Spectranetics settles with U.S. govt agencies for $5M

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Spectranetics, a Colorado Springs, Colo.-based medical device maker, has agreed to pay U.S. government agencies $4.9 million in civil damages plus a $100,000 forfeiture to resolve claims pursued by the FDA and the U.S. Immigration and Customs Enforcement (ICE) against the company, the Justice Department announced on Dec. 29, 2009.

The U.S. Attorney General’s (AG) Office of the District of Colorado said that the claims arose from allegations that the company illegally imported unapproved medical devices and provided them to physicians for use in patients, conducted a clinical study in a manner that failed to comply with federal regulations and promoted certain products for procedures for which the company had not received FDA approval or clearance.

The FDA and ICE launched their investigation on Sept. 4, 2008.

The device maker manufactures and sells certain medical lasers and peripheral devices for those lasers, such as lead wires that guide the lasers through vascular tissue and catheters that carry and contain the lasers inside the veins, including the CVX-300 medical laser and the CliRpath Turbo Laser Catheter, the Turbo Elite laser ablation catheter, and the Turbo-Booster laser guide catheter.

In resolving the matter, Spectranetics has entered into a civil settlement agreement and a non-prosecution agreement with the U.S. The company also entered into a corporate integrity agreement with the Office of Inspector General of the U.S. Department of Health and Human Services, according to Colorado’s AG Office.

According to the agreement, the AG office said that officers and employees who acted on behalf of the company engaged in “multiple areas of wrongdoing.” Specifically, it said that Spectranetics illegally imported unapproved medical devices from overseas manufacturers and distributed the devices for use in human patients, and failed to meet its reporting obligations to FDA regarding the CORAL (COronary graft Results after Atherectomy with Lasers) and another associated study in connection with the devices listed above.

Via the agreement, Spectranetics has accepted responsibility for its conduct, has instituted remedial measures to prevent this conduct in the future and will continue to cooperate in the ongoing criminal investigation, said the office. As a result, Spectranetics will not be criminally prosecuted for this conduct. Under the civil settlement agreement, the U.S. asserted that as a result of the conduct described here and set forth in more detail in the civil agreement, Spectranetics caused false claims to be submitted to the Medicare Program during portions of the time period from 2003 to 2008.

“It is important to hold those who submit false claims to Medicare responsible for their actions,” said U.S. Attorney David Gaouette. “Settlements such as this help to protect the integrity of the Medicare system.”

“I am pleased that we have resolved our issues with the government,” said Emile J. Geisenheimer, Spectranetics’ chairman, president and CEO. “I believe that our level of cooperation and responsiveness and our demonstrable efforts at compliance, much of which preceded the onset of the federal investigation, were critical components that led to the resolution of this matter with no charges filed against Spectranetics.”

“The Department of Justice will be vigilant in pursuing cases against medical device companies that break the law and defraud taxpayers,” said Tony West, assistant attorney general for the Justice Department’s civil division.

“Our compliance agreement with Spectranetics holds the company and its executives accountable for violations of Federal healthcare program and FDA requirements,” said Daniel R. Levinson, inspector general of the Department of Health and Human Services.

“Records from Spectranetics’ clinical investigations will be audited by an Independent Review Organization to ensure compliance with FDA rules—including reporting of adverse events,” said Levinson.