By Allyson B. Mullen –
Late last week, the Department of Justice ("DOJ") obtained criminal charges from a grand jury sitting in the United States District Court for the Western District of Texas against Vascular Solutions, Inc. ("VSI") and Howard Root, VSI’s CEO, for off-label promotion of the company’s Vari-Lase devices. The Indictment alleges a conspiracy to defraud the U.S. government, along with distributing adulterated and misbranded medical devices.
According to the Indictment, this case involves VSI’s promotion of its Vari-Lase laser ablation devices, which includes lasers, consoles, needles, fibers, sheaths, and other accessories. The Vari-Lase devices were cleared for treatment of superficial veins. VSI did not have clearance for treatment of perforator veins. In 2006, however, a competitor of VSI’s obtained clearance for treatment of perforator veins.
In response to this clearance, the government alleges that VSI began systematically promoting Vari-Lase for treatment of perforator veins. In fact, the Indictment claims that VSI created a new “Short Kit,” a modified version of the cleared device that was specifically intended for perforator vein treatment. The Indictment alleges that VSI unsuccessfully sought 510(k) clearance of the Short Kit, which included an expanded indication for a use that would have included perforator veins. The Indictment further alleges that the company performed a clinical study of perforator vein treatment with laser ablation that showed poor safety and effectiveness. Nevertheless, the government contends that VSI promoted the Short Kit and other Vari-Lase devices for the off-label intended use of perforator vein treatment.
The Indictment goes on to allege that Mr. Root oversaw and encouraged the entire promotional campaign. In addition, the government claims that Mr. Root was responsible for reviewing and approving various key training materials that were essential to the company’s off-label promotional activities. The Indictment specifically claims that VSI and Mr. Root’s promotional practices were misleading because they misrepresented and concealed relevant facts regarding the Short Kit, including, telling physicians that Medicare would reimburse for perforator vein procedures performed with VSI’s devices.
As of now, we have only heard the government’s side of the case, and as we all know, there are almost always two sides to every story. It is worth noting that this is the second case against the company on these facts this year. According to the DOJ news release, in July of this year, VSI settled a civil case with the government, in which VSI paid $520,000 “to resolve allegations that it caused false claims to be submitted to federal health programs by marketing a medical device for the ablation (or sealing) of perforator veins without FDA approval and despite the failure of its own clinical trial.” The civil case appears to relate to the same marketing practices that form the basis of the criminal case that was initiated last week.
The civil case was brought in the Western District of Texas, which is the same venue where the criminal case was filed. This is of particular note because it is representative of how the government often investigates and brings criminal cases against drug and device companies. When a relator brings a qui tam case, the government often conducts a criminal investigation in the very same judicial district, whether or not the company is based in that district. In fact, quite often these days the decision regarding which judicial district will conduct a criminal investigation and possible criminal prosecution is often based solely on where the relator’s counsel is based. Qui tam counsel will often file cases in a judicial district where they live, not where the company is headquartered or even where their own client lives.
This forum shopping starkly contrasts with “the old days” when FDA criminal cases were almost always brought in the company’s principal place of business. This trend is troubling for companies because they are being forced to travel around the country defending against not only civil, but now also criminal cases. This is another reminder of why there can be painful consequences when companies are investigated for off-label promotion practices.