Brian Buntz

March 25, 2016

3 Min Read
Abbott Could Face $1B Whistleblower Fine

Abbott Laboratories could face a $1 billion fine in a federal whistle-blower lawsuit over off-label use of stents, and allegations of Medicare fraud and kickbacks paid to hospitals and physicians for such use.

Nancy Crotti

The jury trial began this week in U.S. District Court for the Northern District of Texas in Dallas, 10 years after former Abbott and Guidant sales representative Kevin Colquitt brought the allegations. Illinois-based Abbott obtained Guidant Corp.'s vascular business in a 2006 multibillion-dollar transaction that involved Boston Scientific and a competing bid by Johnson & Johnson.

Colquitt argues that Abbott deliberately marketed bile-duct stents for vascular use without FDA approval, trained physicians in how to use them, and offered them guidance on how to bill Medicare for the off-label procedures. In its defense, Abbott says that such off-label use was common knowledge and widely accepted since the 1990s.

"Physicians have chosen to use biliary stents in vascular stenting procedures as the standard of care for more than a decade.  This practice benefitted countless patients," Abbott spokesperson Darcy Ross wrote in an email statement. "Reimbursement was not only permitted under the Medicare regulations, but also the right decision for patients at the time."

FDA sent Abbott and Boston Scientific (no longer a defendant in the case) a letter in 2010 expressing concern about use of biliary stents in vascular procedures, according to court documents.

"It is clear that many more of these stents are used in the vasculature, for which they are not indicated, than the biliary tree, for which they are indicated," the agency wrote, noting that biliary stents are Class II devices that need only 510(k) approval, while vascular stents fall into the more highly regulated Class III category requiring premarket approval.

Colquitt's attorney, Chris Hamilton, told the jury that Abbott had conducted "an experiment on senior citizens," according to a report on the trial by Bloomberg. Hamilton also said the company "hid the paper trail and buried evidence of malfunctions," including that of a patient who lost a leg and died after one of the stents was implanted, the news service reported.

Losing at trial could cost Abbott up to $1 billion, as the federal whistleblower law allows for mandatory treble damages and statutory fines of $5,500 to $11,000 per claim, according to Patrick Burns of the nonprofit Taxpayers against Fraud organization.

"I think it's going to be hard for Abbott to convince a jury that the company had the unilateral right to pay kickbacks to doctors to put non-FDA approved stents into patients without even informing patients," Burns wrote in an email. "This was Russian Roulette with wives, daughters, and parents."

The trial in Dallas will cover some of the devices described in the $5.48 million settlement Abbott made with the federal government in 2013 over alleged kickbacks to physicians, according to the Bloomberg report. The news service estimated that the Dallas trial would last three weeks.

Learn more about cutting-edge medical devices at BIOMEDevice Boston, April 13-14, 2016.

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