Ablation Company Pays $3.8 Million for Off-Label Use


February 5, 2010

February 5, 2010 – Cardiac surgical ablation system maker AtriCure agreed to pay $3.8 million plus interest for allegedly using illegal kickbacks and an off-label marketing campaign to induce physicians and hospitals to perform its costly inpatient cardiac surgical ablation procedures over less expensive outpatient catheter ablation procedures.

The settlement with the U.S. Department of Justice (DOJ) and the Office of the Inspector General for the Department of Health and Human Services is part of the government's emphasis on combating healthcare fraud. The suite was filed under the False Claims Act, which the Justice Department has used to recover approximately 2.2 billion since January 2009 in cases involving fraud against federal healthcare programs.

The qui tam, or whistle blower, provisions of the False Claims Act permit private citizens, called relators, to bring lawsuits on behalf of the United States and receive a portion of proceeds of any settlement or judgment. The relator who filed the case against AtriCure will receive a total of $625,000 as the statutory share of the current settlement.

Sanford Wittels & Heisler and Grant Morris represent the relator in the case against AtriCure, which was filed in the United States District Court for the Southern District of Texas. The complaint charges that AtriCure violated the Federal False Claims Act. As a result, the Medicare program has faced substantial increased costs from AtriCure's unnecessary and expensive procedures.

"The misuse of medical devices has the potential of exposing patients to dangerous procedures and taxpayers to payment for unwarranted claims against Medicare," said Tim Johnson, United States attorney for the Southern District of Texas. "This settlement demonstrates the government's commitment to maintaining safe and affordable health care for its citizens."

The complaint alleges that AtriCure enticed hospitals to purchase its products by promoting the spread between Medicare reimbursement for AtriCure's surgical ablation procedure and the relatively low cost to the hospital itself. AtriCure further provided physicians and hospitals with kickbacks, including free equipment; price discounts; free advertising, marketing, and referral services; and extensive training for surgeons performing AtriCure procedures.

"This settlement allows us to focus on the remaining two companies under active investigation, Boston Scientific and Medtronic," said Grant Morris, co-lead counsel in the AtriCure qui tam case.