A federal court this week dismissed a False Claims Act lawsuit brought against Cardiovascular Systems (NSDQ:CSII) based on allegations from a former sales rep that the company ran kickbacks and an off-label marketing scheme to boost sales of its orbital atherectomy devices.
The $8 million settlement, 1st announced in March, includes a corporate integrity agreement and calls for the St. Paul, Minn.-based company to pay $3 million up front and the remaining $5 million in 11 quarterly installments beginning in January 2017. The company will pay a 1.8% annual interest rate on the unpaid portion of the settlement, CSI has said.
The U.S. District Court for Western North Carolina approved the settlement July 11, the company said yesterday in a securities filing. The deal, in which the company admitted no liability, does not include the legal costs for the plaintiff, which have yet to be determined.
The 5-year corporate integrity agreement requires CSI to maintain and expand its existing compliance programs and hire an independent review organization to audit its compliance with federal healthcare programs.
The FCA suit, filed in 2013 and unsealed 2 years later, accused CSI of inducing physicians to use its products by offering free, all-expense-paid training programs “followed by explicit demands by CSI employees that attendees use CSI products on future patients,” giving away product for free, 3rd-party referral channel marketing, and “sham Speaker Bureau payments for high-prescribers and others whom CSI sought to cultivate,” according to the complaint.
Plaintiff Travis Thams worked for CSI as a district sales manager from 2012 to 2013, according to the suit.
The lawsuit also accused the company of running an off-label promotion scheme to push sales of its unapproved 4 French catheter. It alleges that CSI also promoted its devices for use in areas of the body it’s not approved for, such as the coronary arteries, and for conditions such as chronic total occlusion for which it is not approved.