A Medical Device Daily

Schiffrin Barroway Topaz & Kessler (Radnor, Pennsylvania) reported filing a class action lawsuit in the U.S. District Court for the District of Massachusetts, on behalf of all purchasers of securities of NeuroMetrix (Waltham, Massachusetts) between Oct. 27, 2005, and March 6, 2007.

The complaint charges NeuroMetrix and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The company's NC-stat System, a neuropathy diagnostic system, is comprised of disposable single-use biosensors that are placed on the patient's body to perform nerve conduction studies.

The complaint alleges that, throughout the class period, defendants failed to disclose adverse facts about the company's financial well-being, business relationships, and prospects.

Specifically, defendants failed to disclose or indicate that health insurers were routinely and increasingly denying reimbursement, and raising payment issues, for procedures using the NC-stat System; that field practitioners had raised serious concerns about the NC-stat System's efficacy; that the company had not applied for its own insurance billing code, but instead had instructed doctors to use billing codes for competing needle procedures; that the company was giving kickbacks to doctors by providing free sensors in exchange for referring other doctors to the NC-stat System; that the company lacked adequate internal and financial controls; and that NeuroMetrix's financial statements were materially false and misleading at all relevant times.

On March 6, 2007, The Boston Globe reported that federal prosecutors were investigating NeuroMetrix regarding possible fraud and for kickbacks the company gave to doctors who recommended NeuroMetrix's product.

NeuroMetrix officials issued a statement saying they believe the claims in the case are without merit and that the company "intends to defend the case vigorously."

In other legalities: Ronald A. Katz Technology Licensing (Los Angeles) reported that pending litigation between Katz and Kaiser Permanente (Oakland, California) and its affiliates has been dismissed.

In addition to a release of claims asserted against it in the litigation, Kaiser Permanente will receive a nonexclusive license under a comprehensive portfolio of patents that Katz owns relating to interactive voice applications and will pay an undisclosed sum.

The nonexclusive license covers services offered by Kaiser Permanente in the automated healthcare and medical information fields delivered through automated systems and live agents. Other terms of the settlement agreement were not disclosed.

The patents held by Ronald A. Katz Technology Licensing cover a wide range of interactive technology including automated forms of: customer service, prescription refill services, securities trading, merchandising, prepaid services, telephone conferences, registration, home shopping, as well as functions involved in securing information from databases by telephone, interactive cable transactions, and various other uses of toll free and local numbers.

Ronald Katz said, "We welcome Kaiser Permanente to the large number of ... companies who have purchased license rights under this portfolio."