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Articles from 2015 In September

Steris Settles Lawsuit over Tax Reimbursements to Executives

The reimbursements involve Steris' upcoming $2 billion acquisition of medical device sterilization rival Synergy.

Chris Newmarker

Steris has settled a shareholder lawsuit filed over special payments its board approved for top officers and directors--payments meant to reimburse them for U.S. excise they will owe after the Ohio-based company moves its headquarters to the United Kingdom amid a merger with medical device sterilization rival Synergy.

The settlement in the Court of Common Pleas in Cuyahoga County, Ohio, includes Steris agreeing to publicly disclose more information about the $11.4 million in tax reimbursement payments going to current and former corporate officers and non-employee directors, according to a Monday filing with the SEC. Synergy also agreed not to grant any additional stock compensation until six months after Steris closes on its nearly $2 billion acquisition of Synergy. Steris also says it will negotiate to pay fees and expenses for the plaintiff's attorney.

The special U.S. excise tax for corporate officers comes on top of of capital gains taxes that shareholders in general often have to pay in such inversion deals, in which a U.S. company moves its headquarters abroad by acquiring an overseas company. The excise tax is meant to dissuade executives from making such deals, so boards have gotten in the habit of reimbursing executives for the tax payments.

Excise tax reimbursements, in fact, are the reason why Medtronic's $48 billion acquisition of Covidien has made its CEO Omar Ishrak the most well-compensated top executive in the medical device industry. Ishrak's total compensation was $39.5 million for the company's fiscal year ended April 24. Medtronic, too, faced a shareholder lawsuit over its compensation plan, but a U.S. District Judge in Minnesota declined to issue an injunction in December, according to the Star Tribune of Minneapolis.

Steris and Synergy shareholder are scheduled to vote Friday to approve the inversion deal. The vote comes days after a federal judge in Cleveland denied the Federal Trade Commission's request for a preliminary injunction to halt the merger.

Besides dealing the FTC a rare setback in the courts, Judge Dan Polster's opinion also casts doubt on whether x-ray sterilization is truly ready for prime time in the U.S. medical device market.

Learn more about cutting-edge medical devices at MD&M Philadelphia, October 7-8.

Chris Newmarker is senior editor of Qmed and MPMN. Follow him on Twitter at @newmarker.

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When Is Off-Label Promotion a First-Amendment Right?

Medtech executives charged in two high-profile criminal cases are making the argument that FDA is squelching their free speech.

Qmed Staff

Howard Root (left) and Patrick Fabian (right)
Vascular Solutions CEO Howard Root (left) and Patrick Fabian, currently chief commercial officer at NxThera, are arguing that the First Amendment covers honest and accurate off-label promotion of medical devices.

At the same time that the U.S. Justice Department is increasingly holding medtech executives personally accountable for the marketing of their companies' products, the executives are responding with an argument straight out of the Constitution: You can't prosecute people for saying things that are true.

A recent article in the Star Tribune of Minneapolis cites First Amendment defense arguments being made in by Vascular Solutions CEO Howard Root, indicted by a federal grand jury in western Texas over off-label use sales promotions. The Star Tribune also mentions a freedom of speech argument being made in U.S. District Court in Massachusetts by former Acclarent sales vice president Patrick Fabian, who along with former CEO William Facteau is accused of fraudulent activities and skirting of FDA rules in the years leading up to the company's 2010 acquisition by Johnson & Johnson. In all, Fabian and Facteau face 18 charges including conspiracy, securities fraud, wire fraud, and introducing adulterated or misbranded medical devices into interstate commerce.

Such First Amendment arguments are being at the same time that the U.S. Justice Department is increasingly going after pharmaceutical and medical device company executives directly, versus seeking fines from their companies, says Paul John Scott in the Post-Bulletin of Rochester, MN, where Mayo Clinic is based.

"Left undecided is who will make the determination that the science promoting a new use of a product is 'truthful and non-misleading.' We ought to create an agency to find out if a study is truthful and non-misleading. Something like, I don't know, the FDA," Scott says.

