Johnson & Johnson Subsidiary Acclarent Settles Medical Device-Related Allegations For $18 Million

Acclarent, a subsidiary of Johnson & Johnson, pays $18 million in a U.S. settlement to resolve medical device-related accusations.

The allegations said that the company marketed and distributed the sinus spacer medical device without an approval from the U.S. Food and Drug Administration (FDA). This then resulted in the submission of false claims from healthcare providers to Medicare as well as other nationwide healthcare programs.

Based on the Justice Department's statement, an Acclarent saleswoman named Melayna Lokosky filed the whistleblower lawsuit against the company and two senior executives. Acclarent Inc. is a medical device manufacturer based in California.

According to the court documents, Acclarent managers directed their sales staff to market the product called Relieva Stratus MicroFlow Spacer (Stratus) as a drug delivery device. However, the FDA only approved Stratus as a medical device that maintains an opening to the sinus post-surgery.

In 2007, Acclarent requested for an approval from the FDA to expand the uses of its Stratus device. However, the requests were denied by the federal health agency. The court documents showed that despite the failed request, the company continued to market and distribute Stratus as such.

On July 20, 47-year-old William Facteau, the former CEO of Acclarent, and 49-year-old Patrick Fabian, the company's past vice president of sales, were convicted. The jury trial covering 10 misdemeanor counts lasted six weeks.

"It is imperative that medical device companies adhere to FDA approval requirements so that patients are not subject to questionable medical treatments at taxpayer expense," said Special Agent in Charge Phillip M. Coyne from the Department of Health and Human Services Office of Inspector General.

Lokosky is set to receive $3.5 million plus interest and legal expenses for her part in the whistleblower lawsuit. The suit, which was captioned United States ex rel. Melayna Lokosky v. Acclarent, Inc., was filed in the District of Massachusetts.

The recent settlement marked another achievement for the HEAT initiative, short for Health Care Fraud Prevention and Enforcement Action Team. The HEAT program was announced by the Secretary of Health and Human Services and Attorney General in May 2009.

The joint partnership focuses on initiatives to lower and prevent rates of financial fraud in Medicare and Medicaid. One of HEAT's most powerful tools is the False Claims Act, which helped the Justice Department recover over $30 billion since January 2009. Over $18.3 billion from the total amount has been recovered from the cases that involved financial fraud against nationwide healthcare programs.

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