The U.S. Dept. of Justice said today that Abbott‘s (NYSE:ABT) Alere (NYSE:ALR) agreed to pay $33.2 million to resolve allegations that it knowingly sold unreliable point-of-care diagnostic devices, causing hospitals to submit false claim to Medicare, Medicaid and other federal healthcare programs.
The U.S. alleged that Alere sold materially unreliable Triage devices, which are designed to diagnose serious conditions like acute coronary syndrome and drug overdose, between Jan. 2006 and March 2012. The government claimed that Alere received an array of customer complaints regarding its Triage devices, notifying the company that certain devices produced results with the potential to create false positives and negatives.
But despite these customer complaints, Alere failed to take action until FDA inspections spurred a nationwide product recall in 2012, according to the DOJ.
“The United States is fortunate that innovative healthcare companies regularly develop medical devices that improve patients’ lives, often in remarkable ways,” acting assistant attorney general for the DOJ’s civil division, Chard Readler, said in prepared remarks. “But the Department will hold medical device manufacturers accountable if they knowingly sell defective products that waste taxpayer dollars and adversely impact patient care.”
Of the $33.2 million that Alere plans to pay, $28 million is slated to go to the federal government and $4.9 million will be returned to individual states.
The settlement also resolves a whistleblower lawsuit filed by Amanda Wu, who previously served as a senior quality control analyst for Alere. Wu will receive $5.6 million as part of today’s settlement, the DOJ said.
“Physicians who work to treat patients with suspected myocardial infarctions rely upon devices such as Alere’s Triage Cardiac products for quick and accurate readings,” Stephen Schenning, acting U.S. attorney for the district of Maryland, added. “When manufacturers such as Alere make changes to the specifications that affect the product’s reliability without informing physicians or the FDA, patient care is put at substantial risk.”
“Congress passed the False Claims Act on March 2, 1863 to protect taxpayer dollars from fraud and abuse and to allow private citizens to join the effort,” Maureen Dixon, special agent in charge for the U.S. Dept. of Health & Human Services’ office of inspector general in Philadelphia, said. “We will continue to work with concerned citizens, the Department of Justice and our investigative partners to ensure the federal government only pays for honest, high quality, health care products and services.”