In both the Acclarent and the Vascular Solutions cases, free speech is being cited as lawyers for the men demand more information about secret grand jury hearings as they raise questions about indictments, saying that prosecutors did not accurately tell grand juries what medical device companies are allowed to tell health providers about their products, according to the Star Tribune.

Vascular Solutions CEO Howard Root is arguing that his company's off-label promotion accurately represents how his company's vein-closure device is used, but acknowledges that the FDA does not necessarily support the claims.

Lawyers for Facteau and Fabian case have argued that the grand jury was not instructed correctly over such medical device regulatory matters as the limitations of the meaning of "intended use," that it is legal to distribute devices knowing that there is possible off-label use, that truthful, non-misleading communications about off-label use are legal, and that medtech companies do not have a duty to report off-label use.

"Misinstruction to the grand jury on any of these critical issues would constitute a serious defect in the grand jury proceedings warranting dismissal," Facteau and Fabian's lawyers write in a July 23 motion for disclosure of the grand jury instructions.

The move by Fabian and Root to argue that free speech pertains to off-label promotion mirrors similar challenges voiced by the pharmaceutical industry. Earlier this year, Pharmaceutical Research and Manufacturers of America and the pharmaceutical coalition known as the Medical Information Working Group filed amicus briefs in New York arguing that FDA's oversight pertaining to off-label promotion should be curbed. Specifically, the groups were involved a 2013 decision by the Second Circuit in United States v. Caronia, which covers New York, and the U.S. Supreme Court decision in Sorrell v. IMS Health.

The Irish drug maker Amarin scored a victory in August after a U.S. district judge blocked the FDA from curtailing its promotion of the purified fish oil pill Vascepa. As a result, the company is free to promote the drug for off-label uses, "as long as it does so truthfully," according to Reuters.

A recent case in the Federal Appeals Court in California, United States v. Harkonen, underscores the latter point. In the Harkonen case, the company's CEO had been prosecuted for his role in reportedly sending out a press release with false and misleading information related to one of the company's drugs. The Court upheld the conviction, stating that the information was misleading and thus not covered under the First Amendment.

Meanwhile, Root, Facteau, and Fabian remain very much active in the medical device industry. Root is still CEO of Vascular Solutions (Maple Grove, MN), andeven enjoyed a raise last year. Facteau is CEO of EarLens (Redwood City, CA), which on Tuesday scored an FDA approval of its novel hearing aid technology, which uses a laser diode and direct vibration of the eardrum to amplify sound. With a pair of serial entrepreneurs at the helm, EarLens is also working on obtaining CE Mark approval for its device. Fabian is chief commercial officer at urology device company NxThera (Maple Grove, MN), which also recently announced the 510(k) clearance for its Rezum system for patients with benign prostate hyperplasia.

Learn more about regulatory affairs at MD&M Philadelphia, October 7-8, 2015.

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Keeping Up With Advances in Electronics

Keeping Up With Advances in Electronics

Technological advances are opening up a whole new world for medical electronics designers.

Jamie Hartford

The world’s smallest pacemaker, smart contact lenses, medical devices with embedded vision—none of these technologies would be possible without recent advances that have made electronics smaller, smarter, and more energy efficient.

A new MD+DI ebook sponsored by Proto Labs will explore developments in power management, sensing, flexible electronics, and miniaturization that are leading to huge leaps forward in the realm of medical electronics. The ebook, titled Engineering the Unthinkable: Exploring the Cutting Edge of Electronics, will bring readers up to date on all the advances they need to know to stay on top of this rapidly evolving field.

Articles in the ebook cover everything from flex circuits and tiny batteries to wirelessly transmitted power and embedded vision. It also chronicles how companies such as Medtronic and Google have harnessed advances in medical electronics to create devices previously thought impossible. And with the electronics landscape changing at such a fast pace, readers will also benefit from an article on dealing with electronic component obsolescence.

If you’re involved in medical electronics design, be sure to check it out.

