Medical Device Companies to Pay $38.75 Million to Settle False Claims Act Allegations

NEWARK, N.J. – Two medical device manufacturers have agreed to pay $38.75 million to resolve allegations that they violated the False Claims Act for billing the Medicare program for defective rapid point-of-care testing devices, Acting U.S. Attorney Rachael A. Honig announced today.

The settlement announced today resolves allegations that from 2008 to 2016 Alere Inc. and Alere San Diego Inc. (collectively, Alere) knowingly sold defective INRatio blood coagulation monitors used by Medicare beneficiaries taking anticoagulant drugs, such as warfarin. For those patients, blood coagulation monitoring is essential to determining a clinically appropriate and safe dosage for their medications. Too much of an anticoagulant drug can cause major bleeding, and too little of the drug can cause blood clots and strokes.  

Since at least 2008, Alere allegedly knew that the software algorithm used in each version of its INRatio monitors contained a material defect. Based on its own internal research, as well as external complaints and warnings, Alere allegedly knew that INRatio devices had a “system limitation” that produced inaccurate and unreliable results for some patients. The United States alleged that despite awareness that INRatio systems were linked to over a dozen deaths and hundreds of injuries, including intra-cerebral hemorrhaging and cardiovascular events following bleeding episodes, Alere concealed the defect for years and billed Medicare for the use of defective INRatio devices. Alere allegedly failed to take appropriate corrective actions until 2016, when the devices were removed from the market following a nationwide Class I product recall undertaken at the request of the U.S. Food & Drug Administration (FDA).

“Health care companies have an obligation to be candid and clear in their disclosures to the FDA,” Acting U.S. Attorney Honig said. “The government expects companies to be proactive in investigating issues affecting patient safety. The U.S. Attorney’s Office for the District of New Jersey will hold accountable any company that fails to meet these obligations.”

“Patients and health care providers rely on diagnostic devices to provide reliable health information,” Acting Assistant Attorney General Brian M. Boynton of the Department of Justice’s Civil Division said. “The Department of Justice will hold accountable medical device companies that knowingly sell defective products that can harm patients and waste taxpayer dollars.”

“Companies that withhold information from or provide false information to FDA put patients’ health at risk and jeopardize the integrity of the regulatory process designed to protect the public health,” Timothy Stenzel M.D., Ph.D., Director of the Office of In Vitro Diagnostics and Radiological Health in the FDA’s Center for Devices and Radiological Health, said.

“Medical device providers who cut corners or purposefully market defective tools put profit above patient health,” FBI Special Agent in Charge George M. Crouch Jr. said. “The FBI will not sit idly by when people’s lives are at risk. It’s an ill-advised business model that ignores the consequences of getting caught.”

U.S. Attorney Honig credited special agents of the FBI Newark Division, under the direction of Special Agent in Charge Crouch, and Healthcare Fraud Unit Major Provider Response Team; special agents of the Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; and the  Civil Division’s Commercial Litigation Branch (Fraud Section), with investigation.

The government is represented by Assistant U.S. Attorney Daniel Meyler of the Health Care Fraud Unit in the District of New Jersey and Trial Attorney Christopher Terranova of the Civil Division.

The claims settled by this agreement are allegations only, and there has been no determination of liability.