Medical device manufacturer Cardiovascular Systems Inc. will pay $9 million to settle allegations that it paid illegal kickbacks to physicians to coax them to use the company’s medical devices, U.S. Attorney Jill Westmoreland Rose announced.
The settlement resolves a False Claims Act lawsuit filed by Travis Thams, a former Cardiovascular Systems employee, under the whistleblower provisions of the False Claims Act, which authorizes private parties to sue on behalf of the U.S. government in cases of suspected fraud and other misconduct.
Mr. Tham’s allegations were investigated by the U.S. Attorney for the Western District of North Carolina, the Department of Health and Human Services, and the U.S. Labor Department, which found credibility to Mr. Tham’s claims and chose to actively participate in the litigation.
According to the lawsuit, the Minneapolis-based medical device maker orchestrated a kickback scheme by providing marketing and other valuable services to physicians who used Cardiovascular Systems’ devices to perform atherectomies, procedures that clear blockages restricting blood circulation in arteries.
The complaint alleges that Cardiovascular Systems developed and distributed marketing materials to promote physicians using its devices to referring physicians, and helped develop business relationships between physicians using its products to referring physicians by coordinating meetings and assisting with business expansion plans.
These activities, the lawsuit claims, violated the False Claims Act and federal anti-kickback laws because they put business interests and profitability over the needs of patients and wasted federal health care funds.
“A Company cannot reward physicians for using its medical devices over those of competitors,” said U.S. Attorney Rose. “The type of kickback scheme alleged in this case compromises good medical care and can lead to inefficient use of limited health care resources.”
In addition to its settlement with the Justice Department, Cardiovascular Systems also entered into a Corporate Integrity Agreement with the Health and Human Services Department, an arrangement that requires the company to improve its regulatory compliance efforts over a five-year period, including hiring an independent auditor to monitor its activities for compliance with federal rules and regulations.