DOJ: Local company to pay over $12 million for alleged false claims


News release 

Advanced Bionics LLC, a Valencia-based manufacturer of cochlear implant system devices, agreed to pay more than $12 million to resolve allegations that it misled federal health care programs regarding the radio-frequency emission generated by some of its devices, according to the U.S. Department of Justice. 

“The United States expects device manufacturers to provide accurate information when they claim that their devices meet certain tests or standards,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the Department of Justice’s Civil Division, in a prepared statement.  

“The integrity of our health care system depends on the government being able to rely on the information provided by manufacturers when they apply for permission to market their devices,” he added.  

Calls and emails to Advanced Bionics seeking comment were not returned on Tuesday. 

According to the settlement, Advanced Bionics sought reimbursement from federally funded health care programs for its Neptune and Naida cochlear implant processors. But the claims resolved by the settlement are allegations only, and there has been no determination of liability, according to the Department of Justice. 

“Advanced Bionics places the highest priority on the safety and efficacy of our devices, and we take compliance with all laws and regulations governing our industry very seriously,” a spokesperson for Advanced Bionics wrote an in email to The Signal Wednesday morning.

“It is important to emphasize that this settlement agreement with the government does not allege that the devices at issue — older versions of our Neptune and Naida processors that we no longer market — were unsafe or ineffective for our patients,” the email read.

The settlement relates exclusively to the adequacy of our disclosures to the FDA about our procedures for radio frequency emissions testing for these legacy devices, according to a spokesperson for Advanced Bionics.

The test at issue measured the extent to which cochlear implant systems generate radio frequency emissions that can potentially interfere with other devices that use the radio frequency spectrum such as telephones, alarm and security systems, television and radios.  

The settlement resolves allegations that Advanced Bionics, in submitting pre-market approval applications to the FDA for its Neptune and Naida devices, made false claims regarding the results of its radio frequency emissions tests. 

“While we deny the government’s allegations, we believe it is in the best interests of our company to resolve this matter so it will not distract from our focus on developing technology and devices that help restore hearing for so many people,” a spokesperson for Advanced Bionics wrote in an email to The Signal.

Advanced Bionics allegedly represented that its processors satisfied an internationally recognized emissions standard when, in reality, it did not comply with that standard, according to the DOJ statement.  

The Department of Justice reported that the company failed to honor the standards requirements to test processors using “worse-case” configurations, and improperly shielded certain emissions-generation system components during emissions testing. 

Advanced Bionics then allegedly sought reimbursement from Medicare, Medicaid and other federally funded health care programs for its devices, the Department of Justice wrote in the statement. 

“Patients deserve to receive medical devices which are in compliance with all federal standards,” Marueen Dixon, special agent in charge of the Department of Health and Human Services Office of the Inspector General, said in the statement. “Manufacturers are required to be truthful in submitting claims for payment to the Medicare and Medicaid programs.” 

In addition to the civil settlement, Advanced Bionics entered into a five-year corporate integrity agreement with the Department of Health and Human Services. The agreement requires an independent review of activities and processes related to the preparation or submission of premarket approval applications to the FDA and performance standards relevant to those PMAs.  

Advanced Bionics will pay approximately $11.36 million to the United States, and an additional $1.24 million to the participating Medicaid states, pursuant to the terms of separate settlement agreements that the company has, or will, enter into, with those states, the DOJ statement said. 

The settlement also resolves a lawsuit initially brought forth by David Nyberg, a former Advanced Bionics engineer, under the qui tam, or whistleblower, provisions of the False Claims Act. Under those provisions, a private party can file an action on behalf of the U.S. and receive a portion of any recovery. 

Nyberg will receive approximately $1.87 million of the federal settlement amount.

“This matter illustrates the government’s emphasis on combating health care fraud,” the DOJ statement said. “One of the most powerful tools in these efforts is the False Claims Act.” 

Tips and complains from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477). 

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