The United States Attorney for the Southern District of New York, Geoffrey S. Berman, and the director of the Center for Devices and Radiological Health at the United States Food and Drug Administration (FDA), Jeffrey E. Shuren, MD, recently announced a settlement with CareFusion Corporation. The settlement involved claims under the False Claims Act, specifically that CareFusion (a subsidiary of Becton Dickinson) admitted to distributing medical devices for which the device manufacturer had not obtained the required approvals or clearances from the FDA and for which the Manufacturer could not demonstrate that the pre-amendment exception applied.
Since 1976, most medical devices must be approved or cleared by the FDA before they can be marketed for use on patients, depending on the degree of patient risk. While there is a grandfather exception for medical devices that were legally in commerce prior to 1976, to qualify for pre-amendment status, the device’s owner (often the manufacturer) must have marketed the device prior to May 28, 1976, in addition to other restrictions.
According to the Department of Justice, CareFusion made several admissions in the settlement, including:
- From 2007 to 2014, the company sold devices for which the Manufacturer:
- had not obtained approval or clearance from the FDA to market;
- was relying on the pre-amendment status exemption to market, but
- lacked the required evidence to demonstrate that the devices qualified for the pre-amendment status exemption.
- During that period, CareFusion purchased devices from Manufacturer that the Manufacturer wrongly claimed qualified for the pre-amendment status exception, and then sold those devices to hospitals and other health care providers.
- Some of those devices were used in procedures for which providers submitted claims for reimbursement to federal health care programs.
- When the Manufacturer provided CareFusion with the evidence on which it was relying to justify its claim that the devices qualified for the pre-amendment status exemption, that evidence was insufficient.
- Once the FDA issued a warning letter to the Manufacturer in 2014 and the Manufacturer issued recall notices for the devices at issue, CareFusion ceased selling and distributing the devices.
A BD spokesperson gave a statement to Regulatory Focus, “BD fully complies with all laws and regulations for the medical products the company manufactures, markets and distributes. It is important to note that CareFusion received confirmation and assurance from the products’ manufacturer that these products were legally available for sale in the US prior to the manufacturer recalling them. BD chose to settle the matter to avoid the time and expense of further litigation.”
Of the $3.3 million settlement, $2,821,539.92 will go to the United States and $478,460.08 will go to states adversely affected by company’s conduct through separate settlements with those states.
In connection with this settlement, the United States joined a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act and remains under seal as the Government continues its investigation.