Endoscopic Technologies Inc. (Estech) has settled allegations of Medicare fraud related to the marketing of its surgical ablation devices. The California-based company has consented to pay a sizable amount to resolve charges that it marketed its devices to treat atrial fibrillation, a use for which the devices have not been approved by the U.S. Food and Drug Administration (FDA). In addition,
the government alleged that Estech had violated the False Claims Act and the Food, Drug and Cosmetic Act by engaging in several other types of misconduct: promoting costly heart surgeries using Estech’s devices when less invasive and more economical alternatives were appropriate; encouraging hospitals to inflate Medicare reimbursements by up-coding surgeries using Estech’s devices; and, making kickbacks to hospitals and other healthcare providers using Estech’s devices. All of these practices, charged the government, involved the intentional submission of fraudulent claims as prohibited by the False Claims Act.

The whistleblower in the case originally filed suit in federal court in the U.S. District Court for the Southern District of Texas. Under the Qui Tam provisions of the False Claims Act, a whistleblower, or “relator,” is authorized to bring a lawsuit on behalf of the United States when he or she becomes aware of a government contractor’s scheme to defraud the taxpayers and federal government. Under the Act, the relator is entitled to a portion of the government’s proceeds of any judgment or settlement.

For the full story, go to the Department of Justice’s Press Release.