Articles Posted in medical device manufacturer fraud

IMG_0315-300x200A civil health care fraud lawsuit has been filed against Life Spine Inc., as well as its founder and president, Michael Butler, and Vice President of development, Richard Greiber, for allegedly paying millions of dollars in kickbacks to surgeons for using their spinal implants, equipment, and other devices. According to the lawsuit, the surgeons who received kickbacks from Life Spine Inc. accounted for half of the company’s total sales from 2012-2018.

Life Spine Inc. is headquartered out of Huntley, Illinois and specializes in the development and manufacturing of devices used in spinal surgeries. This includes spinal implants and instruments under the Life Spine Products line.

In 2012, Butler and Greiber began aggressively recruiting surgeons to act as paid consultants for the company. Butler and Greiber also promised surgeons that any patent applications that were transferred to Life Spine Inc. would result in the related products being brought to market. However, these agreements were contingent on the surgeons’ continued use of Life Spine Products. In exchange, the surgeons received up-front intellectual property acquisition fees for their patent transfers, as well as royalties for sales from the patented products, and regular consulting fees.

Cardinal Health Inc. said in a regulatory filing that it has been sued by the government for fraud and violating health care laws for its marking and sale of continence and ostomy products.  The complaint in the case was apparently filed against Cardinal Health at Home division last year in the U.S. District Court in Massachusetts.

The Department of Justice has not yet determined if it will intervene in the case and is conducting an investigation, according to Cardinal, which is providing information to DOJ .

Jeffrey Newman represents whistleblowers. He does not represent whistleblowers in this case.

An indictment was filed today charging Vascular Solutions Inc. (VSI) and its chief executive officer, Howard Root, with selling medical devices without U.S. Food and Drug Administration (FDA) approval and conspiring to defraud the United States by concealing the illegal sales activity.   The devices at issue are from VSI’s “Vari-Lase” product line, a system designed to treat varicose veins by burning or “ablating” them with laser energy.

Root and VSI are each charged with one count of conspiracy and eight counts of introducing adulterated and misbranded medical devices into interstate commerce.  The case is pending in the U.S. District Court for the Western District of Texas.

“These charges involve a deceptive sales campaign led by the CEO of a public company,” said Acting Assistant Attorney General Branda.  “The indictment charges that the sales campaign persisted in the face of FDA warnings, a whistleblower’s complaint to the CEO and a failed clinical trial showing that the device was less safe and less effective than a product that had already been approved.  We will take action to hold corporations and their leaders responsible when they violate laws intended to protect public health.”

According to the indictment, the Vari-Lase products were cleared by the FDA only for the treatment of superficial veins, but Root and VSI sold them for the ablation, or removal, of “perforator” veins, which connect the superficial vein system to the deep vein system.  Because perforator veins come into direct contact with deep veins, treating them with lasers was a more difficult and risky procedure.

Root is charged with leading the illegal sales campaign, which lasted from 2007 until 2014, and conspiring with others to hide it from the FDA.  The indictment alleges that Root authorized the campaign after VSI failed to obtain FDA authorization to sell the Vari-Lase system for ablation of perforator veins.  The sales campaign is alleged to have ignored FDA concerns about the safety and effectiveness of the procedure and specific warnings from the FDA not to sell Vari-Lase products for treatment of perforator veins.  The indictment alleges that, with Root’s approval, the sales continued even after the company sponsored an unsuccessful clinical trial that showed that the Vari-Lase system was less safe and effective than a competing device that the FDA had cleared for perforator vein treatment.  According to the indictment, the sales continued even after a whistleblower complained to Root in 2009 and the government told the company about its investigation in 2011.

