This week’s Department of Justice “Catch of the Week” goes to New York-based medical device maker AngioDynamics, Inc. On Wednesday, the company agreed to pay $12.5 million to resolve allegations it violated the False Claims Act by making false and misleading promotional claims about the LC Bead and Perforator Vein Ablation Kit (PVAK) medical devices. Angio served as the U.S. distributor for Biocompatibles plc, the manufacturer of LC Bead, and marketed the product for use as a drug-delivery device in combination with chemotherapy drugs. See DOJ Press Release.
The basis for the government’s charges is that AngioDynamics caused false claims to be submitted to government healthcare programs for procedures involving an unapproved medical device marketed with false and misleading promotional claims. According to the government, AngioDynamics personnel routinely promoted this use of LC Bead as “better” and “safer” than alternative treatments. It did so, however, even though the FDA had declined to approve this use and there was insufficient clinical evidence to support the truthfulness of these claims.
The government further alleged that AngioDynamics instructed healthcare providers to use inaccurate billing codes when submitting claims for this use because it knew many insurers would not otherwise cover it. In November 2016, the government resolved related criminal and civil claims against Biocompatibles. The Pennsylvania-based medical device manufacturer pleaded guilty to misbranding charges and agreed to pay more than $36 million to resolve criminal and civil liability arising out of its illegal conduct. See DOJ Press Release. Part of the Angio settlement also resolves charges the company caused false claims to be submitted in connection with the PVAK based on the company’s promotion of the product for uses not approved by the FDA.
In announcing the settlement, the government made it very clear it would hold medical device makers accountable for lying about their products and the uses for which they are approved:
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… The basic legal rule in this area could be mastered by a third-grader: Don’t lie… If you do, you will be held accountable. This settlement reflects that.
The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Ryan Bliss, who formerly worked in the marketing departments of both AngioDynamics and Biocompatibles. He will receive a whistleblower award of roughly $2.3 million from the proceeds of the government’s recovery.
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