Consumer Fraud

Johnson & Johnson’s Acclarent Settles Whistleblower Lawsuit With U.S. for $18 Million

Pills Stethascope on Money 435x289 Johnson & Johnson’s Acclarent Settles Whistleblower Lawsuit With U.S. for $18 MillionJohnson & Johnson’s California-based medical device manufacturer Acclarent will pay the U.S. government $18 million plus interest to resolve allegations that it caused health care providers to submit false claims to Medicare and other federal health care programs by marketing and distributing its Stratus sinus spacer devices without U.S. Food and Drug Administration (FDA) approval.

“The FDA approval process serves an important role in ensuring that federal health care participants receive devices that are safe, effective and medically appropriate,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will not permit companies to circumvent that process and put profits over patient safety.”

The settlement, announced July 22, came two days after Acclarent’s former CEO William Facteau and former Vice President of Sales Patrick Fabian were convicted on 10 criminal charges of introducing adulterated and misbranded medical devices into interstate commerce.

The False Claims Act allegations against Acclarent, which were brought by a whistleblower identified by the U.S. Department of Justice as Melayna Lokosky, had been kept under seal until the criminal case against the executives was resolved.

Acclarent sold a variety of medical devices for use in sinus surgeries, including a device known as the Relieva Stratus MicroFlow Spacer (Stratus). In 2006, Acclarent received FDA clearance to market the Stratus as a spacer to be used only with saline to maintain sinus openings following surgery.

The False Claims Act complaint, however, alleged that Acclarent intended for the Stratus to be used instead as a drug-delivery device for prescription drugs, and that the device was specifically designed and engineered for this use.

The government investigated the whistleblower claims and further alleged that Acclarent marketed the Stratus as a drug delivery device even after the FDA rejected the company’s 2007 request to expand the approved uses for the Stratus.

In 2010, Acclarent added a warning to its label against using active drug substances in the Stratus; however, the government alleged that Acclarent continued to market the Stratus for drug delivery.  By May 2013, Acclarent discontinued all sales of the Stratus and the company agreed to withdraw all FDA marketing clearances for the device, which is no longer commercially available in the U.S.

“It is imperative that medical device companies adhere to FDA approval requirements so that patients are not subject to questionable medical treatments at taxpayer expense,” said Special Agent in Charge Phillip Coyne of the Department of Health and Human Services Office of Inspector General.

The Justice Department said that Ms. Lokosky will receive a $3.5 million whistleblower award for helping the U.S. recover health care funds it spent on procedures involving the Stratus device.

Source: U.S. Department of Justice