Spectranetics: Unapproved Imports, the CORAL Study and a Non-Prosecution Agreement

Spectranetics, a Colorado medical laser and catheter manufacturer, agreed to a $4.9 million civil settlement over allegations of unapproved device imports, clinical-study failures and promotion for procedures without Food and Drug Administration approval or clearance. For someone inside a device business, the case reaches across purchasing, clinical affairs and sales, all the way to the Medicare bill.

What the Spectranetics Non Prosecution Agreement Covered

The Spectranetics non prosecution agreement addressed the conduct under criminal investigation, the civil settlement addressed allegations that it caused false Medicare claims, and a separate corporate integrity agreement addressed compliance. According to the Justice Department’s December 29, 2009 announcement, Spectranetics accepted responsibility under the non-prosecution agreement, instituted remedial measures and agreed to continue cooperating with the criminal investigation. The government agreed not to prosecute the company for the covered conduct.

The corporate integrity agreement was with the Department of Health and Human Services’ Office of Inspector General. It called for a review of clinical-investigation records, bringing the information held inside the company into the resolution alongside the devices it sold.

Unapproved Imports Reached Physicians and Patients

The import conduct described in the non-prosecution agreement carried unapproved devices from overseas manufacturers through Spectranetics to physicians for use in patients.

The government’s announcement named the CVX-300 Medical Laser, the CliRpath Turbo Laser Catheter, the TURBO Elite Laser Ablation Catheter and the TURBO-Booster Laser Guide Catheter. It described wires that guide lasers through vascular tissue and catheters that carry and contain them inside veins.

That product detail matters to an insider. A laser system has equipment and accompanying devices whose identities and uses need to be connected. We would examine which product came from which supplier, what authorization covered it, where it went and what the physician used.

The CORAL Study and FDA Reporting

According to the Justice Department’s account of the non-prosecution agreement, Spectranetics failed to meet Food and Drug Administration reporting obligations for CORAL, short for Coronary Graft Results after Atherectomy with Lasers, and another associated study. The announcement connected those studies to the laser and catheter products it named.

Unapproved devices reached patients while information the company owed its regulator failed to reach it. The government’s account of the non-prosecution agreement described failures on both sides of that relationship.

For clinical and regulatory employees, the useful comparison is between the information inside the business and what reached the regulator. We examine the study records, the reporting decisions and the submissions together. Who received the information, what they did with it and what the company ultimately reported are different parts of that account.

The corporate integrity agreement addressed this area directly. HHS-OIG announced that an independent review organization would audit Spectranetics’ clinical-investigation records for compliance with Food and Drug Administration rules, including adverse-event reporting. The company that held the clinical information would have its reporting examined by someone outside the business.

Manufacturers receive adverse-event information from device users and importers. For an insider, the reporting decisions made after that information arrives are part of the story we would examine with them.

The whistleblower’s allegation that St. Jude Medical restricted employees’ written discussion of clinical studies offers a parallel to Spectranetics’ reporting failures: an insider can explain how a company handled study information.

Promotion for Procedures Without FDA Approval or Clearance

The government alleged that Spectranetics promoted products for procedures for which the company had not received FDA approval or clearance. This allegation followed the products into the sales conversation: what physicians were encouraged to do with them.

Product identity, the promoted procedure and the physician’s use belong together in that account. A sales presentation can explain the use the manufacturer was trying to generate. Clinical records can show the procedure performed. Provider billing records can show how the resulting care was presented for payment. We examine those connections with the insider who knows the product or the account.

Spectranetics’ civil settlement addressed the government’s allegation that the manufacturer’s conduct caused claims to reach Medicare.

How Does Reimbursement Work for Medical Devices?

Medicare generally includes device costs within the payment for the hospital procedure or stay. The manufacturer’s invoice and the hospital’s Medicare claim describe different transactions.

In hospital outpatient care, payment generally includes costs integral to performing a procedure or furnishing a service. In inpatient care, device costs sit within the payment for the stay. A hospital can report a device code or charge even when Medicare makes no separate payment for that device. This is why a device fraud inquiry has to reach the provider’s bill.

In Spectranetics’ civil settlement, the government alleged that the company’s conduct caused false Medicare claims during portions of the period from 2003 to 2008. The allegation followed the manufacturer through to claims submitted to the program. Patients received the devices, and the government alleged that the resulting health care generated false claims against taxpayer money.

The 2020 Journal of Forensic and Investigative Accounting paper A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud treats the payment claim, knowledge, falsity and causation as distinct parts of a False Claims Act healthcare fraud inquiry. Applied to device evidence, that means connecting what the company knew and did with what a provider asked the government to pay. The person who knows the sales decision and the person who knows the bill may hold different parts of the same account.

What an Insider Can Recognize

Spectranetics brings import decisions, clinical reporting and promotion into one case. An employee’s knowledge can connect those activities across departments: the product purchasing obtained, the information clinical affairs received, the use sales encouraged and the care a provider billed.

A document may show what was ordered, reported or billed. Someone who worked with it may know why the description changed, who made the reporting decision or what the sales instruction meant in practice. We work with that knowledge to build the account of the conduct and its connection to government payment.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know the Device and the Decisions

If you know how unapproved devices reached patients, what a clinical study failed to report or how a sales instruction reached a Medicare bill, speak with our whistleblower experts. We build the case with you and bring in medical device fraud whistleblower lawyers who understand clinical evidence and Medicare claims. We stay beside you as your knowledge of the business becomes a case for recovering public money.