Medical device companies are being held responsible for false and misleading promotional claims as well as advising medical providers on what billing codes to use. A recent case shows how these cases can proceed.
On July 18, 2018, it was announced that medical device manufacturer AngioDynamics,
Inc. agreed to pay the United States a total of $12.5 million to
resolve allegations that the company caused healthcare providers to submit
false claims to Medicare, Medicaid, and other federal healthcare programs
relating to the use of two medical devices, LC Bead and the Perforator Vein
Ablation Kit (PVAK).
The claims resolved by the civil settlements are allegations only, and there have been no determinations of liability.
AngioDynamics
will pay $11.5 million to resolve allegations that the company caused false
claims to be submitted to government healthcare programs for procedures
involving an unapproved drug-delivery device that was marketed with false and
misleading promotional claims.
The government alleged that, from May
2006 through December 2011, AngioDynamics served as the U.S. distributor for
Biocompatibles plc, the manufacturer of LC Bead, and marketed LC Bead for
use as a drug-delivery device in combination with chemotherapy drugs.
Moreover, AngioDynamics personnel routinely claimed that this particular
use of LC Bead, which FDA had twice declined to approve, was “better”,
“superior”, “safer” and “less toxic” than alternative treatments, even though
there was insufficient clinical evidence to support the truthfulness of these
claims.
The government also alleged that AngioDynamics was aware that
many insurers declined to provide coverage for certain LC Bead procedures and,
as a result, instructed healthcare providers to use inaccurate billing codes
when submitting claims for such uses.
The federal share of the civil
settlement is approximately $10.9 million, and the state Medicaid share of the
civil settlement is approximately $600,000. The government
previously resolved related criminal and civil claims against Biocompatibles in
November 2016.
AngioDynamics
will separately pay $1 million to resolve allegations that the company caused
false claims to be submitted to federal healthcare programs in connection with
the use of the PVAK, later renamed the 400 micron kit. In 2008,
AngioDynamics acquired the PVAK as part of a product suite that utilizes a
laser to close or collapse malfunctioning veins.
The PVAK was FDA-cleared
only for use in treating superficial veins, and, in 2011, AngioDynamics
requested that the FDA clearance include the treatment of perforator
veins. However, FDA informed the company that the treatment of perforator
veins constitutes a new indication for which safety and efficacy were
unknown. As a result, AngioDynamics voluntarily recalled the PVAK and
re-issued the product under a new name, the 400 micron kit that did not refer
to the unapproved use of treating perforator veins.
Notwithstanding the
recall and rebranding, certain AngioDynamics personnel, as part of a continued
campaign to market the device to treat perforator veins, falsely represented to
providers that Medicare would cover this use despite Medicare coverage
restrictions to the contrary.
The
civil settlement relating to LC Bead resolves a lawsuit filed under the
whistleblower provision of the False Claims Act by Mr. Ryan Bliss, who formerly
worked in the marketing departments of both AngioDynamics and
Biocompatibles. The Act permits private parties to file suit on behalf of
the United States for false claims and share in a portion of the government’s
recovery.
The civil lawsuit was filed in the Western District of Texas
and is captioned United States ex rel. Ryan Bliss v. Biocompatibles, Inc.,
et al., Case No. SA-13-CA-0667-XR. As part of today’s resolution,
Mr. Bliss will receive approximately $2.3 million from the settlement
relating to LC Bead.
Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