Jamie Hartford is MD+DI's editor-in-chief. Reach her at or on Twitter @MedTechJamie.

Glucose Monitoring Market Tops $10 Billion

Glucose Monitoring Market Tops $10 Billion

The global glucose monitoring and diabetes management market is worth $10.03 billion in 2015, according to a new report.

An aging population with higher healthcare needs along with avaliability of new continuous glucose monitors and sensors is driving the market growth. Aside from better technologies other factors contributing to the market  are decreasing healthcare resources, an emphasis on reducing hospital days, and proven cost-effectiveness, according to Kalorama Information, .

"The global glucose monitoring device and diabetes management market has evolved significantly over the last four decades," said Bruce Carlson, publisher of Kalorama. "The number of individuals with diabetes has grown dramatically creating more demand for glucose monitoring devices and supplies. Meters are now smaller, faster, portable and more accurate that they were years ago, with many of them interfacing with computers.

Traditional glucose monitoring and diabetes management account for the majority of sales in this market.

The four companies that have dominated the market thus far have been LifeScan (part of Johnson & Johnson), Roche, Abbott and Bayer, but now competition is coming from the likes of Panasonic, Sanofi and retailers like Wal-Mart and Target.

Arundhati Parmar is senior editor at MD+DI. Reach her at and on Twitter @aparmarbb

To learn more about medical devices and trends in the marketplace, attend the two-day MD&M Minneapolis conference, Nov. 4 and 5 at the Minneapolis Convention Center. 

What Crowdsourcing Can Do to Help the Disabled

Some of the most promising technologies developed at a recent makeathon have been uploaded to MakerBot's Thingiverse, inviting tinkerers from around the world to improve and customize the plans.

Brian Buntz

Google's philanthropic arm recently helped sponsor the Bay Area Makeathon in San Francisco that gave participants 72 hours to shift the lives of the disabled.

Now, the 3-D printing firm MakerBot, which provided 3-D printers for the event, has announced that digital plans for some of the most promising technologies developed at the event have been posted to its Thingiverse platform.

Makerbot is sponsoring an Assistive Technology Challenge to develop further iterations of hardware and software prototypes to help  meet the needs of people with disabilities. "Use their work as inspiration to design something great for a fellow human," the Makerbot website encourages.

"This challenge makes the life-changing inventions from the Bay Area Makeathon available to people with disabilities worldwide and is inviting the global Thingiverse community to further iterate on the designs and prototypes," says Johan-Till Broer, public relations manager at  MakerBot,

The Thingiverse files are available for any users in the world to download, and potentially modify under the Creative Commons license.

Some of the examples of the most promising technologies developed at the Makeathon, which was organized by Tikkun Olam Makers (TOM) and the United Cerebral Partners of the North Bay, include those below:



The winner of the MakerBot Award for Rapid Prototyping at the Bay Area Makeathon, Team Grabber created a grasping device to enable Kim Lathrop, who was born with no arms, to move and hold onto objects via a device placed in her mouth. "At home, I use mouth sticks to hit light switches and to push buttons on the remote control and telephones and stuff like that. I also have a longer one for bringing things closer to me," Kim Lathrop recounted. But I have never had one that grabbed things to help me pick up a plate or to move a telephone to move it to another table." In a press release, Lathrop said the device will enable her to do things like set a table for guests.  

Team members: Alex Gecht, Inbal Halperin, Kim Lathrop, Maayan Kahana, and Noam Platt.

Carry Crutches

Carry crutchesThe Team Carry Crutches pondered how to help people who use crutches carry things. Carrying a cup while walking with crutches can seem nearly impossible, so the team developed a self-stabilizing cup holder that can be affixed to a crutch. A mechanical version was designed to be low cost--the materials are only $15. An electronic version costs twice as much, but offers more stability.

Team members: Benoy Bhagattjee, Daisy Bermudez, Ilan Sherman, Maayan Dremer, Matthew Wasala, and Tomas Garces.

