A qui tam lawsuit against a medical device distributor has ended in a $3.3 million settlement over allegations of illegal distribution of unapproved medical devices. In addition, the defendant in the case, CareFusion Corporation, was required to acknowledge that it had purchased and marketed medical devices that had not received FDA clearance.

Case Background

According to the qui tam claim filed on behalf of the federal government by an unnamed whistleblower, CareFusion, a subsidiary of medical technology firm Becton Dickinson & Co., engaged in the sale of medical devices for which FDA approval had not been granted. These activities allegedly took place between 2007 and 2014, during which CareFusion had relied on what is known as the “pre-amendment status exemption” in determining whether or not the device was legal. This exemption is a “grandfather clause” that can be applied to medical devices that were on the market prior to 1976 and thus do not require FDA clearance.

This is where CareFusion reportedly made its error, according to the Department of Justice. The company failed in its due diligence by not having evidence that the devices in question were, in fact, eligible for the exemption.

During the period in question, CareFusion acquired the devices it sold from manufacturers claiming the products qualified for the exemption without confirming the accuracy of the claim. Those devices were then sold to health care providers who used them in procedures for which claims for reimbursement were filed with the federal Medicare and Medicaid programs.

In a press release, Manhattan Attorney General Geoffery Berman said, “When unapproved devices are used in medical procedures, it presents a public health and safety risk, and federal health insurance programs should not foot the bill.”

Federal health insurance programs should also not cover costs of falsified medical records.

About Qui Tam Law

Qui tam, or whistleblower lawsuits, are those in which a private citizen files a complaint on behalf of the government. These actions have a venerable history going back to the Roman Empire. In those days, criminal prosecutions were filed delatores, who today are known as “relators.”

By the time of Julius Caesar, such citizens who brought the cases before a magistrate received a portion of the defendant’s forfeited property in compensation. Similar legal practices were also part of English jurisprudence during Anglo-Saxon times.

Qui tam laws in the US date from 1778, after two officers of the Continental Navy reported misconduct on part of their commander, suffering severe retaliation as a result. Today’s whistleblower statutes not only provide for compensation for the relator, they also protect the relator from retaliatory action by the defendant.

Today, whistleblower actions are covered under the False Claims Act of 1863 (also known as the “Lincoln Law”). Relators continue to play a valuable role in policing industries that do business with the federal government and holding them accountable for fraud against American taxpayers.

The Current Settlement

According to the National Law Review, of the $3.3 million qui tam settlement, $2.8 million will go to taxpayers, while approximately $480,000 will be paid to states that were affected by Medicare fraud. The remainder will be paid to the relator, whose name is being withheld as the case remains under seal while the government continues its investigation into the matter.

This article is not legal advice. It is presented
for informational purposes only.