A Medical Device Daily

Matria Healthcare (Marietta, Georgia) has agreed to pay $9 million to settle a false claims lawsuit brought by the federal government.

The suit was the result of “whistleblower“ reports by two former employees who alleged that the company had committed fraud by the sale of diabetes self-care products and improper billing to Medicare. The former employees charged that company management also sought to cover up the fraud by firing them when they raised these issues with management.

Mike Bothwell of Bothwell & Simpson represented the two employees, both women, saying that pressure was put on them to “play ball.“

One of them, Sandra Clarke, alleged that top management not only condoned the fraudulent schemes but also in some cases developed them. One of the schemes, she said, involved shipping products to dead people and then billing the federal government.

According to the complaint, the company also shipped supplies to people and institutions that didn't order them, billing Medicare. And when the supplies were returned, Matria made no reimbursement to Medicare.

Clarke said she was fired “in substantial part“ because she sought to resolve the false claims allegations internally.

Under the False Claims Act, the whistleblower bringing the fraud to the attention of the government may be awarded a portion of the funds recovered by the federal government – typically 15% to 25%.

Of the $9 million paid to the government, Clarke will receive $1,188,000. The other whistleblower, Kim Politisky, will receive $792,000.

• Lumenis (Yokneam, Israel) reported that it has reached an agreement in principle with the Securities and Exchange Commission (SEC) to settle a previously disclosed investigation. No fines are required, but the company said it would consent, without admitting or denying the charges, to a permanent injunction against future violations of antifraud, reporting, books and records, and internal control provisions.

The company said it will consent to the entry of an SEC order revoking the registration of its registered securities. When the order is effective, its shares cannot be quoted or traded in the U.S. until it re-registers with the SEC.

Lumenis said that the SEC is recommending that one current and one former employee will be the subject of charges, that the former employee has agreed to settle the charges at the same time as the company and that the current employee does not intend to settle the charges.

The company also is required to continue cooperation with the SEC's ongoing investigation of others.

If the SEC issues an order for deregistration of Lumen-is shares, it will continue normal operations while the deregistration is in effect. Shares will continue to be quoted on the Pink Sheets until the commission issues a final order. It said it intends to file to begin the re-registration process in 2Q07 and that it “is working diligently“ with its auditors and accountants to produce audited financial statements.

Lumenis manufactures laser and light-based devices for medical, aesthetic, ophthalmic, dental and veterinary applications.

In other legalities:

• International Isotopes (Idaho Falls, Idaho) reported that it and Radqual (Sandwich, Massachusetts) have settled their lawsuit with Isotope Products Laborator-ies (IPL; Valencia, California).

The two companies have obtained a license from IPL, allowing them to continue to manufacture their existing line of Benchmark products. All parties have released each other from any claims and counterclaims.

International Isotopes has been providing contract manufacturing services for Radqual since 2001.

Steve Laflin, president and CEO of International Isotopes, said, “We are . . . glad to have the distractions of the entire matter behind us.“

International Isotopes manufactures a nuclear medicine calibration and reference standards, high purity fluoride gases and a range of cobalt-60 products such as teletherapy sources, high purity fluoride gasses, and provides radioisotopes and radiochemicals for medical devices, life science and industrial applications.

• QLT (Vancouver) reported that an appeals court has informed its QLT USA unit that the injunction against promoting, manufacturing and offering for sale Eligard has been stayed, pending its decision to grant a permanent stay of the injunction.

It also said that QLT USA's marketing partner for Eligard in the U.S., Sanofi-Synthelabo (Le Pressis Robinson, France), has advised QLT USA that it is suspending sales of Eligard in the U.S. until the expiration of U.S. patent No. 4,728,721 (the '721 patent), held by TAP , on May 1.

Sanofi-Synthelabo previously informed QLT USA that, unless the court explicitly permits the continued sale of Eligard, or a license is granted, it might elect to suspend Eligard sales in the U.S. until the '721 patent expires.

On Feb. 27, the U.S. District Court for the Northern District of Illinois Eastern Division granted an injunction enjoining QLT, Sanofi-Aventis and their subsidiaries from promoting, manufacturing, selling and offering for sale QLT USA's Eligard product in the U.S. until the '721 patent expires.

QLT USA and Sanofi-Synthelabo said they intend to “vigorously defend“ this case, and to seek an appeal of the ruling.

QLT develops treatments for eye diseases as well as dermatological and urological conditions. Its platforms include photodynamic therapy and Atrigel, to create products such as Visudyne and Eligard.

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