Medical Device Maker Settles Lawsuit

21128571_lA medical-device manufacturer with offices in California and Washington has agreed to pay the federal government up to $5.25 million to resolve allegations that it encouraged doctors to over-charge federal health-care programs for a procedure using their device, the U.S. Justice Department said Wednesday.

The settlement with EndoGastric Solutions Inc., of San Mateo, Calif., and Redmond, Wash., resolves a whistleblower lawsuit filed in June 2012 in U.S. District Court in Montana by former employee Glenn Schmasow.

EndoGastric created the EsophyX as a less invasive way to treat gastric reflux. The government alleged the company told health-care providers to bill for the procedure using codes that applied to a more invasive, and more expensive, procedure.

The government also alleged the company paid kickbacks to physicians to induce them to use the device.

The whistleblower clause of the federal False Claims Act allows private parties to file a lawsuit on behalf of the government for false claims and to obtain a portion of the government’s recovery. Schmasow will receive up to $945,000.

As part of the settlement, EndoGastric Solutions agreed to enter into a corporate-integrity agreement with the Department of Public Health and Human Services’ Office of Inspector General that provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which led to the lawsuit.

EndoGastric Solutions does not admit any wrongdoing as part of the settlement.


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