Medical Devices and DME

January 22, 2019

In an investigation lead by Texas and South Carolina, 46 states and the District of Columbia have entered in to a consent judgment with Johnson & Johnson and its DePuy Orthopaedics unit, resolving claims that the company made misleading claims about the lifespan of two of its metal-on-metal hip implant devices, deceptively marketing and unlawfully promoting the medical devices.  The company will pay $120 million and agreed to specific steps to reform how it markets and promotes its hip implants.  Texas; see also, e.g., NY

December 4, 2018

In connection with fraud involving two medical devices, Covidien and ev3 Inc. have agreed to pay a total of $31 million to resolve allegations of violating the False Claims Act. According to whistleblower and former employee of Covidien, Jeffrey Faatz, sister company ev3 Inc.'s Onyx Liquid Embolic System was only FDA approved for use within the brain, but was allegedly being marketed to surgeons for use outside the brain. Furthermore, ev3 reportedly incentivized its sales representatives to sell the device for unapproved purposes by setting up sales quotas and bonuses, and did so even as FDA officials expressed safety concerns to the company's executives. Separately, Covidien was accused of paying kickbacks to hospitals to induce use of its Solitaire mechanical thrombectomy device, causing false claims to be submitted to Medicare and Medicaid. For blowing the whistle on this case, Faatz will receive a relator's share of $2 million. DOJ; USAO CDCA; USAO SDFL; USAO MA

December 4, 2018

Medical device-maker LivaNova USA, Inc. has agreed to pay $1.87 million to resolve claims that it paid improper kickbacks to physicians who were among the largest referrers of patients for LivaNova's implanted epilepsy device.  The payments took the form of "speaking fees" for the doctors, although the doctors who received them were primarily speaking to their own staffs.  Ashley Case, a former employee of LivaNova, initiated the investigation by filing a case under the False Claims Act; she will receive an unspecified share of the settlement.  USAO NDGA

July 18, 2018

AngioDynamics, a New York-based medical device manufacturer, will pay $12.5M to settle allegations that it caused healthcare providers to submit false claims to Medicare and Medicaid. $11.5M of settlement resolves allegations that the aggressively marketed an unapproved drug delivery device, the LC Bead, with false and misleading statements. The remaining $1M resolved allegations that the company sold a device that was approved to collapse malfunctioning superficial veins to collapse malfunctioning perforator veins, also using false and misleading statements. The LC Bead-related fraud was brought to light by a whistleblower who will receive an award of $2.3M. DOJ

July 5, 2018

North Carolina announced it has settled with Rotech Healthcare Inc., a Florida-based respiratory equipment supplier, over civil allegations that Rotech knowingly submitted false claims for portable oxygen contents to Medicaid and Medicare. The settlement is joined by 22 other states and the federal government. The total settlement is $9.95 million, of which North Carolina will receive $43,671.23. Between 2009 and 2012, Rotech automatically billed Medicaid and Medicare for portable oxygen contents regardless of whether the beneficiaries used or needed portable oxygen and without obtaining the required proof of delivery. Rotech continued this practice despite knowing that it was submitting ineligible claims. NC  The settlement is part of previously-reported settlement with the federal government and other states.  April 12 Federal Settlement. The case was initiated by a whistleblower.

April 23, 2018

Three individuals who fraudulently marketed and sold light-emitting medical devices as a cure-all to consumers were sentenced as follows: Robert “Larry” Lytle, the leader of the scheme, was sentenced to 12 years in prison; Ronald D. Weir Jr. was sentenced to 24 months; and Irina Kossovskaia was sentenced to 15 months. Lytle and his co-conspirators marketed and distributed QLaser devices to mostly elderly consumers by falsely claiming they could safely and effectively treat a panoply of medical conditions at home, including cancer, emphysema, diabetes, autism, HIV, and heart disease. DOJ

April 12, 2018

Florida-based respiratory equipment supplier Rotech Healthcare Inc. agreed to pay $9.68 million to settle claims of violating the False Claims Act by submitting claims for portable oxygen contents to Medicare for beneficiaries who did not use or require them. The Company further admitted to billing Medicare regardless of whether such contents were delivered. The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by former Rotech employee Janet Hale. She will receive a whistleblower award of $1,645,600 from the proceeds of the government’s recovery. DOJ

March 28, 2018

New Orleans resident Sandra Parkman was sentenced to 32 months in prison for her involvement in a $3.2 million Medicare fraud and kickback scheme. According to the evidence presented at trial, Parkman and others engaged in a scheme to defraud Medicare by supplying medically unnecessary durable medical equipment, including power wheelchairs, to Medicare beneficiaries in and around New Orleans. DOJ