The indictment also charges VSI and Root with deceiving the FDA.  In late 2007, Root decided to launch a special “Short Kit” designed for perforator vein treatment, despite the lack of FDA marketing authorization, by claiming that the product was intended for “short vein segments” or “short veins.”  At the same time, the government alleged that internal company documents approved by Root taught the sales force that these terms included perforator veins and urged salespeople to suggest to health care providers that Vari-Lase devices could be used to treat perforator veins.  After learning about the government’s investigation, members of the sales force began using the term “short vein segments” in field trip reports to disguise that they were still selling Vari-Lase devices for perforator vein treatment, according to the indictment.  Two other members of the sales force are alleged to have misled investigators; in addition, the indictment charges that one member falsely denied his conduct and another tried to scapegoat a low-level salesman.

In July 2014, VSI agreed to pay $520,000 to resolve allegations that it caused false claims to be submitted to federal health programs by marketing the Vari-Lase devices for treating perforator veins.  In that civil action, the government alleged that VSI knowingly caused physicians and other purchasers of the Short Kit to submit false claims to federal health care programs for uses of the Short Kit that were not reimbursable.

Jeffrey Newman represents whistleblowers

Continue reading

Drug manufacturers and medical device companies paid at least $3.5 Billion to U.S. physicians in the final five months of last year according to The Centers for Medicare and Medicaid services

The payments and so-called transfers of value to an estimated 546,000 doctors and 1,360 teaching hospitals include such items as free meals that company sales representatives bring to physicians’ offices, fees paid to doctors to speak about a company’s drug to other doctors at restaurants, compensation for clinical trial research and consulting fees.Some doctors have earned tens of thousands of dollars annually from drug companies by flying to various cities to give paid speeches, while some surgeons have received even larger amounts from medical-device makers, partly from royalties on products they helped develop.

Beginning next year, companies will report full-year data annually. Companies submitted the data to the CMS earlier this year, using the so-called Open Payments portal. The agency has allowed physicians to register with the Open Payments system to get a preview of the payment records, before it went public, to allow time for them to dispute any reports they believed were inaccurate.

 U.K.-based medical device manufacturer Smith & Nephew has agreed to settle a qui tam suit and pay the United States government eight million dollars.  The whistleblower, Sam Cox, sued Smith & Nephew  under the whistleblower provisions of the False Claims Act for violating the Trade Agreements Act (TAA).  The whistleblower provisions permit private citizens known as “Relators” to bring lawsuits on behalf of the U.S. and receive a portion of proceeds of any settlement or judgment.

Continue reading


Vascular Solutions Inc. (VSI) has agreed to pay $520,000 to resolve allegations that it caused false claims to be submitted to federal health programs by marketing a medical device for the ablation (or sealing) of perforator veins without FDA approval and despite the failure of its own clinical trial, the Justice Department announced today.  VSI is a medical device company based in Minneapolis, Minnesota. Continue reading

Medical device manufacturer CareFusion will pay $40.1 million to settle a False Claims Act whistleblower case for improperly promoting and marketing its surgical preparation solution Chloraprep. It also concealed kickbacks to a doctor who promoted the drug says the DOJ.

Chloraprep was promoted for the surgical prepration for use with intravenous prepration and suture care, said the Government, even though the FDA rejected Chloraprep for such uses. CareFusion allegedly also entered into agreements to make payments to Heal Care Concepts Inc. to promote Chloraprep to other healthcare providers.

The FDA has specific regulations regarding the use of medical devices and preparations and must pre-approve a product for specific use.

James Allen, who received a defective pacemaker manufactured by Guidant LLC decided to blow the whistle on the company revealing information that two lines of implantable defibrillators were sold even though the company knew they were defective.

Boston Scientific and its subsidiaries Guidant LLC , Guidant Sales LLC and Cardiac Pacemakers Inc. will pay $30 million to settle allegations that for three years, Guidant knowingly sold defective heart devices to health care facilities that in turn implanted the devices into Medicare patients.

Mr. Allen shall receive $2.25 million as his reward for revealing the false claims, pursuant to The False Claims Act, a whistleblower law allowing for individuals to reveal fraud on the government and obtain a percentage of what the government recovers.