Medicare Device Maker Settles False Claims Allegations, Agrees to Pay $12.5M

A New York-based medical device manufacturer has agreed to pay $12.5 million to settle allegations it caused healthcare providers to submit false claims to federal healthcare programs relating to the use of two of its medical devices.

AngioDynamics Inc. was accused of causing false claims to be submitted to Medicare, Medicaid, TRICARE, and other federal healthcare programs for procedures involving an unapproved drug delivery device that was marketed with false and misleading promotional claims.

The government alleged that between May 2006 and December 2011, AngioDynamics served as the U.S. distributor for Biocompatibles plc, which manufactured the LC Bead, and marketed it for use as a drug delivery device, in combination with chemotherapy drugs. It was alleged that their employees claimed the device, was “better,” “superior,” “safer,” and “less toxic,” than other treatments.

Although the LC Bead had FDA approval for use in “bland embolization,” which involved blocking the flow of blood to tumors, it had twice been denied FDA approval as a chemotherapy drug delivery device.

The government went on to allege that AngioDynamics was aware that many insurers would not pay for certain procedures using the LC Bead, so it told providers to use inaccurate billing codes when submitting claims for these uses. It will pay $11.5 million to settle those allegations.

Separately, AngioDynamics also was accused of causing false claims to be submitted to federal healthcare programs for the use of another device – Perforator Vein Ablation Kit, or PVAK. It was alleged that in 2008, the company acquired the PVAK as part of a group of products that used a laser to close or collapse veins that no longer functioned properly. The PVAK had FDA approval to treat superficial veins. AngioDynamics requested FDA approval to treat perforator veins, which perforate the deep facia of muscles to connect superficial veins. The FDA then told AngioDynamics it would require a new indication for which safety and efficacy were not known.

Instead, AngioDynamics recalled the product and rebranded it under another name. However, the company continued to market the device to treat perforator veins and, according to the government’s accusations, told providers that Medicare would pay for the procedure, despite coverage restrictions. It will pay another $1 million to settle those allegations.

The settlement relating to LC Bead was the result of a whistleblower case filed by the product manager responsible for the marketing department of the British manufacturer of LC Bead. It’s important to note that the settlement does not constitute any admission of guilt on the part of AngioDynamics.

In announcing the agreement, the government made it very clear it would hold medical device makers accountable for lying about their products and the uses for which they are approved.

“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 Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division. “When manufacturers make misleading statements concerning the use of their products in ways that have not been cleared by the FDA, it undermines patient care.  Taxpayers and patients deserve better.”

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