Smart Seat

Smart Cushion

People who use wheelchairs extensively can develop pressure sores from being fixed in the same position. To combat the problem, a team took on the name "Smart Ass" to develop a 3-D printed device that can instruct a user to shift their position. Equipped with sensors, the device can also be controlled using a smartphone app.

Team members: Hagit Alon, Oscar Segovia, Paul Herzlich, Pierre Karashchuk, Shaun Giudici, Tomás Vega, Yakshu Madaan, and Yonni Bank.

iEat: Independent Feeder


People who have limited control of their hand can have significant trouble feeding themselves as using a spoon, fork, or knife can require significant dexterity. While feeding devices are available, they are often expensive and limited in their functionality. Team iEat has developed a low-cost device  that enables people with limited hand control to feed themselves.

Team members: Clarice Torrey, Dana Yichye-Shwachamn, Ken Fujimoto, Randy Darden, and Zebreda Dunham.

Learn more about cutting-edge medical devices at MD&M Philadelphia, October 7-8, 2015.

Brian Buntz is the editor-in-chief of Qmed. Follow him on Twitter at @brian_buntz.

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How Mobile Health Data Can Boost Traditional Medtech

How Mobile Health Data Can Boost Traditional Medtech

The wearable trend doesn't need to be viewed as a threat. One medtech veteran explains how traditional medtech manufacturers can benefit, even thrive, as a result of mHealth data.

Marie Thibault

Oftentimes, new technologies are viewed as disruptors that eventually put existing technologies or procedures out of business. On the medical device side, coronary stents were one such disruptor, replacing coronary artery bypass surgery for many patients.

While it might look like wearable technology could do the same for some traditional medical devices—see MD+DI's recent coverage of mobile devices that are shaking up cardiac monitoring—the innovation disruption isn't always a threat to device makers.

Speaking to an audience on September 30, John Mastrototaro, vice president of informatics at Medtronic, explained that mobile health technology has the power to prove the value of current medical technology. Mastrototaro was speaking at the “Mobile Health: The Power of Wearables, Sensors, and Apps to Transform Clinical Trials” conference, hosted by the New York Academy of Sciences and Medidata.

Instead of viewing wearable technology as something completely separate from or as competition to today’s medical devices, Mastrototaro detailed the ARREST AF study as a specific instance that shows that wearable technology could perhaps help traditional technology in the future.

ARREST AF, which stands for “Aggressive Risk Factor Reduction Study for Atrial Fibrillation and Implications for the Outcome of Ablation,” was a five-year study of a group of patients who underwent atrial fibrillation ablation. Catheter ablation procedures are commonly used to treat afib, but the success of this treatment is sometimes marred by high recurrence rates. These afib ablation patients were allowed to opt into risk factor management (RFM) that was intended to reduce risk factors like weight, blood pressure, glucose, and lipid levels. Of the group studied, 61 patients chose to enter the RFM cohort while the other 88 patients were the control cohort. 

Mastrototaro explained that at the end of five years, the RFM patient cohort ended up experiencing statistically significant reductions in the weight, blood pressure, glucose, and lipid risk factors, and that this group was also a stunning five times more likely to be alive and arrhythmia-free—87% versus 18%—than the non-RFM cohort.

The takeaway? Risk factor management like exercise and diet makes a big difference on afib ablation success and patient outcomes.

Medtronic is one manufacturer of ablation catheters for afib ablation procedures. “This is important to the medical device manufacturers like us who make ablation catheters,” Mastrototaro said. “If you’re using an ablation catheter on patients and it’s only 18% successful, it might not be used much . . .”

It follows that wearables might have an important part to play alongside device treatments. If physicians could monitor their patients using wearable technology, they might be able to encourage and ensure better patient outcomes following traditional device-based treatments.

Medtronic has a finger in the mobile health pie with Cardiocom, which it acquired in August 2013. Cardiocom offers a telehealth and remote monitoring platform to enable real-time information from and caregiver feedback to patients with chronic diseases.

Want to catch up on the latest in medical device innovation? Register for the MD&M Minneapolis conference , November 4–5, 2015.

