Medical Device Company Agrees To Pay $8 Million To Resolve Claims It Paid Illegal Kickbacks To Physicians

CHARLOTTE, N.C. – Minneapolis-based Cardiovascular Systems, Inc. (CSI), has agreed to pay $8 million to resolve allegations that it paid illegal kickbacks to induce physicians to use the company’s medical devices, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.

Derrick L. End of
Translation Jackson, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General for the region including North Carolina joins U.S. Attorney Rose in making today’s announcement.

According to allegations contained in filed court documents, CSI executed a kickback scheme to induce the use of its medical devices by doctors. The government alleges that CSI violated the False Claims Act by providing marketing and other practice development services to physicians utilizing CSI’s devices to perform atherectomies. Atherectomy is a procedure that clears blockages restricting blood circulation in arteries. The government alleges that CSI developed and distributed marketing materials to promote physicians utilizing CSI’s devices to referring physicians; coordinated meetings between utilizing physicians and referring physicians; and developed and implemented business expansion plans for utilizing physicians. The government alleges that CSI engaged in these activities to induce doctors to begin to use or continue to use CSI’s devices.

“Doctors are expected to provide medical advice and treatment options that benefit patients, not their own practice,” said U.S. Attorney Rose. “A Company cannot reward physicians for using its medical devices over those of competitors. The type of kickback scheme alleged in this case compromises good medical care and can lead to inefficient use of limited healthcare resources. My office is committed to preventing medical device manufacturers from improperly influencing physicians’ medical judgment. We will thoroughly investigate any such allegations,” Rose added.

Today’s settlement resolves a civil complaint filed in July 2013 by whistleblower Travis Thams, a former employee of CSI. Mr Thams filed the allegations against CSI under the qui tam provisions of the False Claims Act, which permit private parties to file suit on behalf of the government and obtain a portion of the government’s recovery.

In addition to its settlement with the Justice Department, CSI has also entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services - Office of Inspector General, requiring the company to engage in significant compliance efforts over the next five years, including engaging an independent review organization.

“Medical device companies engaging in kickbacks to boost profits undermine physicians’ medical judgment and drive up health care costs for everyone,” said Special Agent in Charge Jackson. “Our agency will continue to work with our law enforcement partners to investigate and recover Medicare money that was improperly paid.”

This settlement was the result of a coordinated effort by the U.S. Attorney=s Office Western District of North Carolina and HHS-OIG.

The lawsuit is captioned United States, ex rel. Thams v. Cardiovascular Systems, Inc. Case No. 3:13-cv-404. The claims resolved by this settlement are allegations only, and there has been no determination of liability.