Atrium Medical Corp. agrees to $11.5 million settlement

Medical device manufacturer accused of improper kickbacks to doctors


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Hudson-based Atrium Medical Corp. has agreed to an $11.5 million settlement with former sales representative and whistle blower Esther Grace Sullivan over claims it paid improper kickbacks to doctors for promoting the unapproved use of medical stents in patients’ arteries.

Grace, who also worked as a territory business manager for Atrium from 2007 to 2012, alleged the company engaged in a nationwide scheme to promote its iCast brand stent for use in the vascular system, even though it had only received federal approved for treating tracheobronchial obstructions.

According to a press release by the Dallas law firm Standly Hamilton LLP, Atrium used a system of referral dinners to induce physicians to implant the stents in the arteries of elderly patients while submitting payment claims to Medicare. The lawsuit also alleged Atrium provided financial grants and other kickbacks to doctors in violation of the federal Anti-Kickback Statute.

Atrium sold an estimated $382 million in iCast stents from 2007 to 2012. Sullivan said she believed nearly 100 percent of those were implanted for unapproved uses and that more than 70 percent were paid for by Medicare, Medicaid, military hospitals and the U.S. Department of Veterans Affairs.

The settlement is one of the largest in U.S. history under the federal False Claims Act involving a medical device where the government declined to intervene, according to Standly Hamilton.

In addition to Standly Hamilton, the legal team representing Ms. Sullivan included attorneys from Waters & Kraus, LLP, in Dallas; Taibi Kornbluth Law Group, P.A., in Durham, North Carolina; and The Law Offices of Jeffrey A. Newman & Associates in Boston.

"We are extremely happy to help resolve this matter for Grace, and it is particularly gratifying since this case was declined by the government," said attorney Standly Hamilton, who specializes in False Claims Act cases. "This was a victory not only for our client but for the many people whose taxes were spent on a device that was used in a way that was never approved by the FDA."

Sullivan is eligible for a money award based on her role in exposing the scheme, with most of the settlement money going to the government agencies that paid for the iCast devices that were used inappropriately.

A Texas district court issued an order on July 22 dismissing the case following the settlement announcement.

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