Marie Thibault is the associate editor at MD+DI. Reach her at and on Twitter @medtechmarie

                                             [Image courtesy of STUART MILES/FREEDIGITALPHOTOS.NET]

Hackers Flock to Fake Medical Devices

Marie Thibault

Researchers have shown, through an experiment, that medical devices are available to hackers. According to tech news outlet The Register, security experts this week said that software they used to imitate two devices, an MRI and a defibrillator, was targeted by “a whopping 55,416 successful SSH [Secure Shell] and web logins and some 299 malware payloads” over about six months.

The fake devices were part of the findings discussed by experts Scott Erven and Mark Collao at the DerbyCon security conference this week.

While that’s illuminating, what’s more frightening is that tens of thousands of real medical devices can be found by hackers.

The Register reports that Erven and Collao revealed that thousands of medical systems, by virtue of being on public Internet, are accessible to hackers. The researchers found thousands of medical products using the Shodan search engine, which is billed as “the world’s first search engine for Internet-connected devices.”

They found medical device-related vulnerabilities by searching for medical-specific terms. Erven told The Register, “Once we start changing [Shodan search terms] to target specialty clinics like radiology or podiatry or paediatrics, we ended up with thousands with misconfiguration and direct attack vectors.”

Among the items that Erven, an associate director at Protiviti, and Collao, a security consultant at Protiviti, found by searching Shodan was more than 68,000 medical systems from a large healthcare organization in the United States. The Register details the equipment included in this finding: “21 anesthesia, 488 cardiology, 67 nuclear medical, and 133 infusion systems, 31 pacemakers, 97 MRI scanners, and 323 picture archiving and communications gear.”

According to The Register, Erven has reported numerous vulnerabilities to major medical device makers.

Collao told The Register, “[Medical devices] are all running Windows XP or XP service pack two . . . and probably don’t have antivirus because they are critical systems.”

Devices running antiquated technology like Windows XP is an important don’t for cybersecurity expert Stephanie Preston, a cyber embedded systems engineer at Battelle. She recently told MD+DI that device manufacturers need to stop using outdated technology.

Want to catch up on the latest in medical device innovation? Register for the MD&M Minneapolis conference , November 4–5, 2015.

Marie Thibault is the associate editor at MD+DI. Reach her at and on Twitter @medtechmarie 


Nanoparticles Masquerading as Blood Cells Boost Drug-Delivery Precision

Nanoparticles disguised as human platelets could open the door for targeted drug treatments for cardiovascular disease and various bacterial infections. The technique is expected to greatly enhance the healing power of such treatments without saturating other areas of the body with drugs.

Kristopher Sturgis

Schematic platelet nanoparticles UC San Diego
The patelet-membrane-coated nanoparticles are able to evade attack by the immune system, targeting both harmful pathogens and damaged blood vessels. (Image courtesy of Zhang Research Group, UC San Diego Jacobs School of Engineering)

Though it is still in the proof-of-concept phase, nanoengineers at the UC San Diego Jacobs School of Engineering created platelet-mimicking nanoparticles that help deliver drugs to targeted sites in the body--specifically injured blood vessels, and organs infected by harmful bacteria.

While scientists have long worked to develop nanoparticle-based precision drug delivery, this approach is different in that it uses nanoparticles cloaked with human platelet membranes. This allows the nanoparticles to circulate through the bloodstream without being attacked by the immune system. The platelet membrane coating also has the added benefit of binding to damaged blood vessels and other pathogens, allowing them to release their drug payload at specific sites in the body.

The study was designed to address one of the major challenges of modern medicine: delivery medicine precisely where it is needed to avoid the side effects and toxicity that can be problem with higher dosages of medicine and inherently toxic treatments like chemotherapy. Shu Chien, a professor of bioengineering and medicine at UC San Diego and one of the authors of the study, stated that the technology is a great example of combining engineering principles with technology to achieve "precision medicine."

