Cardiovascular Systems Agrees To $8M Settlement For False Claims Act Suit

The company is accused of providing kickbacks to physicians and running an off-label marketing scheme to fuel sales.
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Cardiovascular Systems Inc. agreed on Monday to pay $8 million to the plaintiff of a False Claims Act lawsuit that alleged the company ran kickbacks and an off-label marketing scheme in order to augment sales of its products.
Travis Thams, who was a district sales manager from 2012 to 2013, sued New Brighton-based CSI in July 2013, accusing the medical device maker of coaxing physicians to use its orbital atherectomy devices by offering “free, all-expense paid training programs [that were] followed by explicit demands by CSI employees that attendees use CSI products on future patients.” The complaint also accused CSI of giving away product in exchange for referrals to market to third-party physicians, as well as “sham … payments for high-prescribers and others whom CSI sought to cultivate.”
Court documents indicate CSI also attempted to push sales of its 4 French catheter by allegedly running an off-label promotion scheme. The device was allegedly promoted by CSI for its capability to treat areas of the body it was not approved for.
The $8 million deal would require CSI to make payments to the U.S. government over a three-year period and cover Thams’ legal fees. In a filing, the company noted that it was still working through final terms of the settlement.
On the heels of CSI’s scheme accusations, company shareholders filed a purported class action lawsuit last month. Led by shareholder Caroline Paradis, the company is being accused of misleading investors about the alleged off-label scheme that she claims triggered a 70 percent devaluation of CSI stock. Paradis is seeking remedy for herself and all persons who purchased CSI stock between September 12, 2011 and January 21 of this year.
CSI has said the purported class action suit is “without merit and [the company] intends to defend itself vigorously.”