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The Manufacturer of two Medical Devices Agrees to Pay the Government $12.5 Million to Resolve False Claims Act Allegations

When companies misrepresent the capabilities of their medical devices to the public and to healthcare providers, lives are endangered. This is a situation that the government has once again refused to tolerate. Thus, the Justice Department announced last week that New York-based medical device manufacturer AngioDynamics, Inc., will pay  the US $12.5 million to settle claims that it caused healthcare providers to submit false claims to Medicare, Medicaid and other agencies for two of its medical devices – LC Bead and the Perforator Vein Ablation Kit (PVAK). “The Justice Department is committed to holding medical device manufacturers accountable, which includes requiring that they follow all laws designed to ensure that medical devices are safe and effective,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division. “When manufacturers make misleading statements concerning the use of their products in ways that have not been cleared by the FDA, it undermines patient care. Taxpayers and patients deserve better.”

AngioDynamics has agreed to pay the government $11.5 million to resolves allegations that it caused false claims to be submitted for two unapproved drug-delivery devices that were marketed using false and misleading promotional claims. The government alleged that this occurred from May 2006 through December 2011. During that period, AngioDynamics was the U.S. distributor for Biocompatibles, PLC – the manufacturer of LC Bead – and marketed LC Bead as a device that delivered drugs in combination with chemotherapy treatments. Furthermore, AngioDynamics personnel are alleged to have claimed that LC Bead was “better”, “superior”, “safer”, and “less toxic” than alternative treatments. The FDA had earlier declined a request by the company to make such claims. Next, the government alleged that AngioDynamics instructed healthcare providers to get around the refusal of certain insurers to provide coverage for certain LC Bead procedures by instructing these providers to use inaccurate billing codes when submitting claims.

AngioDynamics is also slated to separately pay $1 million to resolve claims that it also caused false claims to be submitted for PVAK, another of its medical devices. The device – which AngioDynamics acquired along with other medical devices – uses lasers to collapse malfunctioning veins. AngioDynamics requested that the FDA approve the use of the device in treating perforator veins but when the agency approved the PVAK for the treatment of superficial veins only, AngioDynamics rebranded the device and continued to market it for the treatment of perforator veins. This is despite a recall of the device. The government alleges that this falsely represented to providers that Medicare would cover the use of this unapproved device.

“Medical device makers have an obligation to provide truthful information to protect both patients and the integrity of government health programs,” said Special Agent in Charge Scott J. Lampert of the U.S. Health and Human Services Department Office of Inspector General. “We will continue to thoroughly investigate health care fraud allegations.”

This civil settlement arose from a lawsuit that was filed under the Whistleblower or qui tam provisions, of the False Claims Act. 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. Plaintiffs usually retain the services of a false claims act lawyer in these cases. Whistleblower lawyers are knowledgeable in all areas of the False Claims Act and its provisions. Mr. Ryan Bliss, who formerly worked in the marketing departments of both AngioDynamics and Biocompatibles, filed the suit and will receive $2.3 million dollars as his share of the recovery. The federal share of the civil settlement is approximately $10.9 million; the state Medicaid share is approximately $600,000.