Medical device maker ev3 Inc. agreed to pay $1.25 million to resolve allegations that it caused some hospitals to unnecessarily admit Medicare patients for an outpatient procedure to open hardened arteries, the Justice Department said Thursday.
The civil settlement resolved a lawsuit filed under the whistleblower provisions of the False Claims Act. The law permits private parties to file qui tam suits on behalf of the United States for false claims and obtain a portion of the government’s recovery.
Amanda Cashi, a former Fox Hollow sales representative, filed a qui tam suit against Fox Hollow six years ago. Cashi’s portion of the settlement will be $250,000.
Minnesota-based ev3 acquired Fox Hollow Technologies Inc. in 2007. In 2010, Ireland-based Covidien paid $2.6 billion to buy ev3. And last month, Medtronic paid nearly $50 billion to acquire Covidien and ev3.
The DOJ alleged that Fox Hollow used 12 hospitals in nine states to submit claims to Medicare for medically unnecessary inpatient stays for some Medicare patients undergoing elective atherectomy procedures.
Atherectomy is a minimally-invasive surgical procedure that uses a small cutting device to remove atherosclerosis, or hardening of the arteries, from large blood vessels. The procedure is intended to open up narrowed coronary arteries to increase blood flow and circulation.
One device used in atherectomies is the Silver Hawk Plaque Excision System sold by Fox Hollow. The DOJ alleged that in 2006 and 2007, Fox Hollow convinced hospitals to bill Silver Hawk atherectomy procedures as more expensive inpatient claims instead of cheaper outpatient claims. Some hospitals did that, and allegedly collected bigger Medicare reimbursement than they were entitled to.
“Medical device makers that try to boost their profits by causing patients to be admitted for unnecessary and expensive inpatient hospital stays will be held accountable,” said Thomas O’Donnell from the inspector general’s office of the federal Department of Health and Human Services. “Both patients and taxpayers deserve to have medical decisions made based on what is medically appropriate.”
Since January 2009, the Justice Department has recovered more than $23.5 billion through False Claims Act cases. More than $15 billion of that amount has been recovered in cases involving fraud against federal health care programs.
The DOJ said the claims resolved by the settlement are allegations only and there has been no determination of liability.
The case is United States ex rel. Cashi v. Fox Hollow Technologies, Inc., et al. Civ. No. 09-CV-01066-S (W.D.N.Y.).
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.