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The Department of Justice (DOJ) recently announced that a New York-based medical device manufacturer, AngioDynamics, Inc. (AngioDynamics), has agreed to pay a total of $12.5 million to the United States Government to resolve False Claims Act allegations.  AngioDynamics allegedly caused healthcare providers to submit false claims to Medicare, Medicaid, and other healthcare programs.  The claims were related to the use of two medical devices, LC Bead and the Perforator Vein Ablation Kit (PVAK).  AngioDynamics will pay $11.5 million to settle allegations of false claims submissions involving LC Bead, an unapproved drug-delivery device that it marketed with false and misleading promotional claims.  AngioDynamics will also pay an additional $1 million to settle claims arising from the use of PVAK, a device used to treat malfunctioning veins.

From May 2006 through December 2011, AngioDynamics was the U.S. distributor for Biocompatibles plc, the manufacturer of LC Bead.  AngioDynamics marketed LC Bead as a drug-delivery device to be used with chemotherapy drugs, claiming that it was superior to alternative treatments despite insufficient evidence to support that claim.  In fact, the Food and Drug Administration (FDA) had twice declined to approve LC Bead for that particular use.  Further, AngioDynamics allegedly knew that insurers did not provide coverage for certain LC Bead procedures.  The company therefore instructed healthcare providers to use inaccurate billing codes when submitting claims for this particular use.  The federal share of this civil settlement was approximately $10.9 million, and the state Medicaid share was approximately $600,000.  The settlement resolves a False Claims Act whistleblower lawsuit by Mr. Ryan Bliss, who formerly worked in the marketing departments of both companies.

AngioDynamics will also pay an additional $1 million to resolve allegations that it caused false claims to be submitted to federal healthcare programs involving PVAK usage.  The company acquired PVAK in 2008 as part of a product suite that uses lasers to close or collapse malfunctioning veins.  The FDA, however, had only approved the use of PVAKs for treating superficial veins.  In 2011, AngioDynamics requested that the FDA also provide clearance for the treatment of perforator veins.  The FDA denied their request, stating that the treatment of perforator veins was a new indication that involved unknown safety and efficacy concerns.  Consequently, AngioDynamics voluntarily recalled the PVAK and then reissued the product under a new name: the 400 micron kit.  AngioDynamics personnel allegedly continued to market the device as a tool that could be used to treat perforator veins.  They also falsely represented to providers that Medicare would cover this use despite contradictory Medicare coverage restrictions.

The U.S. Attorney’s Offices for the Western District of Texas and the Northern District of New York, and the Civil Division’s Commercial Litigation Branch coordinated their efforts leading to the AngioDynamic settlements.  The FDA’s Office of Chief Counsel, HHS’ Office of Counsel to the Inspector General, and the Department of Defense’s Defense Criminal Investigative Service also provided assistance in the matter.  The FDA’s Office of Criminal Investigations conducted the investigations and the HHS Office of Inspector General investigated allegations in the PVAK settlement.

The DOJ press release is available at:

https://www.justice.gov/opa/pr/medical-device-maker-angiodynamics-agrees-pay-125-million-resolve-false-claims-act

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