Consumer Fraud

Medical device maker ev3 pays $1.25 million to settle whistleblower’s False Claims Act lawsuit

whistleblower 2 370x210 Medical device maker ev3 pays $1.25 million to settle whistleblower’s False Claims Act lawsuitMedical device manufacturer ev3, formerly known as Fox Hollow Technologies Inc., has agreed to pay the U.S. government $1.25 million to settle a whistleblower’s allegations that the company encouraged hospitals to admit patients for procedures involving its devices as inpatients when they should have been treated as outpatients at a significantly lower cost. The Justice Department said the scheme resulted in the hospitals submitting false claims to Medicare.

According to whistleblower Amanda Cashi, a former sales representative for Fox Hollow Technologies, the company intentionally caused 12 hospitals in nine states to submit claims to Medicare for medically unnecessary inpatient stays. Patients admitted as part of the scheme to collect higher Medicare payments underwent elective atherectomy procedures – minimally invasive surgeries that use a small cutting device to remove plaque from hardened arteries and improve circulation.

Throughout 2006 and 2007, the lawsuit alleged, Fox Hollow devised a scheme to increase purchases of its Silver Hawk Plaque Excision devices by advising hospitals that they should bill Medicare for procedures involving the devices as expensive inpatient claims. This, in turn, enabled the hospitals to claim higher, more profitable reimbursements from Medicare for the procedures.

“Medical device makers that try to boost their profits by causing patients to be admitted for unnecessary and expensive inpatient hospital stays will be held accountable,” said Department of Health and Human Services Special Agent Thomas O’Donnell . “Both patients and taxpayers deserve to have medical decisions made based on what is medically appropriate.”

U.S. Attorney William J. Hochul, Jr., of the Western District of New York, who helped prosecute the case, said that fraudulent schemes like the one involving the Fox Hollow devices “ultimately drive up costs for all taxpayers and beneficiaries of government health care programs.”

Ms. Cashi filed her lawsuit under the whistleblower provisions of the False Claims Act, which authorizes private individuals to sue on behalf of the U.S. for fraud and other wrongdoing committed against federal agencies and programs. Whistleblowers whose False Claims Act cases lead to a recovery receive up to 30 percent of the total amount recovered. Ms. Cashi will receive $250,000 as her award for exposing the ev3 scheme.

Source: U.S. Department of Justice