Lawsuits have been filed in Houston, Texas, alleging that Boston Scientific Corp., Medtronic Inc. and five other companies promoted surgical devices for unapproved uses and thereby cheated the federal Medicare program. The lawsuits filed by a whistleblower were unsealed in a Houston court. Boston Scientific and its Guidant Corp. unit “initiated a coordinated nationwide sales campaign, including the use of illegal kickbacks and other improper means, to entice physicians and hospitals to use their products for off-label purposes,” according to a former saleswoman (identified as Jane Doe) in the complaint.
The Plaintiff filed similar actions accusing companies including Medtronic, St. Jude Medical Inc. and Endoscopic Technologies Inc. of improperly marketing surgical ablation devices, used for lesions or scar tissue, for treatment of a trial fibrillation to increase sales. The suits were filed under the federal False Claims Act on behalf of the government, alleging the off-label marketing caused excessive Medicare reimbursements. The Justice Department says that Endoscopic Technologies, based in Danville, California, agreed to pay the U.S. $1.4 million to settle the lawsuit filed against it. The federal government had joined the case against the company.
Thus far, the government hasn’t determined whether to join the whistleblower suits against the other device makers. It must decide by August 21st whether to intervene. Minneapolis-based Medtronic first disclosed the investigation in its March 4, 2009, quarterly filing with the U.S. Securities and Exchange Commission.
The lawsuits claim the companies encouraged doctors and hospitals to use cardiac ablation as inpatient procedures, greatly increasing the cost. Surgical ablation devices create controlled lesions or scar tissue on the heart muscle to block irregular signals of the heart, potentially re-establishing normal heart rhythm. It is alleged in the complaint against Natick, Massachusetts-based Boston Scientific and Guidant that:
For the majority of patients, cardiac ablation can be more safely performed, at a lower cost, as an outpatient catheter procedure. Inpatient admission is not medically necessary.
The lawsuits claim the companies promoted expensive heart surgeries using the devices when less invasive alternatives were appropriate, advised hospitals how to inflate Medicare reimbursements and paid kickbacks to doctors and hospitals. The Defendants also include Atricure Inc., based in West Chester, Ohio. The Justice Department in its announcement of the $1.4 million settlement that such promotion by Endoscopic Technologies, or Estech, violated the federal Food, Drug and Cosmetic Act and caused the submission of false claims. Tony West, Assistant Attorney General for the Department’s civil division, observed:
The Department of Justice is committed to protecting Medicare from the unlawful marketing practices of Estech and other medical device manufacturers.
If you need additional information on litigation of the nature discussed above, contact Ted Meadows at 800-898-2034 or Ted.Meadows@beasleyallen.com.
Source: Bloomberg News
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