Colo. Company to Pay $5M to Resolve Medical Device Allegations

Spectranetics Corp., a medical device manufacturer, located in Colorado Springs, Colo., has agreed to pay the United States $4.9 million in civil damages plus a $100,000 forfeiture to resolve claims against the company, the Department of Justice announced.

The claims arise 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 Food and Drug Administration approval or clearance.

The company manufactures, distributes, 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, specifically, 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 this matter, Spectranetics has entered into a civil settlement agreement and a non-prosecution agreement with the United States. The company also entered into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services.

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

Under the terms of the non-prosecution 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. As a result, Spectranetics will not be criminally prosecuted for this conduct. Under the civil settlement agreement, the United States 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."

"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 DOJ's Civil Division.

"Our compliance agreement with Spectranetics holds the company and its executives accountable for violations of federal health care 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."

The matter was handled by the U.S. Attorney's Office for the District of Colorado, the Office of Consumer Litigation and the Commercial Litigation Branch of the Justice Department's Civil Division and the Food and Drug Administration Office of Criminal Investigation. The corporate integrity agreement was handled by the Department of Health and Human Services Office of the Inspector General.

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