Advanced Bionics to Pay $11 Million to Resolve Alleged False Claims Act Violations

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PHILADELPHIA, PA — Advanced Bionics LLC, a Valencia, California, based manufacturer of cochlear implant systems, will pay $11.36 million to resolve alleged False Claims Act violations for misleading federal healthcare programs regarding the radio-frequency (RF) emissions generated by some of its cochlear implant processors. The settlement was announced Tuesday by United States Attorney Jacqueline C. Romero and the Justice Department.     

The settlement resolves allegations that Advanced Bionics, in submitting pre-market approval applications to the U.S. Food and Drug Administration (FDA) for its Neptune and Naida cochlear implant processors, made false claims regarding the results of its RF emissions tests. These tests measure the extent to which cochlear implant systems generate RF emissions that can interfere with other devices that use the RF spectrum – such as mobile phones, alarm and security systems, televisions, and radios.

According to the allegations, Advanced Bionics represented that its processors satisfied an internationally recognized emissions standard when, in fact, they did not. More specifically, Advanced Bionics is alleged to have manipulated testing conditions to obtain passing test results by not testing processors in “worst-case” configurations, and improperly shielding certain emissions-generating components of the cochlear implant system during emissions testing – all contrary to the standard’s requirements.

“The FDA’s approval process requires companies to demonstrate the efficacy of their products,” said U.S. Attorney Romero. “The settlement, in this case, demonstrates our commitment to hold responsible any medical device manufacturer that skirts these rules and seeks FDA approval of a device it knows is not as effective as represented. The consumers who use these devices, and the federal programs that pay for many of them, deserve better.”

“The United States expects device manufacturers to provide accurate information when they claim that their devices meet certain tests or standards,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Department of Justice’s Civil Division. “The integrity of our health care system depends on the government being able to rely on the information provided by manufacturers when they apply for permission to market their devices.”

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“Patients deserve to receive medical devices which are in compliance with all federal standards,” said Maureen R. Dixon, Special Agent in Charge, Office of the Inspector General, Department of Health and Human Services (HHS-OIG). “Manufacturers are required to be truthful in submitting claims for payment to the Medicare and Medicaid Programs. HHS-OIG will continue to work with DOJ and our law enforcement partners to protect the integrity of the Medicare Trust Fund.”

“The VA OIG is dedicated to ensuring veterans receive the healthcare products that the VA is promised,” said Special Agent in Charge Christopher Algieri of the Department of Veterans Affairs Office of Inspector General’s Northeast Field Office. “In reaching [this] settlement, we thank the U.S. Attorney’s Office and our law enforcement partners in exposing misleading practices that affect medical devices meant for veterans and the proper use of VA dollars for their benefit.”

“The Department of Defense Office of Inspector General’s Defense Criminal Investigative Service (DCIS) is committed to working with its law enforcement partners and the U.S. Attorney’s Office, Eastern District of Pennsylvania, to combat health care fraud,” stated Special Agent in Charge Patrick J. Hegarty, DCIS Northeast Field Office. “TRICARE, the health care program for active-duty military personnel, retirees, and dependents, relies on medical providers to furnish complete and truthful information about the efficacy of their products and services. [This] settlement demonstrates DCIS’s tireless commitment to investigating the submission of false claims and statements to TRICARE.”

“We expect that medical products offered to federal employees and their families meet the standards promised by the manufacturer,” said Amy K. Parker, Special Agent in Charge, Office of Personnel Management (OPM) OIG. “We applaud our law enforcement partners and colleagues at the Department of Justice for their hard work resulting in [the] settlement.”

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As a result of this week’s settlement, in addition to the $11.36 million paid to the United States, Advanced Bionics will pay state Medicaid programs $1,238,580. The Medicaid program is funded jointly by the federal and state governments.

In addition to the civil settlement, Advanced Bionics entered into a five-year Corporate Integrity Agreement (CIA) with HHS-OIG. The CIA requires an independent review of activities and processes relating to the preparation or submission of Premarket Approval Applications (PMAs) to the FDA and performance standards relevant to those PMAs. Advanced Bionics must also implement a robust compliance program that includes, among other things, a risk assessment program and compliance certifications from key managers and from the Board of Directors.

The settlement resolves a lawsuit originally brought by David Nyberg, a former Advanced Bionics engineer, under the whistleblower, or qui tam, provisions of the False Claims Act. The Act permits private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Nyberg will receive approximately $1.87 million of the federal settlement.

The government’s pursuit of these matters illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act.  Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800 HHS TIPS (800-447-8477).

The case is being handled in this district by Assistant United States Attorney Lauren DeBruicker and Auditor Dawn Wiggins. This settlement was the result of a coordinated effort by the U.S. Attorney’s Office for the Eastern District of Pennsylvania; the Civil Division of the United States Department of Justice; the Department of Health and Human Services, Office of Counsel to the Inspector General and Office of Investigations; the Defense Criminal Investigative Service; the Defense Health Agency Office of General Counsel; the Office of Personnel Management, Office of Inspector General; the Department of Veterans Affairs, Office of Inspector General; and the National Association of Medicaid Fraud Control Units. The FDA’s Office of Chief Counsel also provided assistance.

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The lawsuit is captioned United States, et al., ex rel. David Nyberg v. Advanced Bionics Corp., No. 19-cv-3439 (E.D. Pa.). The claims resolved by the settlement are allegations only; there has been no determination of liability.

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