The research also showed that when packed with a dose of antibiotics, the platelet-mimicking nanoparticles can also treat bacterial infections that have entered the bloodstream and prevent them from spreading to other areas of the body. This targeting ability is what makes the platelet membranes so useful in the area of drug delivery, and could also have potential applications in new therapies for systemic bacterial infections.

Work with nanoparticles has increased in recent years as researchers explore new methods of targeted therapy and drug delivery. Earlier this year doctors from Houston Methodist developed a technique for destroying blood clots using magnetic nanoparticles infused with drugs. The method was designed to trap the drugs specifically at the site of the clot, before delivering a targeted dose of a commonly used clot-busting drug. The group found that specifically targeting the clots with drug infused nanoparticles destroyed clots roughly 100 times faster than any current method used.

Chien and his group are hoping their technique can achieve similar results when it comes to increasing therapeutic efficacy through targeted drug delivery. Recently they began testing the platelet-mimicking nanoparticles on rats afflicted with injured arteries. They packed the nanoparticles with docetaxel, a drug used to prevent scar tissue formation in the lining of damaged blood vessels. The researchers observed that the nanoparticles laced with docetaxel selectively collected at the site of the damaged arteries and healed them with great efficiency.

The promising results showcased the potential of the platelet-mimicking nanoparticles, as they provide the ability to focus drug treatment on bacteria locally, without spreading drugs throughout the body to healthy tissues and organs. The group hopes to develop the nanoparticles into other new treatments for bacterial infections, as well as targeted drug therapies for cardiovascular disease.

Learn more about cutting-edge medical devices at MD&M Philadelphia, October 7-8.

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7 Crime Stories You Have to Read to Believe

The medical device industry is unfortunately crime blotter worthy. Here are seven recent cases to make the headlines.

Chris Newmarker and Brian Buntz

Medtech unfortunately has its share of crime cases, as we've come to discover at Qmed. In this year alone, such stories were among the most popular pieces of content on the site. With that in mind, we would like to share with you the most prominent crime stories of 2015 thus far.  

So here is our very own medtech crime blotter:

Richard Craig Rooney

1. Military Docs Can Go to Prison for (Secretly) Taking Medtech Money

Former U.S. Army physician Richard Craig Rooney has been sentenced to two and a half years in federal prison for recommending products from Altiva Corp. and Allure Spine Consulting, while hiding from the military that he was taking money from the companies. Military physicians are under much stricter rules over such gifts than doctors in general. In fact pharmaceutical and medical device companies paid U.S. physicians $6.49 billion last year.

Learn more about the doctor's alleged conflict of interests.

2. Former St. Jude Medical VP Accused of Expensing Strip Club Visits

Bryan Szweda St. Jude

Bryan Szweda is due back in court in St. Paul, MN, next month after turning himself in after being charged with five counts of theft by swindle, along with an additional felony charge of theft of trade secrets. Szweda, who worked at St. Jude from 2009 to 2014, is accused of stealing nearly $142,000 via falsified expense reports and his corporate credit card, spending the money on everything from from NBA tickets to multiple strip club visits.

Read more about the string of felonies filed against Szweda, as well as his decision to turn himself in over the theft charges.  

3. A Medtech Murder Mystery

In February, Allison Feldman, a 31-year-old burn and trauma device sales rep for the Swedish firm Mölnlycke Health Care was murdered in her Arizona home. Details were scarce then with Scottsdale, AZ-police hesitant to release much information regarding the crime or its investigation.

Learn more about the crime and few details that eventually did emerge in the case.

4.  Former Acclarent Execs Hit with Fraud Charges

Johnson & Johnson acquired Acclarent for $785 million in 2010. But before that happened, its top executives were engaged in a host of fraudulent activities in anticipation of an eventual payday at the sinus balloon catheter company, according to federal prosecutors in Massachusetts, who have charged two former Acclarent executives. The judge in the case is presently going through motions.

Learn more about the case against the executives.

J&J was also hit with its own lawsuit in Los Angeles Superior Court.

