UPDATE: AtriCure finalizes settlement in federal whistleblower case

February 2, 2010 by MassDevice staff

Without admitting wrongdoing, the atrial fibrillation company finalizes an agreement to pay $3.8 million to settle Justice Dept. charges that it ran an illegal kickbacks and off-label marketing program aimed at boosting Medicare payments for its procedure.

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AtriCure Inc. (NSDQ:ATRC) finalized a deal to pay $3.76 million over five years to settle a federal beef accusing it of running an illegal kickbacks and off-label marketing program for its atrial fibrillation devices, according to the U.S.Justice Dept.

In November, the West Chester, Ohio-based company said it tentatively settled a federal "qui tam" whistleblower lawsuit and a separate DOJ investigation. The terms of the final deal, like the tentative agreement reached last fall, "specifically state that AtriCure and its employees admit no wrongdoing or illegal activity,”according to an Atricure press release.

In November, the company said it set aside $3.8 million to cover the tentative settlement.

Three other companies — Boston Scientific Corp., St. Jude Medical Inc. and Medtronic — are still on the hook in the case.

The lawsuit accused AtriCure of offering kickbacks to induce surgeons and hospitals to use its inpatient cardiac ablation procedure rather than less expensive, outpatient alternatives. The company was accused of promoting the spread between Medicare reimbursement rates for its procedure and the cost to hospitals and doling out kickbacks including free equipment, discounts, free advertising, marketing, and referral services and training for surgeons on its procedure.

The finalized settlement will see the company pay annual penalties (including interest) of $500,000, $500,000, $650,000, $1 million and $1.5 million.

AtriCure shares were down about 1 percent to $5.80 at 3:10 p.m.