Cardiovascular Systems: Building the Practices That Used Its Devices

In the Cardiovascular Systems kickback settlement, the company agreed to pay $8 million to resolve allegations that it used marketing and practice-development services to induce physicians to use its atherectomy devices. The alleged benefit was help building the doctor’s business: promoting the practice to referring physicians, arranging introductions and putting expansion plans into action.

The Department of Justice announced the civil settlement on June 29, 2016. A former employee brought the case against the Minneapolis-based medical device company under the False Claims Act.

How the Alleged Referral-Building Worked

The government alleged that Cardiovascular Systems built physicians’ referral networks to persuade them to begin or continue using its devices. The company’s alleged sales strategy reached into the business that brought patients to the physicians performing those procedures.

According to the government’s account of the allegations, Cardiovascular Systems developed and distributed marketing materials promoting physicians who used its devices to physicians who could refer patients to them. The customer being promoted was the doctor. The intended audience was another doctor with patients to refer.

The company also allegedly coordinated meetings between those groups. That puts the manufacturer in the middle of a relationship with value beyond the immediate device order: the relationship between the physician performing an atherectomy and the physician sending a patient for care.

The government further alleged that Cardiovascular Systems developed and implemented business-expansion plans for the device-using physicians. The allegation described the manufacturer doing the work of expanding the practice, alongside the promotional materials and referral meetings.

The manufacturer allegedly helped build the customer’s business to secure the customer’s device use. The government warned that this kind of arrangement compromises patient care and can waste limited health care resources.

Why Practice Development Matters to Device Choice

A service can transfer value to a physician’s practice just as money can. A 2020 paper in the Journal of Forensic and Investigative Accounting, A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud, explains that kickback arrangements can involve direct or indirect compensation, in cash or in kind, connected to prescribing, purchasing or recommending federally funded care. That helps explain why work done for a practice belongs in the same inquiry as money paid to it.

The alleged benefit here addressed the physician’s own business needs. The government alleged that the return Cardiovascular Systems sought was continued or new use of its devices.

The Company’s Own Purchasing Contract

Cardiovascular Systems’ publicly filed purchasing agreement with HealthTrust shows the institutional side of its business. The agreement covered its Orbital Atherectomy System and required the manufacturer to report member purchases when paying group purchasing fees. Purchases through distributors and purchases made under separately negotiated agreements were included.

For an insider, the useful detail is the purchase reporting. A referral meeting concerns relationships between physicians. A purchasing report concerns the devices an institution bought. We examine how those records line up: the practice receiving assistance, the physician choosing the device, the customer purchasing it and the procedure billed.

The Civil Settlement and Compliance Agreement

The settlement resolved the former employee’s qui tam case, a False Claims Act case brought on the government’s behalf.

Cardiovascular Systems also entered a Corporate Integrity Agreement with the Department of Health and Human Services’ Office of Inspector General. The settlement announcement described five years of compliance efforts, including an independent review organization.

What Are Some Examples of Kickbacks in Healthcare?

Practice-building services feature in other medical device kickback allegations, including customized marketing, referral events, patient screenings and advertising assistance. The Cardiovascular Systems case sits beside other cases in which the alleged inducement was work that helped the customer’s business grow.

In its 2019 announcement concerning Covidien, the Justice Department described allegedly free or discounted practice and market-development support intended to induce purchases of vein-ablation products.

In the 2020 Merit Medical Systems settlement, the government alleged that the company’s Local Advertising Program offered free advertising and practice support to selected providers to reward past sales, induce future sales and steer business away from competitors.

What Evidence Is Needed to Prove Fraud?

For a practice-development kickback case, we connect the help a practice received to the device business sought in return and the care billed to the government. That means understanding the account from both the manufacturer’s side and the provider’s side. Your knowledge of why the company helped a particular practice can explain what separate marketing, purchasing and billing records cannot show on their own.

The Cardiovascular Systems allegations concerned marketing materials, referral meetings and business-expansion plans. The services matter, and so does what the company expected in return.

We work with device sales, marketing, practice-development and compliance insiders to make those connections. If you know what was promised or why an account received help, that is the substance to discuss with our whistleblower experts.

How Much Is a Whistleblower Claim Worth?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In a practice-development case, our work with you follows the value given to the customer, the device business sought in return and the government claims connected to it.

You Know Why the Practice Got the Help

If your work put you inside a manufacturer’s referral-building program, tell our whistleblower experts what the company offered and what it wanted back. We build the device kickback case with you and bring in medical device whistleblower lawyers who understand practice-development incentives and provider billing. From the first account of the arrangement through the pursuit of a recovery, we stay at your side.