In July 2018, medical device manufacturer AngioDynamics, Inc., agreed to pay the United States $12.5 million to resolve allegations that the company caused healthcare providers to submit false claims to Medicare, Medicaid, and other federal healthcare programs relating to the use of their two medical devices, LC Bead and the Perforator Vein Ablation Kit (PVAK).
The $12.5 million is split in two separate settlements – an $11.5 million settlement to resolve allegations that AngioDynamics caused false claims to be submitted to government healthcare procedures involving an unapproved drug-delivery device (LC Bead) that was marked with false and misleading promotional claims.
The government alleged that from May 2006 through December 2011, AngioDynamics served as the U.S. distributor for Biocompatibles plc, the manufacturer of LC Bead, and marketed LC Bead for use as a drug-delivery device in combination with chemotherapy drugs. The government further alleged that AngioDynamics personnel routinely claimed that this particular use of LC Bead, which FDA had twice declined to approve, was “better,” “superior,” “safer,” and “less toxic” than alternative treatments, even though there was insufficient clinical evidence to support the truthfulness of these claims. The federal share of the civil settlement is approximately $10.9 million, and the state Medicaid share of the civil settlement is approximately $600,000. The government previously resolved related criminal and civil claims against Biocompatibles in November 2016.
The other $1 million calculated in the settlement is to resolve allegations that AngioDynamics caused false claims to be submitted to federal healthcare programs in connection with the use of the PVAK. In 2008, AngioDynamics acquired the PVAK as part of a product suite that uses a laser to close or collapse malfunctioning veins. The PVAK was FDA-cleared only for use in treating superficial veins, and in 2011, AngioDynamics requested that the FDA clearance include the treatment of perforator veins. The FDA would not grant such a clearance as the treatment of perforator veins constitutes a new indication for which safety and efficacy were unknown. Then, AngioDynamics voluntarily recalled the PVAK and re-issued the product under a new name, the 400 micron kit, that did not refer to the unapproved use of treating perforator veins. Notwithstanding the recall and rebranding, select AngioDynamics personnel, as part of a continued campaign to market the device to treat perforator veins, falsely represented to providers that Medicare would cover this use despite Medicare coverage restrictions to the contrary.
“This settlement reflects the expectation that medical device manufacturers will give doctors accurate information about devices they manufacture and underscores the vital role of the False Claims Act in protecting the public,” said United States Attorney Grant C. Jaquith for the Northern District of New York. “We will continue to use all available tools to help secure patient safety and ensure the integrity of healthcare services claims submitted to the government.”
“Medical device makers have an obligation to provide truthful information to protect both patients and the integrity of government health programs,” said Special Agent in Charge Scott J. Lampert of the U.S. Health and Human Services Department Office of Inspector General. “We will continue to thoroughly investigate health care fraud allegations.”