5. Another Tragic Medtech Murder

Booking photo of Lyle "Ty" Hoffman from September 2014. (Image courtesy of Ramsey County (MN) Sheriff's Office)

Earlier this year, Lyle "Ty" Hoffman was sentenced in St. Paul, MN, to the expected 25 ½-year prison sentence for murdering Kelly L. Phillips, 48, a general counsel and vice president for Worldwide Businesses at Boston Scientific in Minneapolis. Hoffman, a former romantic and business partner of Phillips, admitted that he shot Phillips multiple times--once at close range--after a heated argument and struggle at a suburban Twin Cities gas station.

Read more about the murder case.

6.  Pacemaker Takes Center Stage in Murder Case

An Ontario man spent months in jail, accused of stabbing his father to death--until data from his dad's St. Jude Medical pacemaker provided crucial evidence, according to a report in the Toronto Star.

Learn more about how the pacemaker set him free.

7. An Alleged Medtech Investment Fraud

Kenneth Jackson founded Medical Safety Solutions in 2007, and along with three others traveled around the company selling private stock in the company, which touted a needle destruction device known as the Sharps Terminator. The big problem was that they did not have an FDA PMA for the device, and worse, they lied about it to investors, according to federal prosecutors in Ohio.

Read more about the alleged $7 million investment fraud.

Anything else that should have been included in this roundup? Email us at and

Learn more about cutting-edge medical devices at Minnesota Medtech Week, November 4-5 in Minneapolis.

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Surgeon Gets Prison Time for $7M Medtech Fraud Scheme

A former Army surgeon was handed a nearly three-year sentence for accepting fraudulent payments from medical device companies.

Brian Buntz and Chris Newmarker

Richard Craig Rooney

Former Army Lt. Col. Richard Craig Rooney, 46, is going to prison for failing disclose his financial interest in medical device companies whose products he was recommending to the military, according to the U.S. Department of Justice in Western Texas.

U.S. District Judge David Briones on Friday sentenced Rooney to two and a half years in federal prison, fined him $15,000, and ordered him to forfeit nearly $4.3 million over prosecutors describe as a $7.3 million health care fraud scheme. Rooney will also be placed on supervised release for three years after he completes his prison term.

The federal government had already seized a house based in Washington that belonged to Rooney. (Related article: Medtech and Pharma Firms Paid $6.5B to Docs in 2014)

Most recently living in Medina, WA, Rooney had faced a 65-count federal indictment detailing activities from 2002 through mid-2010. The indictment also named Rooney's wife, Angie Unchi Song, who had formerly worked as an otolaryngologist and cosmetic surgeon in El Paso, TX.

Rooney's attorney, Mary Stillinger, had initially professed his innocence. Rooney, however, eventually pleaded guilty, admitting that he was employed by Altiva Corp. and Allure Spine Consulting between 2005 and 2010. He also admitted that he recommended the companies' products to his employers: Darnall Army Medical Center based in Ft. Hood, TX and the William Beaumont Army Medical Center based in El Paso. The two medical centers ultimately purchased substantial volumes of products from Altiva and Allure without realizing that Rooney had financial ties to those companies.

Taking payments from medical device companies is a pretty common practice for doctors, actually. Pharmaceutical and medical device companies paid U.S. physicians $6.49 billion last year, based on data gathered through the Sunshine Act, a provision of the Affordable Care Act. In all, more than 600,000 physicians and 1100 teach hospitals received payments from drug and device makers.

Doctors employed by the U.S. military, however, are under much stricter rules, under which they are not allowed to take third-party payments. (An Army cardiologist in Washington state, for example, was fined in 2011 for accepting gifts from Boston Scientific according to The Seattle Times.)

On top of that, Rooney apparently hid his business relationships from the military.

A hearing to determine restitution is scheduled for December 1.

Learn more about cutting-edge medical devices at MD&M Philadelphia, October 7-8.

Brian Buntz is the editor-in-chief of MPMN and Qmed. Follow him on Twitter at @brian_buntz.Chris Newmarker is senior editor of MPMN and Qmed. Follow him on Twitter at @newmarker

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