Acclarent Stratus: Cleared for Saline, Promoted for Steroids

In the Acclarent Stratus settlement, Acclarent agreed to pay $18 million to resolve allegations that it promoted a sinus spacer for steroid delivery and caused providers to submit false claims to Medicare and other federal health care programs. The device had clearance for use with saline. The government alleged that employees taught physicians to use it with a prescription steroid, even after the Food and Drug Administration rejected the company’s request to expand its use.

The Justice Department announced the civil settlement on July 22, 2016. Acclarent sold devices used in sinus surgery and was then a subsidiary of Ethicon, a Johnson & Johnson company. The case reached across the business: what the company designed, what it asked FDA to permit, what it demonstrated to physicians, and what providers billed.

What Stratus Was Cleared to Do

The Relieva Stratus MicroFlow Spacer received Food and Drug Administration clearance in 2006 as a spacer used only with saline to maintain sinus openings after surgery. The cleared use concerned keeping an opening in place. The government’s allegation concerned using the same device to deliver prescription corticosteroids, including Kenalog-40.

That difference ran through the product itself. In its settlement announcement, the government alleged that Acclarent intended Stratus for drug delivery and specifically designed and engineered it for that purpose. The allegation put the device’s physical design alongside its promotion.

How Steroid Delivery Became the Sales Pitch

Acclarent asked the Food and Drug Administration to expand Stratus’s uses in 2007, and the agency refused. The court’s account of the criminal case describes a proposed change to the instructions allowing the catheter’s balloon to be filled with saline or another therapeutic agent. The agency told the company that the changed intended use required a new submission.

The civil allegations describe what happened in front of physicians. Acclarent employees used a training video demonstrating Stratus with Kenalog-40. They also demonstrated the device with a white, milky substance resembling that steroid.

The demonstration made the intended use visible. The agency had cleared a saline spacer, and the company had asked to broaden that use. The government alleged that employees continued to teach drug delivery after the agency said no.

The physician training alleged in the civil announcement makes the sales side tangible: employees demonstrating steroid delivery through the spacer. A training video can show what a physician was taught to do with a device, while internal marketing material can show the commercial plan behind that instruction. For a sales or clinical-training insider, the connection between those records is the useful part of the story.

In 2010, after Ethicon acquired Acclarent, the company added a label warning concerning active drug substances in Stratus. By May 2013, Acclarent had discontinued all Stratus sales and agreed to withdraw its marketing clearances.

How Does Reimbursement Work for Medical Devices?

Medicare usually includes an implanted device’s cost in the payment for the procedure or hospital care. The physician may choose the device, while the hospital or surgery center buys it and bills for the care. That split helps explain how a manufacturer’s sales campaign can reach a government payment through someone else’s claim.

Device representatives work close to that decision. A Senate Finance Committee staff report describes representatives who order, deliver and stock instrumentation and assist surgeons in the operating room. Product education and clinical use meet at the point where a manufacturer makes a sale and a provider delivers the service it bills.

In Acclarent’s case, the government alleged a specific sequence: the company marketed and distributed Stratus for drug delivery, providers used it that way, and providers submitted false claims to federal health programs. The allegation followed the manufacturer’s promotion into the treatment and the bill. In the government’s account, taxpayers were being asked to cover a use the agency had refused to clear.

For an insider, the connection between the training and the provider’s claim is the part that turns a product story into a healthcare fraud case.

The Genzyme Seprafilm civil case shows the same manufacturer-to-provider connection through a different product. The government alleged that Genzyme taught providers to dissolve Seprafilm into a slurry for laparoscopic procedures and caused claims for uses that were not reimbursable. In both cases, instruction about how to use a device was part of the alleged route to a provider’s bill.

What the Criminal Trial Established

In the separate criminal case, a jury convicted Acclarent’s former chief executive and former vice president of sales on ten misdemeanor counts involving distribution of adulterated and misbranded devices.

The successful theory concerned a changed intended use without the required clearance. That is the part of the criminal result that makes the FDA correspondence and the company’s plans especially useful to an insider trying to understand this case.

The Chief Executive and the Regulatory Strategy

In the criminal case against the former chief executive, the evidence reached beyond the sales pitch. The court described how the government showed what the company intended the device to do:

The Food and Drug Administration response gave that evidence a concrete reference point. The company had proposed changing the instructions, and the agency had required a new submission. Internal decisions about the product and its market could be compared with that written response.

The Sales Leader and the Physician Demonstrations

The former vice president of sales was also convicted in the criminal trial. The court explained that statements about Stratus helped show its intended use alongside the internal communications, design and regulatory evidence.

Can a Whistleblower Take Legal Action Against a Medical Device Company?

Yes. A whistleblower can bring a qui tam case under the False Claims Act over a manufacturer’s role in causing providers to submit false claims. Acclarent’s civil case concerned the company’s alleged responsibility for claims submitted by health care providers.

The whistleblower in the Acclarent civil case received approximately $3.5 million. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

What Evidence Is Needed to Prove Fraud?

Proving a device-promotion case means connecting what the manufacturer intended and taught to the care delivered and the claim for payment. That is the work we do with you. In Stratus, that means the cleared use, the requested change, FDA’s response, the design and marketing records, the physician training and the provider’s bill.

A 2020 analysis in the Journal of Forensic and Investigative Accounting, A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud, puts the payment request at the center of False Claims Act analysis. It examines whether a statement had the practical effect of inducing a wrongful payment. Applied to a device sales campaign, that means following the effect of the promotion through the provider’s treatment and billing decisions.

A regulatory employee may understand the difference between the cleared instructions and the proposed change. A trainer may recognize what the demonstration taught. A provider-side employee may understand how that use reached a bill. We work with the person who can explain those connections, including why a document meant something different inside the business from what an outsider would see.

When You Know What the Demonstration Was Selling

If you know how a device’s sales pitch departed from its cleared use, speak to one of our Whistleblower Experts about what you saw. We build the connection between the product, the company’s decisions and the provider claims, and bring in medical device whistleblower lawyers who understand FDA clearance and healthcare reimbursement. We stay beside you as your knowledge becomes the case we pursue together.