Atricure Settles Medicare Fraud Claims for $3.8M

Posted February 3rd, 2010.

As It Appeared On

By Jacqueline Bell

Law360, New York (February 03, 2010) — Medical device maker AtriCure Inc. has reached a $3.76 million settlement with the U.S. Department of Justice, putting to rest claims that the company improperly marketed devices used to treat abnormal heart rhythms and enticed physicians and hospitals to inflate Medicare costs related to their use.

The agreement resolves allegations raised in a DOJ investigation and a related whistleblower case in the U.S. District Court for the Southern District of Texas that AtriCure marketed its surgical ablation systems used to treat atrial fibrillation, a common type of abnormal heart rhythm, for a use not currently approved by the U.S. Food and Drug Administration.

The DOJ also alleged that AtriCure pushed heart surgery using the company\’s medical devices when less-invasive alternatives were appropriate, and suggested to hospitals how to pump up Medicare reimbursement claims for surgical procedures using the company\’s devices.

The department further claimed that the company paid kickbacks to health care providers who used its devices, including free equipment, price discounts, free advertising, and referral services and training for surgeons.

Under the final settlement announced Tuesday, AtriCure and its employees admitted no wrongdoing or illegal activity.

“Moving forward, the men and women of AtriCure have never been more passionate and committed to our mission of improving and preserving human life or more confident in the power of our strategic plan. We believe strongly that AtriCure is uniquely positioned to deliver results for patients, physicians and shareholders,” said David J. Drachman, president and chief executive officer of AtriCure.

The allegations against AtriCure were first made in a lawsuit filed under the qui tam provisions of the False Claims Act, under which citizens are allowed to bring lawsuits on behalf of the government and in return receive a portion of the proceeds of any settlement or judgment. The U.S. government can opt to intervene in those cases and proceed with the action.

As part of the AtriCure settlement announced Tuesday, the relator will receive a total of $625,000, according to the DOJ. The qui tam complaint will be formally dismissed once the court reviews the settlement and the notice of dismissal filed by the DOJ, the company noted Tuesday.

David Sanford, a founding partner of Sanford Wittels & Heisler LLP who represents the relator in the case against AtriCure, said he was gratified the government substantiated the allegations by intervening and settling the case.

“AtriCure has done the right thing by settling this case before an onslaught of negative publicity surrounding the DOJ investigation,” Sanford said.

He noted that the AtriCure case was one of five qui tam suits that have been filed against major medical device makers alleging they improperly marketed surgical ablation systems for off-label purposes and pushed hospitals and doctors to inflate Medicare claims related to the devices.

Another of the suits, against San Ramon, Calif.-based Endoscopic Technologies has also been settled, with the company agreeing to fork over $1.4 million to the government, according to a July announcement from the DOJ, which also joined that suit.

As for the other three cases, Sanford said settlement talks with St. Jude Medical Inc. were ongoing, while litigation against Medtronic Inc., and Boston Scientific Corp. continued.

So far the government has not made a final decision about whether to intervene in those suits, according to Sanford.

The relator in the current matter is represented by Sanford Wittels & Heisler LLP and the Law Office of Grant Morris.

AtriCure is represented by EpsteinBeckerGreen.

The case is United States of America ex rel. Doe v. AtriCure Inc., case number 4:07-cv-02702, in the U.S. District Court for the Southern District of Texas.

–Additional reporting by Erin Marie Daly

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