A Medical Device Daily

The officers of AtriCure (West Chester, Ohio) are facing a federal investigation and a resulting court case seeking millions of dollars in damages for allegedly lying on financial statements, according to a lawsuit filed Dec. 12.

The 43-page, class-action lawsuit filed in U.S. District Court in Cincinnati says that Atricure falsified financial filings with the U.S. Securities and Exchange Commission from May 10, 2007, through Oct. 31, 2008. The lawsuit, which names CEO David Drachman and CFO Julie Piton, also requests a jury trial.

The lawsuit came as a result of an investigation by the U.S. Department of Justice into whether AtriCure used illegal practices to market its surgical ablation devices, which cannot be promoted for sale because they're not approved by the FDA.

The device treats atrial fibrillation, a type of abnormal heart rhythm that affects more than 2 million Americans.

The Justice Department also is investigating whether AtriCure coaxed doctors and hospitals into billing Medicare incorrectly for purchases of the devices, according to the lawsuit.

As a result, the lawsuit says, AtriCure inflated its quarterly and annual revenues during the 17-month period, which falsely inflated a stock price that in the past year traded as high as $14.38.

The stock closed at $2.15 per share on Monday, Dec. 15.

AtriCure says it is cooperating with the investigation, and that it will "vigorously defend this lawsuit and any additional related lawsuits that may be filed," according to a company news release.

"The question is whether they intentionally or recklessly made false statements," said Lionel Glancy, of the Los Angeles law firm Glancy Binkow & Goldberg, which is representing shareholder Brian Halford and other shareholders. "And we believe we will eventually be able to prove that."

Although the requested claim is $1 million in damages, according to the lawsuit, Glancy said it could be "generally in the millions of dollars."

He also said the number of plaintiffs could balloon to the thousands.

In other legalities, Acacia Research Corp. (Newport Beach, California) reported that its Hospital Systems subsidiary resolved litigation with Philips Electronics North America (Andover, Massachusetts) pending before the U.S. District Court for the Eastern District of Texas. The litigation related to a portfolio of patents that apply to medical picture archiving and communication system technology.

Acacia's subsidiaries develop, acquire, and license patented technologies.