The US Department of Justice has announced that medical device manufacturer AngioDynamics has agreed to pay US$12.5 million to end an investigation into whistleblower allegations that it instructed healthcare providers to submit false claims to insurers.

The settlement, announced by the DOJ on 18 July, relates to LC Bead, an embolisation device used to block the flow of blood to tumours, for which the company acted as US distributor on behalf of manufacturer Biocompatibles between 2006 and 2011. It also settled claims related to AngioDynamics’ marketing of the Perforator Vein Ablation Kit (PVAK), which it acquired in 2008 as part of a suite of products that use laser technology to close malfunctioning veins.

The LC Bead settlement brings an end to a five-year lawsuit filed under the whistleblower provision of the US False Claims Act by Ryan Bliss, a former member of the marketing department of AngioDynamics, Biocompatibles and its British parent company BTG, in Texas in 2013.

Bliss alleged that the Biocompatibles misbranded LC Bead as a “drug-eluting” device – one that slowly releases a drug into a patient’s system – rather than an embolisation device, which was the only use for which the US Food and Drug Administration had approved it. He further claimed that AngioDynamics marketed LG Bead as a drug-delivery device in combination with chemotherapy treatments.

The DOJ announcement alleges AngioDynamics personnel “routinely claimed” that this use of LG Bead “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 DOJ also said the company was aware that insurers were likely to decline to cover certain LC Bead procedures, and that the company instructed healthcare providers to use inaccurate billing codes when submitting claims.

Biocompatibles pleaded guilty to misbranding LC Bead and agreed to pay US$11 million in criminal fines and forfeitures and a further US$25 million to resolve civil allegations under the False Claims Act in 2016.

AngioDynamics, meanwhile, has not admitted liability or conceded that the DOJ’s claims are well founded, but had agreed to pay US$11.5 million “To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation”.

The DOJ announcement said the settlement brought an end to the Bliss suit, and noted that the whistleblower will receive around US$2.3 million as a result.

The company has agreed to pay a further US$1 million to settle separate allegations related to the PVAK. The FDA cleared the product for use in treating superficial veins but rejected AngioDynamics’ request to approve it for the treatment of perforator veins on the grounds that it would constitute a new indication “for which safety and efficacy were unknown.”

The DOJ said the company subsequently recalled the product and reissued it under a new name – “the 400 micron kit” – which still didn’t refer to the unapproved use of the device. Nevertheless, the DOJ alleged, “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.”

US Attorney for the Northern District of New York Grant Jaquith said the settlement “reflects the expectation that medical device manufacturers will give doctors accurate information about devices they manufacture and underscores the vital role of the False Claims Act in protecting the public fisc.”

Steve Trowbridge, AngioDynamics’ senior vice president and general counsel told PLN the DOJ announcement “relates to the resolution of a matter previously reported over a year ago by the company in public filings.”

Counsel to Ryan Bliss

  • Newman Law Offices

Jeffrey Newman

  • Waters & Kraus

Paul Lawrence

Counsel to AngioDynamics

  • Hyman Phelps & McNamara

Anne Walsh