Sterilizer Manufacturing Executives Convicted of Fraud

May 1, 2006

4 Min Read
Sterilizer Manufacturing Executives Convicted of Fraud

Last month, following a nine-week trial in a Chicago federal court, two executives of a now-defunct medtech manufacturing company were convicted of fraudulently selling unapproved and unsafe surgical sterilizing devices. The faulty equipment caused 18 patients to lose vision in one eye, according to FDA.

At the time of their initial indictment in February 2003, Ross Caputo was president and CEO and Robert Riley was vice president of regulatory affairs for AbTox Inc. (Mundelein, IL). Both were found guilty of three counts of wire fraud, four counts of mail fraud, conspiracy to defraud FDA, and seven counts of selling an adulterated or misbranded human medical device. Two other defendants—Mark E. Schmitt, formerly director of marketing, and Marilyn M. Lynch, formerly director of clinical services—previously pleaded guilty.

In 1994, AbTox received FDA approval to market a small gas plasma sterilizer intended for use on only flat stainless-steel surgical instruments without tubes or hinges. However, the device was deemed unmarketable by company executives, who then began selling a much larger sterilizer, which they marketed to hospitals as suitable for a wide range of instruments, including those made of materials besides stainless steel.

According to the U.S. attorney prosecuting the case, AbTox told hospitals that they could use the sterilizer for complex instruments, including those designed for cataract surgery and other ophthalmic procedures. Many of these instruments featured brass joints, which reacted adversely to the sterilizing agent, leaving a blue-green toxic residue in the units.

AbTox was aware of the chemical reaction but failed to advise hospitals about any corrective action in cleaning the units, according to FDA. It was subsequently determined that the copper acetate residue also remained in the intricate tubes of instruments sterilized with the AbTox unit. This residue caused decomposition of the cornea and resulted in the reported incidents of blindness.

Some of the hospitals that bought the AbTox sterilizer told the company that they suspected the units might be a contributing factor in patient injuries.

AbTox continued to sell the unapproved sterilizers, but by 1998, faced with declining sales, the company filed for bankruptcy protection. It initiated a product recall at about the same time FDA issued a nationwide alert advising hospitals about the dangers associated with the units.

While on the market, AbTox reportedly sold 168 of the sterilizers, which generated more than $18 million in revenue. The units were sold nationwide, and customers included hospitals run by the U.S. Department of Veterans Affairs and other government agencies.

The prosecution of the case was under the direction of Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois, in conjunction with the U.S. Department of Veterans Affairs, the Naval Criminal Investigative Service, the Air Force Office of Special Investigations, and FDA's Office of Criminal Investigations.

“The Food and Drug Administration plays an enormously important role in safeguarding public health and ensuring that medical devices marketed to hospitals are both safe and effective for their intended use,” Fitzgerald said. “Companies that seek to evade federal law and deny hospitals and patients the protections those laws provide do so at the risk of prosecution and serious penalties.”

Assistant U.S. Attorney Gillum Ferguson said AbTox manufactured, promoted, and sold the instruments to hospitals in “bad faith.”

“These convictions are evidence of FDA's resolve to ensure the safety and efficacy of human medical devices,” said Margaret Glavin, FDA's associate commissioner for regulatory affairs. “Our criminal investigators aggressively pursue those that endanger the public health by manufacturing and selling unsafe products.”

Sentencing of the convicted executives is set for July 12. Significant penalties, including jail terms, fines, and restitution, are expected.

© 2006 Canon Communications LLC

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