Spectranetics Corp. (NSDQ:SPNC) admitted responsibility and will pay $5 million to avoid federal prosecution in a case alleging the Colorado Springs company illegally imported medical lasers for a clinical trial, according to the U.S. Justice Dept.
The company, which makes cardiac ablation lasers used to zap arterial plaque, agreed to pony up $4.9 million in civil damages and forfeit $100,000 to settle the case, according to the Justice Dept. Spectranetics also agreed to non-prosecution and corporate integrity agreements with the government.
According to the non-prosecution agreement, Spectranetics and some of its officials illegally imported medical laser equipment. The company ran clinical studies that didn’t comply with Food & Drug Administration regulations (the Coronary Graft Results after Atherectomy with Lasers or Coral trial and another trial of its models of its CVX-300 medical laser and CliRpath Turbo laser, Turbo Elite laser ablation and Turbo-Booster laser guide catheters), according to the Justice Dept. The company also promoted products with no FDA clearance, according to the DOJ. False Medicare claims were submitted from 2003 to 2008 as a result, the agency said.
Federal agents raided the company’s headquarters Sept. 4, 2008, according to the Colorado Springs Gazette. Spectranetics will cooperate with an ongoing criminal investigation, according to the newspaper.
CFO Guy Childs told the Gazette that the settlement won’t affect day-to-day operations or lead to layoffs among its 450 workers. The company had $18.3 million in cash on had at the end of the third quarter. The tab for the case will top $10 million once Spectranetics pays the feds no later than Thursday, Childs said, as the company has already shelled out $5.3 million in legal fees over the probe. Spectranetics has also paid $600,000 to a Washington, D.C.-based consultant to review its compliance programs, according to the newspaper, and Childs said several shareholder lawsuits over the case have been consolidated into a class action suit.
“I am pleased that we have resolved our issues with the government. I believe that our level of cooperation and responsiveness and our demonstrable efforts at compliance, much of which preceded the onset of the federal investigation, were critical components that led to the resolution of this matter with no charges filed against Spectranetics,” president and CEO Emile Geisenheimer said in a press release.
Then-president and CEO John Schulte resigned a few weeks after the federal raid in 2008, according to the Gazette, which also reported that the Securities and Exchange Commission requested documents from Spectranetics after the its stock price plunged following the raid.
SPNC shares were trading at $7.05 as of the close of trading Jan. 4, after spiking to $7.66 news of the settlement broke Dec. 29.