Cardiovascular Systems wins extension in FCA case

Cardiovascular Systems (NSDQ:CSII) said yesterday it received an extension for responding to a False Claims Act brought against it in May 2014.

The extension from the United States District Court for the Western District of North Carolina, Charlotte Division, pushes the response deadline back from January 4, 2016 to March 25, 2016.

The FCA suit was brought against the company by a former sales rep who alleged the company ran kickbacks and an off-label marketing scheme to boost sales of its orbital artherectomy devices, a violation of the False Claims Act.

The case was unsealed in July this year, and accuses St. Paul, Minn.-based CSI of inducing physicians to use its products by offering free, all-expense-paid training programs “followed by explicit demands by CSI employees that attendees use CSI products on future patients,” giving away product for free, 3rd-party referral channel marketing, and “sham Speaker Bureau payments for high-prescribers and others whom CSI sought to cultivate,” according to the complaint filed in the U.S. District Court for Western North Carolina.

Thams worked for CSI as a district sales manager from 2012 to 2013, according to the complaint.

The lawsuit also accused the company of running an off-label promotion scheme to push sales of its unapproved 4 French catheter. It alleges that CSI also promoted its devices for use in areas of the body it’s not approved for, such as the coronary arteries, and for conditions such as chronic total occlusion for which it is not approved.

In May 2014, CSI revealed that the district attorney for western North Carolina opened a probe into Thams’s allegations “to determine whether the company has violated the False Claims Act, resulting in the submission of false claims to federal and state health care programs, including Medicare and Medicaid.”

CSI said that federal prosecutors have decided not to join the Trams lawsuit so far.

The company said that while it “maintains rigorous policies and procedures to promote compliance with the FCA and other regulatory requirements and intends to vigorously defend this lawsuit, it could not predict whether the Department of Justice would intervene or how the investigation would end for the company, according to an SEC filing.

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