A Medical Device Daily

Masimo (Irvine, California) reported that the Ninth Circuit Court of Appeals has affirmed the 2006 Federal District Court decision that Tyco Healthcare (Mansfield, Massachusetts), now Covidien, violated the antitrust laws through anticompetitive business practices related to the sale of its Nellcor pulse oximetry products.

According to Masimo, the 2006 decision found that Tyco had unlawfully maintained monopoly power and that its sole-source agreements and market-share based compliance pricing contracts were unlawful restraints of trade. Masimo originally filed the suit in 2002.

"We hope that the results that we have fought for will help improve patient care and reduce the cost of care by improving caregivers' access to cost-effective, innovative products," said Joe Kiani, founder/CEO of Masimo. "Medical products, from drugs and implantable devices to pulse oximeters, should be judged on their own merits and not based on artificial restraints on hospital purchasing placed by large manufacturers. America is struggling with rising healthcare costs. The best medicine for this challenge is innovation and competition. Since Masimo began our travails in the Senate and the courts to restore competition, American hospitals and care givers have begun to have more choice. That choice in pulse oximetry has not only caused pulse oximetry pricing to decrease by over 30%, but many people's lives were either saved or improved as a direct result of their access to Masimo pulse oximeters. We hope this ruling will improve the accessibility of all life-saving products for the best care at lowest price possible for patients."

Masimo develops monitoring technologies intended to significantly improve patient care. In 1995, the company debuted Measure-Through Motion and Low-Perfusion pulse oximetry, known as Masimo SET, which virtually eliminated false alarms and increased pulse oximetry's ability to detect life-threatening events, according to the company.

In other legalities:

• AGA Medical Holdings (Plymouth, Minnesota) reported that the German Regional Court in D sseldorf, Germany has granted a preliminary injunction against the manufacture, possession and sale of the Figulla Flex occluders made by Occlutech (Jena, Germany). The judge determined that the Figulla Flex occluders infringe AGA's patent EP 0 808 138 in Germany. On Oct. 29, a bailiff was sent to Occlutech's facility in Jena and seized over 2,700 infringing devices, AGA noted.

As a result of this decision and the prior decisions of the German courts, Occlutech is now prevented from selling any of its occlusion products in Germany or producing them for sale outside of Germany. The injunction was granted soon after the German Federal Patent Court in Munich upheld the validity of AGA's patent.

• Aribex (Orem, Utah) said it has filed a patent infringement complaint for unspecified damages against manufacturer DigiMed (Seoul, Korea), Sigma Biomedics (Buffalo Grove, Illinois), and Dentalaire Products (Fountain Valley, California). Sigma and Dentalaire distribute the Bio-Ray Prox, a portable X-ray device that is manufactured in Korea by DigiMed. According to the company, the complaint, filed in the U.S. District Court in Salt Lake City, comes after a number of attempts by Aribex to resolve concerns over the alleged infringement of Aribex patents by several different manufacturers and importers.

Aribex says it develops a class of handheld X-ray sources, with patented technology enabling a lightweight and easily transported design. Its NOMAD family of X-ray devices is used in the dental, veterinary, and forensic disciplines.

The complaint alleges that Aribex intellectual property rights are being knowingly and unfairly violated.

• A hospital group based in McAllen, Texas, has agreed to pay the United States $27.5 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute between 1999 and 2006, by paying illegal compensation to doctors in order to induce them to refer patients to hospitals within the group, the Justice Department reported. McAllen Hospitals (South Texas Health System), is a subsidiary of Universal Health Services (King of Prussia, Pennsylvania), a company that owns hospitals and other health care centers around the country.

The settlement involved allegations that the defendants had entered into financial relationships with several doctors in McAllen in order to induce them to refer patients to the defendants' hospitals. The government alleged that these payments were disguised through a series of sham contracts, including medical directorships and lease agreements. Under the Stark Statute, Medicare providers are prohibited from billing Medicare for referrals from doctors with whom the providers have a financial relationship, unless that relationship falls within certain exceptions.

The settlement resolves allegations raised against both the parent and the subsidiary in a qui tam or whistleblower lawsuit filed in 2005 by Bruce Moilan, a former employee of the defendants. Moilan will receive $5.5 million from the proceeds of the settlement.

As part of the agreement, South Texas Health Systems will enter into a five-year Corporate Integrity Agreement that requires it to establish procedures for tracking and evaluating financial arrangements between its health care facilities and their referral sources. The agreement also requires specific training for South Texas Health System representatives involved with financial arrangements, an independent third-party's annual review of the health system's compliance with certain Corporate Integrity Agreement obligations involving financial arrangements, and a report to the Office of Inspector General by the independent third-party reflecting the results of the review.

Of the $27.5 million to be paid by the defendants, the federal government will receive $25,208,333 and the state of Texas will receive $2,291,667 for claims submitted to the state Medicaid program.

The case was handled by the Justice Department's Civil Division, the U.S. Attorney's Office for the Southern District of Texas, the Texas Attorney General's Office and the Office of Inspector General of the Department of Health and Human Services.