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Catch of the Week — Wound Care Device Manufacturer ACell Inc.

Posted  June 14, 2019

Our Catch of the Week goes to ACell Inc., a Maryland-based medical device manufacturer that pleaded guilty to violating the Federal Food, Drug, and Cosmetic Act (FDCA) by failing to report that it had partially removed its wound-care product, MicroMatrix, from the market because it was contaminated with endotoxins, placing treated patients in danger of serious infection, even death, without informing the FDA that it had done so. The Department of Justice announced that, as part of its criminal plea agreement, ACell will pay a $3 million fine. In addition, parallel with the criminal case, ACell will pay $12 million and enter into a Corporate Integrity Agreement to resolve its civil liability under the federal False Claims Act. The FCA settlement is based on a whistleblower complaint filed in June 2013 by a former ACell employee.

Essentially, as reported in the criminal Information filed by the United States, ACell admits that, in early 2012, members of its senior management attempted to cover-up manufacturing problems with MicroMatrix, a powder made from pig bladders, by instructing its sales force to return some of the contaminated product to ACell’s headquarters, without disclosing the reason for the “silent recall” to its own sales force, the purchasing doctors or hospitals, treated patients, or the FDA. Upon being told of the risk to patient health posed by vials of MicroMatrix that remained on the market, ACell’s CEO reportedly stated that the devices had “too much street value” to be recalled. Some of the returned contaminated powder was then sold to veterinarians for use on animals. At least one veterinarian contacted ACell to report a dog and horse which had both experienced “massive swelling” after receiving injections of MicroMatrix. ACell failed to inform the veterinarian that the product was sourced from a contaminated lot. A doctor and nurse also complained about swelling, abscesses, and infection in human patients treated with MedMatrix. ACell brushed aside these complaints as well.

The False Claims Act settlement with ACell also encompasses allegations that the company marketed MicroMatrix for off-label uses that had not been FDA approved. Specifically, the United States and whistleblower alleged that, beginning in 2011, ACell marketed MicroMatrix as safe and effective for the treatment of internal wounds, when it had only been FDA cleared for topical use. The United States also contended that ACell gave doctors kickbacks in the form of speaker payments, entertainment, and free product in order to induce MicroMatrix orders. ACell also allegedly gave doctors incorrect coding recommendations, thereby improperly inflating Medicare reimbursements.

The resolution of this matter does not appear to have made the United States whole relative to the actual amount paid for MicroMatrix by the Medicare, Medicaid, and Tricare programs, reflecting the government’s determination that ACell lacked the ability to pay full damages. Nevertheless, the United States’ resolution is an excellent example of the significant contribution that a whistleblower can make to addressing the threat of patient harm—including animals treated by veterinarians—posed by device manufacturers blinded by corporate profits.


Tagged in: Catch of the Week, FCA Federal, FDA Fraud, Medical Devices and DME, Whistleblower Case,