Justice Department Fines Medical Device Makers
The U.S. Department of Justice and U.S. Department of Health and Human Services released their joint annual report on health care fraud and abuse control on March 19th. According to the report, the federal government won or negotiated roughly $3.3 billion in judgments and settlements. Fines against medical device makers totaled over $110 million.
Boston Scientific and Guidant subsidiaries reached a $30 million settlement to resolve False Claims Act (FCA) allegations that Guidant intentionally sold defective defibrillators over a course of three years. These devices were allegedly sold to health care facilities that implanted them in Medicare patients. Allegedly, two lines of Guidant’s implantable defibrillators carried the risk of short circuiting due to an “arcing” defect. Guidant corrected the defect but still sold remaining stock of the defective versions and tried to hide the issue, the government alleged. Guidant pleased guilty to criminal charges of misleading the U.S. Food and Drug Administration (FDA) and failing to submit a labeling change involving the faulty devices in February 2010.
The government reached a $9.98 million settlement with Medtronic, Inc. who allegedly paid kickbacks to persuade doctors to use their cardiac rhythm management devices including pacemakers and defibrillators. Allegedly, Medtronic paid doctors to speak at events, gave tickets to sporting events and developed free marketing plans for physicians.
Abbott Laboratories, Inc. agreed to settle allegations involving false claims submitted to Medicare for $5.5. million. The settlement resolved allegations that the company intentionally paid prominent physicians kickbacks so they would arrange for affiliated hospitals to purchase Abbott’s vascular products for use procedures involving carotid and peripheral vascular and biliary stents.
The government alleged that Genzyme Corp. sales representatives instructed doctors how to use Seprafilm in an unapproved manner. Allegedly, company employees taught physicians and other employees to dissolve Seprafilm sheets in saline to create a “slurry” for use in laparoscopic surgeries. Allegedly, the sales representatives said to fill a catheter with the mixture and squirt it into the abdominal cavity. The FDA has only approved Seprafilm for open abdominal surgery but not for laparoscopic surgery or other minimally invasive surgeries. The company allegedly caused false claims to be submitted to federal health care programs for non-reimbursable uses. Genzyme agreed to pay $22.3 million to resolve the allegations.
CareFusion agreed to pay $40.1 million to settle allegations that it paid kickbacks and engaged in off-label marketing. The company allegedly marketed Chloraprep for uses not approved by the U.S. Food and Drug Administration (FDA).
Smith and Nephew allegedly violated the Trade Agreements Act and agreed to an $8.3 million settlement. The company sold devices manufactured in Malaysia when the law mandates they be manufactured in the US, the government alleged.
Omni Surgical L.P. (Spine 360) and an Indiana spinal surgeon agreed to a combined $2.6 million settlement to resolve allegations that the company paid kickbacks influence him to use their products. Allegedly, the company pretended to pay the physician for intellectual property agreements while actually paying for the use of Spine 360 products.
