North Carolina medical device maker Baxano Surgical Inc. (NSDQ:BAXS) agreed to pay $6 million to close a Justice Dept. probe initiated nearly 2 years ago. The definitive settlement consummates a tentative agreement the spinal device company forged with federal regulators in December 2012, according to a Baxano Surgical statement.
Baxano Surgical, which admitted no wrong-doing in connection with the settlement, agreed to play the $6 million, plus 2% accrued interest, in 9 quarterly installments beginning July 2013. Baxano had set aside the $6 million in the quarter ended Dec. 31, 2012, the company said.
Under the terms of the agreement Baxano Surgical must abide by a "corporate integrity agreement," which requires the company to launch a series of "compliance related obligations, including training and monitoring procedures and maintaining a disciplinary process for compliance obligations for 5 years."
The settlement closes the books on the federal investigation as well as a whistleblower lawsuit.
The federal investigation began in October 2011, when federal regulators subpoenaed Baxano Surgical, then called TranS1 (NSDQ:TSON), seeking documents related to alleged healthcare fraud and false claims.
"The subpoena seeks documents for the period January 1, 2008, through October 6, 2011," according to a 2011 TranS1 regulatory filing. "The company is cooperating with the government’s request and is in the process of responding to the subpoena."
Baxano Surgical was formed in March 2013 when TranS1 acquired privately held Baxano Inc. in a deal worth about $23.6 million. The companies sealed the deal just last month.