Kickbacks Cost Cardiovascular Systems $8M in Whistleblower Travis Tham’s FCA Lawsuit

St. Paul, Minnesota-based Cardiovascular Systems Inc. (CSI) has agreed to pay $8 million to settle a False Claims Act (FCA) lawsuit alleging the company used kickbacks and an off-label marketing scheme to increase medical device sales, the U.S. Attorney’s Office in the Western District of North Carolina announced Wednesday. Whistleblower Travis Thams stands to collect between $800,000 and $2.4 million for filing the initial claim and exposing the alleged FCA violations.

Kickbacks Cost Cardiovascular Systems $8M in Whistleblower Travis Tham’s FCA Lawsuit

Device Sales Rep Travis Thams Alleges Kickbacks in Whistleblower Lawsuit

Thams began working for Cardiovascular Systems as district sales manager in 2012 and filed the initial civil False Claims Act complaint in July 2013. Thams’ suit claimed CSI provided physicians with all-expense-paid training programs in exchange for explicit agreements to use CSI products. CSI also allegedly paid physicians for sham “Speaker Bureau” services and traded medical devices for 3rd party referral channel marketing.

The whistleblower suit also claimed CSI marketed orbital atherectomy devices and 4-guage French catheters for use in procedures that the Food and Drug Administration (FDA) had not approved.

“CSI executed its scheme primarily through unlawful kickbacks and utilized its sales force to illegally promote the off-label sales and use of its medical devices in order to obtain reimbursement for non-FDA-approved indications and maximize profits through false and fraudulent statements,” the whistleblower lawsuit explains. “CSI’s quid pro quo kickback strategy was intended to and did induce physicians to use and obtain reimbursement for use of CSI medical devices on patients covered by Medicare, Medicaid, and other government payors.”

Feds Determine CSI FCA Violations

In May 2014, the district attorney for western North Carolina opened an investigation around Thams’ claims. The investigation determined CSI had violated the False Claims Act by submitting false claims to government health care programs, including Medicaid and Medicare.

“Medical device companies engaging in kickbacks to boost profits undermine physicians’ medical judgment and drive up health care costs for everyone,” said Derrick L. Jackson, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General.  “Our agency will continue to work with our law enforcement partners to investigate and recover Medicare money that was improperly paid.”

Cardiovascular Systems Settles at $8 Million on Kickback and Off Label Marketing Allegations

According to the settlement agreement, St. Paul, Minnesota-based CSI will pay $3 million up front and begin paying the remaining $5 million, with an annual interest rate of 1.8%, in quarterly installments starting January 2017. The company will also enter a 5-year corporate integrity agreement with the U.S. Department of Health and Human Services’ Office of the Inspector General (HHS-OIG) as part of the settlement, requiring it “to engage in significant compliance efforts over the next five years, including engaging an independent review organization.” CSI admits no liability in the settlement.

Whistleblower Travis Thams set to Net Whistle Blower Bounty

The federal False Claims Act allows private citizens to file suit on behalf of the government and share in 10% to 30% of any government recovery. Thams stands to collect between $800,000 and $2.4 million, plus attorneys’ fees and costs, for his role in exposing the fraud.

Kickbacks Compromise Quality Patient Care

“Doctors are expected to provide medical advice and treatment options that benefit patients, not their own practice,” said Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. “A Company cannot reward physicians for using its medical devices over those of competitors. The type of kickback scheme alleged in this case compromises good medical care and can lead to inefficient use of limited healthcare resources. My office is committed to preventing medical device manufacturers from improperly influencing physicians’ medical judgment.”

Whistleblowers and the Department of Justice have been instrumental in exposing increasing numbers of cases where healthcare providers receive kickbacks, often disguised, in return for promoting and using a pharma or device manufacturer’s products in violation of the Anti-Kickback statute, a presumptive violation of the U.S. False Claims Act.

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