Medical Device Manufacturers (and Sellers) Take Note – Atricure to Pay U.S. $3.76 Million to Resolve Medicare Fraud Allegations

Quite interesting…  I had a discussion with a prospective client the other day who was sharing the need for firms – especially those in the Medical field – to operate ethically and know the rules when it comes to sales and ‘inducement’!  “It is clear,” he stated, “that firms need to take proactive actions to make sure that they not only operate within the law (as they understand it), but take affirmative actions to demonstrate their intent to operate in an ethical/legal environment.  As I was considering a fraud prevention presentation for this firm, then two days later this crosses my desk…

According to the Justice Department – Atricure Inc., a medical device manufacturer, has agreed to pay the United States $3.76 million to resolve civil claims in connection with the alleged promotion of its surgical ablation devices.  Surgical ablation devices use focused energy to create controlled lesions or scar tissue on a patient’s heart or other organs.

The settlement resolves allegations that the West Chester, Ohio-based company marketed its medical devices to treat atrial fibrillation (the most common cardiac arrhythmia or abnormal heart rhythm), a use that is not approved by the U.S. Food and Drug Administration (FDA). Atricure also allegedly promoted expensive heart surgery using the company’s devices when less invasive alternatives were appropriate, advised hospitals to up-code surgical procedures using the company’s devices to inflate Medicare reimbursement, and paid kickbacks to health care providers to use its devices. The United States asserted that by engaging in this conduct, Atricure knowingly violated the Food, Drug, and Cosmetic Act and caused the submission of false and fraudulent claims in violation of the False Claims Act.

The allegations were made against Atricure in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private citizens, called “relators,” to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment. The relator will receive a total of $625,000 as the statutory share of the current settlement.

NOTE: With opportunities for whistleblowers to gain personally from a settlement…it should be clear that challenges to operating actions come from many angles.  Some companies consider this a cost of doing business, but when the settlement hits (assuming there is no prosecution) the use of the equipment changes and people tend to run from issues that have a negative legal implication.

“The misuse of medical devices has the potential of exposing patients to dangerous procedures and taxpayers to payment of unwarranted claims against Medicare,” said Tim Johnson, United States Attorney for the Southern District of Texas. “This settlement demonstrates the government’s commitment to maintaining safe and affordable health care for its citizens.”

This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $2.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3 billion.


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