Feds Investigate Whistleblower Suit Filed against Cardio Firm

The federal government is investigating a whistleblower's allegations that Cardiovascular Systems Inc. (CSI) paid kickbacks to doctors for using its products.

Nancy Crotti

A former sales manager at the New Brighton, MN-based Cardiovascular Systems Inc. filed a kickback lawsuit in 2013 in the Western District of North Carolina. The lawsuit that prompted the Department of Justice's investigation was unsealed this week, according to an SEC filing. In court documents, the federal government said that it would investigate but not intervene at this time. Twenty-seven states and the District of Columbia are also listed as plaintiffs.

Although the company said it had not been served the complaint, it vowed to vigorously defend itself.

"CSI maintains rigorous policies and procedures to prevent violations of the False Claims Act and other regulatory requirements and is working with the Department of Justice to promptly respond to the (complaint)," the company said in a statement. "We cannot predict when the investigation or the potential litigation arising from the complaint will be resolved, their outcome or the potential impact on CSI."

The suit claims that Cardiovascular Systems violated the False Claims Act through the alleged kickbacks and off-label promotion of medical devices. The allegations by whistleblower Travis Thams revolve around ways that the company allegedly tried to sell its Diamondback 360, Predator 360, and Stealth 360 peripheral atherectomy devices. Thams claims to have seen the alleged illegal activity firsthand, according to a report in the Minneapolis Star Tribune.

Cardiovascular Systems describes its Diamondback 360 as a high-speed cutting tool that is inserted via a catheter through the skin into a patient's blood vesselto remove calcified plaque andreestablish blood flow in narrowed arteries or arterio-venous dialysis shunts.FDA approved the system in October 2013, but recalled it in May 2014, citing the possibility that a sheath might fracture during use.

The 26-year-old company has never reported a profit, according to the Star Tribune story. The newspaper said that it lost $35 million last year on revenue of $136 million. Thams' lawsuit said company executives' ultimate goal is to hit analysts' quarterly revenue targets in order to attract new investors or sell the company.

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