California Medical Company Settles Whistleblower’s Suit

San Diego, California-based CareFusion, a medical technology company, has agreed to settle a False Claims Act suit brought by a whistleblower under the qui tam provisions of the False Claims Act for more than $40 million. The whistleblower alleged that CareFusion violated the False Claims Act and the Anti-Kickback Statute in connection with the marketing and sale of its ChloraPrep products.

According to its website, CareFusion employs over 14,000 employees worldwide and has more than 25,000 customers, including hospitals, out-patient surgery centers, and long-term care facilities. Its website indicates that CareFusion focuses on medication management, strategies for lowering costs in procedural areas, reducing the risk of infection, and improving the care of patients who require the use of ventilators.

In addition to its Chloraprep skin antiseptic, CareFusion’s products include, Pyxis for medication dispensing, Alaris for infusion, Avea ventilators, Jaeger respiratory diagnostic equipment, Avamax and Pleurx for interventional procedures, and V. Mueller and Snowden-Pencer surgical instruments.

In her qui tam complaint, the whistleblower, Dr. Cynthia Kirk, a former CareFusion vice president of regulatory affairs, alleged that CareFusion paid kickbacks to physicians in violation of the Anti-Kickback Statute and promoted ChloraPrep for off-label uses that were not approved by the Food and Drug Administration. Specifically, it was alleged that CareFusion paid $11.6 million in improper kickbacks to Dr. Charles Denham, while Denham was serving as co-chair of the Safe Practices Committee at the National Quality Forum. According to its website, the National Quality Forum (“NQF”) is a nonprofit, nonpartisan, public service organization committed to the improvement of American healthcare. NQF reviews, endorses, and recommends use of standardized healthcare performance measures.

The whistleblower alleged that in 2008 CareFusion entered into agreements with Denham which resulted in the payment of $11.6 million to him. According to the whistleblower, the payments were made to induce Denham to recommend and promote the purchase of ChloraPrep by health care providers. ChloraPrep is approved for the preparation of a patient’s skin prior to surgery or injection to help prevent infection. In addition, it was alleged that CareFusion promoted ChloraPrep for uses not approved by the FDA during the period 2009 to 2011.

The whistleblower’s complaint was initially filed in Kansas in 2010 under the qui tam provisions of the False Claims Act. Of the $40.1 million CareFusion has agreed to pay in settlement of the allegations, the whistleblower will receive approximately $3.26 million as her reward under the qui tam provisions of the False Claims Act.

For additional information on how to file a qui tam case, read here.