Monday, July 20, 2009

Whistleblower suits target fraud by ablation companies

Endoscopic Technologies Inc. (Estech), a medical device manufacturer, will pay the federal government $1.4 million to resolve a whistleblower suit alleging violations of the False Claims Act, the U.S. Dept. of Justice announced.

The suit claimed that Estech promoted its surgical ablation devices for treatment of atrial fibrillation, a use that is not approved by the U.S. Food and Drug Administration (FDA). The government also alleged that the company promoted expensive heart surgeries using the company’s devices, advised hospitals to up-code surgical procedures, and paid kickbacks to healthcare providers to use its devices.

The suit was filed in the Southern District of Texas, which has unsealed four additional qui tam lawsuits against other surgical ablation device manufacturers.

One of those companies is AtriCure Inc., which said in an SEC filing that it had received a copy of the qui tam complaint. The company says that the relator is a former employee of one of the other medical device companies.

Other companies named, according to the Wall St. Journal, include Medtronic, St. Jude and Boston Scientific, all of whom say they are cooperating with federal authorities.

FINRA acts to protect municipal bond investors

The Financial Industry Regulatory Authority (FINRA) announced that it will be surveying retail sales practices in the municipal securities market.

FINRA investigators are conducting sweeps to gather information in three distinct areas: industry sales to retail investors; municipal securities involving swaps and derivatives for small municipalities; and sales of certain so-called municipal Gas Bonds that were underwritten and guaranteed by the now-defunct Lehman Brothers and quickly became distressed.

FINRA is an industry-funded group that polices Wall Street.

Sen. Grassley has questions for medical journals

Sen. Chuck Grassley, the ranking Republican member of the Finance Committee, wants leading medical journals to outline their policies on ghostwriting.

Sen. Grassley has sent a letter to eight medical journals as part of his inquiry into whether drug and medical device companies are paying for draft articles and getting prominent doctors and researchers to sign on as authors, even though they may have had minimal involvement in the writing.

The letter continues, "Concerns have been raised... that some medical literature may be little more than subtle advertisements rather than independent research. The information in these articles can have a significant impact on doctors’ prescribing behavior and, in turn, on the American taxpayer, as the Medicare and Medicaid programs pay billions of dollars for prescription drugs and medical devices."

Grassley had previously sent similar letters to several pharmaceutical companies and medical publishers.

Monday, July 06, 2009

SEC whistleblower program should emulate FCA, lawyer says

In an letter to the Financial Times, attorney Erika Kelton says that the proposed bounty program for SEC whistleblowers could be more effective.

Kelton, a partner at Phillips & Cohen LLP, recommends that the program include an "action-forcing mechanism." Under the False Claims Act, the Department of Justice is required to decide with a specified time whether or not it will intervene in a qui tam action. Without such a mechanism, Kelton says, the SEC bounty program will be less effective.