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Justice Department to Angiodynamics: Don't lie. And pay $12.5 million for false claims

Staff Writer | July 19, 2018
Latham, New York-based medical device manufacturer AngioDynamics, Inc. has agreed to pay the United States a total of $12.5 million to resolve allegations that the company caused healthcare providers to submit false claims to Medicare, Medicaid, and other federal healthcare programs relating to the use of two medical devices, LC Bead and the Perforator Vein Ablation Kit (PVAK), the Justice Department announced.
Medicine   “Better”, “superior”, “safer” and “less toxic”
AngioDynamics will pay $11.5 million to resolve allegations that the company caused false claims to be submitted to government healthcare programs for procedures involving an unapproved drug-delivery device that was marketed with false and misleading promotional claims.

The government alleged that, from May 2006 through December 2011, AngioDynamics served as the U.S. distributor for Biocompatibles plc, the manufacturer of LC Bead, and marketed LC Bead for use as a drug-delivery device in combination with chemotherapy drugs.

Moreover, AngioDynamics personnel routinely claimed that this particular use of LC Bead, which FDA had twice declined to approve, was “better”, “superior”, “safer” and “less toxic” than alternative treatments, even though there was insufficient clinical evidence to support the truthfulness of these claims.

The government also alleged that AngioDynamics was aware that many insurers declined to provide coverage for certain LC Bead procedures and, as a result, instructed healthcare providers to use inaccurate billing codes when submitting claims for such uses.

The federal share of the civil settlement is approximately $10.9 million, and the state Medicaid share of the civil settlement is approximately $600,000. The government previously resolved related criminal and civil claims against Biocompatibles in November 2016.

AngioDynamics will separately pay $1 million to resolve allegations that the company caused false claims to be submitted to federal healthcare programs in connection with the use of the PVAK, later renamed the 400 micron kit.

In 2008, AngioDynamics acquired the PVAK as part of a product suite that utilizes a laser to close or collapse malfunctioning veins.

The PVAK was FDA-cleared only for use in treating superficial veins, and, in 2011, AngioDynamics requested that the FDA clearance include the treatment of perforator veins.

However, FDA informed the company that the treatment of perforator veins constitutes a new indication for which safety and efficacy were unknown.

As a result, AngioDynamics voluntarily recalled the PVAK and re-issued the product under a new name, the 400 micron kit that did not refer to the unapproved use of treating perforator veins.

Notwithstanding the recall and rebranding, certain AngioDynamics personnel, as part of a continued campaign to market the device to treat perforator veins, falsely represented to providers that Medicare would cover this use despite Medicare coverage restrictions to the contrary.

The civil settlement relating to LC Bead resolves a lawsuit filed under the whistleblower provision of the False Claims Act by Mr. Ryan Bliss, who formerly worked in the marketing departments of both AngioDynamics and Biocompatibles.

The Act permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery.

The civil lawsuit was filed in the Western District of Texas and is captioned /United States ex rel. Ryan Bliss v. Biocompatibles, Inc., et al./, Case No. SA-13-CA-0667-XR.

As part of this resolution, Mr. Bliss will receive approximately $2.3 million from the settlement relating to LC Bead.

The settlements with AngioDynamics were the result of a coordinated effort among 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, with assistance from 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.

The investigations were conducted by the FDA’s Office of Criminal Investigations; the HHS Office of Inspector General investigated allegations in the settlement involving PVAK.

The claims resolved by the civil settlements are allegations only, and there have been no determinations of liability.