Medical Devices and DME

September 13, 2019

Medical device manufacturer Avalign Technologies, Inc. and its subsidiary Instrumed International, Inc., will pay $9.5 million to resolve allegations that the companies unlawfully marketed devices not properly approved by the FDA for use in spinal surgeries, circumcisions, and other medical procedures, with knowledge that the devices did not have the required FDA approvals.  The allegations were originally made in False Claims Act action brought by a whistleblower.  USAO SDNY

August 29, 2019

A healthcare executive in Tennessee has been sentenced to 3.5 years in prison and ordered to forfeit nearly $600,000 for her role in a $4.6 million illegal kickback scheme.  In pleading guilty to violating the Anti-Kickback Statute, Brenda Montgomery admitted that she paid the CEO of Comprehensive Pain Specialist (CPS), John Davis, a 60% cut of Medicare reimbursements—amounting to more than $770,000—for arranging the referrals of durable medical equipment.  As a result of the scheme, Montgomery herself received fraudulent reimbursements amounting to as much as $2.9 million.  USAO MDTN

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;  2021 settlement with Arriva here

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