversion messaging and document the business reasons and safeguards; in Langer, presentations touting income and family hiring became evidence.

Two Hypothetical Scenarios: Same Sales Model, Different Compliance Outcomes
Both hypothetical companies use commission-only 1099 reps who support orthopedic surgeons. Neither structure is risk-free, because many courts would treat the commissions themselves as remuneration; what separates them is how much additional evidence of intent a relator can find.

Scenario A: “Company A” -- a stronger, but not safe, record
Company A pays a flat commission across products, limits reps to technical support in the operating room, runs all surgeon hospitality through a documented central program, requires the same training for contractors and employees, and escalates rep complaints to counsel. In the District of Massachusetts, a relator might be left with little beyond commission pay and quotas, which Langer treated as lawful. In a court following the Fourth Circuit or Vertex, however, those same commissions could satisfy the remuneration and inducement elements, leaving Company A to defend on willfulness before a jury.

Scenario B: “Company B” -- a triable case
Company B pitches conversion as a chance to “build your own business,” pays more on premium implants, lets reps host surgeon dinners and invite top surgeons on chartered flights, makes contractor training optional, and tells a rep who raises AKS concerns to stop. Those facts track the evidence that sent Langer toward trial, and a compliance manual likely would not change that.
Good field practices reduce risk, but they do not cure the underlying exposure of paying contractors on volume. The only structure with safe harbor protection is bona fide employment.

Related Development: Vertex v. HHS
As we have previously covered, on September 4, 2026, in Vertex Pharmaceuticals Inc. v. HHS, No. 25-5133 (D.C. Cir. Sept. 4, 2026), the D.C. Circuit held that Vertex’s Fertility Support Program, which offered up to $70,000 in fertility services to patients receiving its Casgevy gene therapy, would violate the AKS. The court also reversed HHS’s Beneficiary Inducement Statute ruling because the agency dismissed Vertex’s evidence by saying only that it “lack[ed] data.”

Judge Rao held that “induce” simply means to influence and, joining the Second and Fourth Circuits, that “remuneration” reaches any valuable compensation, not just corrupt payments. See Pfizer, Inc. v. U.S. Dep’t of Health & Hum. Servs., 42 F.4th 67, 76–77 (2d Cir. 2022); Pharm. Coal. for Patient Access v. United States, 126 F.4th 947, 958–61 (4th Cir. 2025). That reading sits in tension with Langer, which read “induce” to require wrongful influence. Expect relators to invoke Vertex in sales-force cases until the First Circuit weighs in.

Most consequentially, citing Loper Bright, the court struck down HHS regulations that delayed and tolled the statutory 60-day advisory opinion deadline. HHS must now rule on the record as submitted, which compresses the informal window for withdrawing or revising a request before an unfavorable opinion issues. Companies seeking an opinion should submit a complete, evidence-rich record at the outset.

Related Development: EKRA’s Treatment of Commissions and Independent Contractors
When determining how to structure their sales forces, companies with laboratory, toxicology, or clinical treatment operations must also consider the Eliminating Kickbacks in Recovery Act of 2018 (EKRA), 18 U.S.C. § 220. EKRA prohibits knowingly and willfully paying or receiving kickbacks for referrals to recovery homes, clinical treatment facilities, and laboratories, regardless of whether the services are reimbursed by federal health care programs or private payors. Violations carry up to 10 years in prison and fines of up to $200,000 per violation. EKRA generally will not reach a pure device sales force, but it can apply to device and diagnostics companies that operate or contract with laboratories.

Independent contractors. Unlike the AKS employee safe harbor, which protects only bona fide employees, EKRA’s statutory exception expressly reaches payments to employees or independent contractors with a bona fide employment or contractual relationship. But the exception is narrower in a more important respect: it applies only if compensation does not vary based on the number of individuals referred, the number of tests or procedures performed, or the amount billed to or received from the payor. The AKS employee safe harbor permits commission pay to bona fide employees; EKRA’s does not protect commissions for anyone. A commission-based 1099 rep is therefore outside both safe harbors, and a commission-based W-2 rep protected under the AKS may still fall outside EKRA’s exception.

The Schena standard. In United States v. Schena, 142 F.4th 1217 (9th Cir. 2025), the first appellate decision interpreting EKRA, the Ninth Circuit affirmed a laboratory operator’s EKRA convictions based on percentage-of-revenue payments to marketers, many of them independent contractors, and held that EKRA reaches marketing intermediaries who interface with referring providers, not just the providers themselves. At the same time, the court held that percentage-based compensation is not a per se EKRA violation: “induce” connotes “wrongful causation” and requires “undue influence,” not mere influence or encouragement. The conviction rested on additional evidence that marketers misrepresented the tests to physicians and targeted providers unfamiliar with allergy testing.

Comparison with Langer. Schena and Langer converge on the central point: commissions alone are not kickbacks, and liability turns on evidence of wrongful or undue influence over the referring physician. Both rely on the narrower Ninth Circuit line of AKS authority, and Schena expressly drew on AKS case law to interpret EKRA. They diverge in three respects. First, EKRA covers private-payor business and carries criminal exposure without the federal health care program nexus the AKS requires. Second, EKRA’s safe harbor conditions protection on non-volume-based pay for employees and contractors alike, so the W-2 conversion that restores AKS protection does not cure EKRA risk for commission-based laboratory sales staff. Third, Schena’s narrower reading of “induce” sits in direct tension with Vertex’s reading of the same word in the AKS.

Companies subject to both statutes should structure laboratory marketing pay to fit EKRA’s exception, as the Schena court itself suggested.

Frequently Asked Questions

Is it legal to pay medical device sales reps commissions as independent contractors?
It is legally risky. Langer held that commission-based pay to 1099 reps is not a per se AKS violation, but that ruling may prove an outlier. No safe harbor applies, and many courts, including the Fourth and D.C. Circuits, read the AKS broadly enough that volume-based commissions to contractors can constitute remuneration paid to induce purchases.

Does the Anti-Kickback Statute employee safe harbor cover 1099 sales reps?
No. The safe harbor at 42 U.S.C. § 1320a-7b(b)(3)(B) and 42 C.F.R. § 1001.952(i) protects payments to bona fide employees only, not independent contractors.

Do courts agree on commission payments to independent contractor reps?
No. The Second and Fourth Circuits read the AKS broadly, while the Fifth, Seventh, and Ninth Circuits require intent to improperly influence health care decisions; Langer follows the latter. In Vertex, the D.C. Circuit joined the broader reading.

Should device companies convert 1099 sales reps to W-2 employees?
Companies should seriously consider it, particularly for reps with operating-room access or other clinical influence. Employee status brings safe harbor protection and reduces misclassification risk, but adds cost. Companies keeping 1099 reps should not rely on Langer and should minimize OIG suspect characteristics, control hospitality and operating-room conduct, and document compliance.

Looking Ahead
Langer is a single district court ruling at summary judgment, and the First Circuit has not spoken. With the Second, Fourth, and D.C. Circuits reading the AKS broadly, and the government urging that reading, Langer’s narrower approach faces meaningful headwinds. Companies should treat Langer as a potential outlier, not a green light, and expect continued qui tam activity targeting commission-based contractor models.

Foley Hoag LLP regularly advises medical device manufacturers on sales-force structure, AKS and FCA compliance, internal investigations, and qui tam defense. Please contact us to discuss how these developments affect your organization.
 

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This alert is for informational purposes only and does not constitute legal advice. The Langer decision is subject to further proceedings and potential appeal and may not be followed by other courts.