Late last week, the Department of Justice announced that California-based medical device manufacturer NuVasive Inc. agreed to pay the United States $13.5 million to resolve allegations related to how the company marketed its CoRoent System for surgical uses that were not approved or cleared by the Food and Drug Adminstration (FDA). Further, the settlement resolves allegations that the company paid kickbacks to induce physicians to use the company’s product. NuVasive did not enter into a Corporate Integrity Agreement as part of the settlement.
The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act by Kevin Ryan, a former NuVasive sales representative who said he had first-hand knowledge of the medical device maker’s marketing scheme. The Act permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. As part of the resolution, Ryan received approximately $2.2 million.
The United States and the qui tam relator, Ryan, filed their amended complaint in October of 2013, stating:
NuVasive’s off-label marketing and promotion of CoRoent XL implants, Osteocel Plus and Formagraft repeatedly violated provisions of the Anti-Kickback Statute, which in turn resulted in violations of the False Claims Act, because NuVasive’s improper kickbacks and incentives induced physicians to choose and utilize CoRoent CL implants for non-approved, non-indicated, off-label uses when they otherwise would not have.
Specifically regarding off-label, the United States alleged that between 2008 and 2013, NuVasive promoted the use of the CoRoent System for surgical uses that were not approved or cleared by the FDA, including for use in treating two complex spine deformities: severe scoliosis and severe spondylolisthesis.
The settlement agreement also resolves allegations that NuVasive knowingly offered and paid illegal remuneration to certain physicians to induce them to use the CoRoent System in spine fusion surgeries, in violation of the federal Anti-Kickback Statute. The DOJ Press release states that the “illegal remuneration consisted of promotional speaker fees, honoraria and expenses relating to physicians’ attendance at events sponsored by a group known as the Society of Lateral Access Surgery (SOLAS). SOLAS was allegedly created, funded and operated solely by NuVasive, despite its outward appearance of independence.”
“The Justice Department is committed to holding medical device manufacturers accountable, which includes requiring that they follow all laws designed to ensure that medical devices are safe and effective,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “It is also imperative that manufacturers not improperly influence the selection of medical devices in order to ensure that these decisions are based on the needs and interests of patients, not on a physician’s own financial interests.”
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services, stated DOJ. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24.8 billion through False Claims Act cases, with more than $15.9 billion of that amount recovered in cases involving fraud against federal health care programs.
View NuVasive’s Press Release here
View the amended complaint (2013) here: Download Nuvasive Amended Complaint