Vascular Solutions: The VariLase Civil Settlement and Criminal Acquittal

Vascular Solutions agreed to a $520,000 civil settlement over allegations that off-label promotion of its vein-ablation kit caused false claims to federal health care programs. A jury later found the company and its chief executive not guilty on every criminal charge. The case reaches into work that device insiders know firsthand: designing a kit, reviewing clinical results, training sales representatives and telling physicians how a procedure will be reimbursed.

What the Civil Settlement Alleged

Vascular Solutions agreed to resolve allegations that it knowingly promoted its Vari-Lase Short Kit for perforator-vein treatment and caused physicians and other purchasers to bill federal programs for uses those programs would not reimburse. The Department of Justice announced the civil settlement on July 28, 2014.

The Minneapolis company sold equipment for endovenous laser ablation, which seals varicose veins with laser energy. A console generated the energy. An accessory kit supplied the needle used to enter the vein, the fiber that carried the energy and a sheath that guided the fiber while protecting portions of the vein outside the treatment area. The Short Kit had a shorter sheath, making shorter vein segments easier to treat.

That physical difference mattered to the sales story. The kit’s Food and Drug Administration clearance covered superficial veins, which run near the body’s surface. Perforator veins connect those surface veins to deeper veins in the leg muscle. The government alleged that Vascular Solutions sought clearance for perforator-vein ablation, failed to obtain it and then promoted the kit for that use anyway.

The government’s allegation also concerned what the company knew about the treatment. According to the settlement announcement, its clinical trial of perforator-vein ablation failed both safety and efficacy benchmarks. The alleged chain ran from the manufacturer’s promotion to the physician’s use of the kit and then to a federal health care claim. The physician or purchaser submitted the bill, but the government pursued the manufacturer for allegedly causing it. Taxpayers were allegedly paying for treatment the programs would not cover.

What the Criminal Indictment Charged

The criminal indictment, filed in November 2014, alleged that Vascular Solutions used the phrase “short vein segments” to market the Short Kit for perforator veins. Its account focused on the relationship between the product’s design, the training presentation and the clinical information passed to doctors.

According to the indictment, the chief executive decided to launch the kit using that phrase even though it had no specific meaning. The launch presentation said the company would promote the kit for short vein segments because it lacked clearance for perforator veins. Yet the presentation contained numerous slides about perforator veins, and the company’s design dossier included perforator veins within its description of short vein segments.

In the indictment’s account, the slides said perforator veins even when the sales wording did not.

The indictment also alleged a gap between the RELIEVE clinical trial’s results and what the sales force was instructed to say. It described deep vein thrombosis in 14% of patients, classified as a major adverse event, and a vein-closure rate of 69.7% against a protocol expectation of 98%. The indictment charged that the company instructed sales representatives to tell physicians the trial had achieved a 91% closure rate.

What the Jury Acquittal Decided

The Vascular Solutions VariLase acquittal came on February 26, 2016, when a jury acquitted the company and its chief executive on all five counts of the revised indictment. The government took its device-promotion case to trial and lost.

The civil settlement addressed alleged false claims for government payment. The later criminal trial ended with acquittals for both defendants.

How Does Reimbursement Work for Medical Devices?

In health care billing, Medicare commonly includes a device’s cost within payment for a procedure or hospital stay. In hospital outpatient care, implanted and insertable devices are generally packaged into the procedure payment, though the claim may still report a device code and charge. The product sale and the government’s payment for treatment are different transactions.

In the Vascular Solutions civil case, the government alleged that the manufacturer caused purchasers to submit claims for nonreimbursable uses. That is why the physician’s treatment decision and the purchaser’s claim are part of the company’s story. A sales record can show which kit changed hands. The treatment and billing records show what the customer did with it and what the government was asked to pay.

The Complaint’s Allegation About Separate Treatment Days

The whistleblower’s complaint also alleged that Vascular Solutions representatives advised doctors to spread a patient’s vein treatments across separate days to increase reimbursement:

That allegation puts reimbursement inside the sales conversation. The representative was allegedly advising on the timing of treatment as well as selling the equipment. For a device insider, the useful connection is between the advice the company gives a customer and the billing decisions that follow it.

What Evidence Is Needed to Prove Fraud?

We work with device insiders to connect the product’s intended use, the clinical information and sales message with the treatment and the government claim. In this case, those connections ran through what the regulatory team sought, what the trial measured, what the sales force was told and what customers heard about payment.

A 2020 review in the Journal of Forensic and Investigative Accounting, A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud, identifies access to inside information as a strength of healthcare fraud whistleblower cases.

In this case, the civil allegations came from a former Vascular Solutions sales representative. The company’s design file, clinical results, training materials and advice to purchasers were the places where the disputed promotion could be understood. The person who knows the sales conversation may hold a part of the story that the bill alone never tells.

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

A former sales representative did so in the Vascular Solutions case, bringing the civil allegations through a qui tam case under the False Claims Act. The Justice Department’s account identifies that case as the source of the allegations resolved by the settlement.

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

The Sales Conversation You Know

If you know how a device’s clinical results became a sales pitch, or what customers were told about getting paid, talk with our whistleblower experts. We build your case around that inside knowledge, find medical device fraud whistleblower lawyers with the right experience and stay beside you through the pursuit of a recovery.