Several medical device companies – including three of the largest in the U.S. – have been accused of encouraging doctors to use their surgical ablation devices for unapproved uses by offering illegal kickbacks. According to newly unsealed documents in Houston federal court, Boston Scientific (Natick, Massachusetts), Medtronic (Minneapolis), St. Jude Medical (St. Paul, Minnesota), AtriCure (Westchester, Ohio), Endoscopic Technologies (San Ramon, California), and St. Jude subsidiary Epicor Medical (Sunnyvale, California) are named in the whistleblower lawsuits.

The lawsuits were originally filed in 2007 but were recently unsealed by a Texas federal judge. The allegations are related to an inquiry in Texas by the U.S. Department of Justice (DoJ) that was previously disclosed by several of the companies in filings with the Securities and Exchange Commission.

According to a statement provided to Medical Device Daily by Sara Spafford, a St. Jude spokeswoman, the unsealing of this lawsuit is one step in a process that began in October 2008 when the company received a letter from the Civil Division of the DoJ stating that it was investigating sales and marketing practices of its Epicor surgical ablation device.

"St. Jude Medical will continue to cooperate with the DoJ in its investigation and intends to vigorously defend itself in this newly unsealed suit," Spafford said in the statement.

The Associated Press reported that the government has until Aug. 21 to decide whether to join the whistleblower lawsuit.

An unidentified former Boston Scientific saleswoman who says she was fired after complaining about illegal practices at the company is the plaintiff in several of the cases. She alleges in cases against Boston Scientific, Medtronic, and AtriCure that these companies marketed surgical ablation devices as a treatment for atrial fibrillation (AF) even though they were not FDA approved for that condition. Doctors are allowed to use products like this for off-label uses, however it is illegal for companies to market such uses. One plaintiff named in the Medtronic lawsuit is Donald Boone, a former sales manager for various device makers, including St. Jude and Guidant, which is now part of Boston Scientific.

The complaints allege that the companies encouraged doctors to use the products for off-label uses, or those not FDA approved. According to the court documents, these uses were more costly than the FDA-approved uses of the devices, and therefore resulted in Medicare being overbilled.

Allegedly, the companies offered the surgeons kickbacks in the form of free advertising, press, and referral services to bring in more patients and business.

The DoJ reported earlier this week that Endoscopic Technologies agreed to pay the U.S. $1.4 million to resolve civil claims in connection with the alleged promotion of its surgical ablation devices (Medical Device Daily, July 16, 2009). Surgical ablation devices use focused energy to create controlled lesions or scar tissue on a patient's heart or other organs. The DoJ said the settlement resolves allegations that the company marketed its devices to treat AF, a use that is not FDA approved. The government also alleged that the company promoted expensive heart surgeries using its devices to inflate Medicare reimbursements, and paid kickbacks to healthcare providers to use its devices. The DoJ said the U.S. continues to investigate the recently unsealed lawsuits against the other device manufacturers.

A Boston Scientific spokesman told the AP that the company sold its ablation units in 2006 and 2007 and no longer markets the devices. Medtronic said in a statement it disclosed the investigation in March.

In other legalities, InnoMed (Coconut Creek, Florida) issued a statement to all Mergenet Solutions (also Coconut Creek) and InnoMed shareholders regarding litigation between the companies and Kevin Harmon. According to InnoMed, it has been "embroiled" in litigation since 2002 with Harmon, a plaintiff who has claimed, among other things, that InnoMed had misappropriated the rights to the patents pertaining to the Nasal Aire sleep apnea device when the company acquired such patents as part of an asset purchase in April 2001.

Specifically, the company noted, the Harmon litigation claimed that InnoMed participated with others in the conversion and fraudulent conveyance of the patents. In addition he requested an accounting and sought "unjust enrichment damages," the company said. On Jan. 27, the Superior Court in Waycross, Georgia dismissed all of the Harmon claims in response to InnoMed's motion for summary judgment, the company said. "Despite the fact that Harmon has appealed this decision, we believe that InnoMed will again prevail on the appeal," the company told its shareholders in the statement.

In response to the Harmon litigation, InnoMed said it filed a counterclaim against Harmon and Viasys Healthcare (Dublin, Ohio), "a company with whom Harmon had entered into a series of agreements the effect of which was to create a substantial could over the title and rights of InnoMed to virtually all of its sleep patents and patent applications," InnoMed stated. The company said the initial purpose of its counterclaim was to resolve the legal conflicts relating to ownership of the patents, and seek redress against these parties for the financial losses suffered due to the actions of the counterdefendants.

On June 13, InnoMed and Mergenet filed a motion seeking to amend its counterclaim to add additional claims, and an additional plaintiff, Mergenet, and an additional counterdefendant, Cardinal Health (also Dublin), Viasys' parent company.

"We believe Viasys and its affiliates have caused our companies irreparable business harm and untold financial losses well into the millions of dollars. Indeed, the lawsuit seeks $100 million in compensatory and $1 billion in punitive damages against all defendants," InnoMed said.