Medical Devices and DME

June 11, 2019

A Maryland-based medical device manufacturer facing criminal charges and civil charges under the False Claims Act has agreed to pay $15 million to settle all claims.  According to former employee and whistleblower John Murtaugh, when the company discovered that its MicroMatrix wound dressing powder was contaminated with high levels of endotoxins, it allegedly removed certain MicroMatrix products off the market, but failed to report the removal to the FDA and disclose the reason to doctors, hospitals, and its own sales representatives.  ACell also allegedly caused false claims to be submitted to federal healthcare programs by directing its sales representatives to market the product as safe and effective, providing coding recommendations designed to elicit higher payments from Medicare, and providing improper inducements to encourage use of its product.  As part of the settlement, Murtaugh will receive $2.3 million, and ACell will enter into a 5-year corporate integrity agreement.  DOJ

April 30, 2019

Anna Ramira-Ambriz, the owner of a durable medical equipment (DME) company, pleaded guilty on March 31, 2017, to defrauding Medicare out of more than $3 million. Ramirez-Ambriz owned Compassionate Medical Supplylocated in Edinburg.  From 2007 through 2013, Ramirez-Ambriz billed Texas Medicaid for higher quantities and more costly incontinence supplies than were actually delivered. She will be sentenced to federal prison for over six years, followed by an immediate three years of supervised release. Ramira-Ambriz was also ordered to pay over $3 million in restitution to the Texas Medicaid Program. DOJ

April 24, 2019

Two executives of Arriva Medical, LLC, a mail-order diabetic testing supply company acquired by Alere, Inc. in 2011, will pay a total of $1 million to settle claims that they caused Arriva to submit false claims to Medicare by supplying patients with free or no cost home blood glucose meters, waiving patient copayments, and billing for medically unnecessary home blood glucose meters.  USAO MD TN

March 13, 2019

Following an earlier guilty plea, Waveney Blackman, the owner of Washington, D.C. durable medical equipment company WaveCare Health Services, was sentenced to 3.5 years in prison for her role in submitting nearly $10 million in fraudulent claims to Medicaid for would care products that were not actually purchased and provided.  Blackman was also ordered to forfeit $9.4 million and pay restitution in the same amount.  DOJ; USAO DC

March 11, 2019

Medical device manufacturer Covidien LP will pay $20 million to resolve False Claims Act cases initiated by three whistleblowers alleging that Covidien violated the Anti-Kickback Statute by providing remuneration to healthcare providers in California and Florida.  Covidien markets radiofrequency ablation catheters to providers including vein surgery practices for use in procedures for the treatment of varicose veins and underlying conditions, and allegedly provided its customers with substantial assistance in connection with marketing vein screening and related services in order to increase demand for such services and therefore induce purchases of Covidien's vein ablation products.  Covidien will pay $17.5 million to the United States; $1.5 million to California; and $1 million to Florida.  Two whistleblowers who were sales managers for Covidien, Erin Hayes and Richard Ponder, will share a $3.1 million whistleblower reward.  The settlement also resolves claims by whistleblower Shawnea Howerton, a former employee of one of Covidien's customers.  DOJ; USAO NDCal; FL

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