• Whistleblower Case Against British Medical Device Company BTG Results in $36 Million Civil and Criminal Settlement with U.S. Department of Justice
  • November 16, 2016
  • Law Firm: Waters Kraus LLP - Dallas Office
  • False Claims Act lawsuit revealed BTG subsidiary, Biocompatibles, marketed its LC Bead device exclusively for uses that had been denied approval by the FDA.

    DALLAS - Medical device manufacturer BTG plc., and the United States Department of Justice (DOJ) have agreed to settle civil allegations of false claims fraud for $25 Million and criminal charges of marketing fraud for a fine of $11 million. BTG subsidiary Biocompatibles has entered a guilty plea to charges of marketing misbranded medical devices. Whistleblower Ryan Bliss, represented by attorney Paul Lawrence of Waters Kraus & Paul of Dallas and co-counsel Jeffrey Newman of Boston, brought the qui tam lawsuit which includes accusations that BTG’s subsidiary lied to the FDA and caused violations of the False Claims Act (FCA).

    Mr. Bliss was a high-ranking BTG marketing professional responsible for marketing and management of Biocompatibles’ medical products in the U.S. and Canada. He uncovered the medical device false claims and marketing fraud in company records. Mr. Bliss took a considerable chance by wearing a wire for the government and recording conversations with key personnel at BTG, which helped prove the case.

    At the heart of this medical device marketing fraud case is a product sold in the United States as LC Bead, which was designed by BTG’s subsidiary Biocompatibles as a chemotherapy drug delivery device, but was cleared by the FDA for what is called “bland” embolization only, i.e., a use that involves blocking the flow of blood to tumors. Paul Lawrence, lead attorney for the whistleblower, said “what was shocking about the company’s behavior is that they obtained clearance for marketing the device for one use, bland embolization of blood vessels, knowing full well that 100% of its sales would be for a different use, as a drug delivery device, which the FDA had refused to approve.” Biocompatibles never shared with medical providers that the FDA had twice refused to approve LC Bead for drug delivery and marketed the device for that purpose anyway. Medicare and other federal health care programs do not cover devices that are not approved or cleared by the FDA.

    In the settlement agreement between BTG, the government and the whistleblower the government alleges that as Biocompatibles planned to enter the U.S. market in 2005, it intended for LC Bead to be used as a drug-delivery device in combination with chemotherapeutic agents, specifically in a medical procedure known as drug-eluting bead transarterial chemoembolization or “DEB-TACE.” More specifically, Biocompatibles intended for LC Bead to be used as a drug delivery-device in DEB-TACE procedures for patients diagnosed with hepatocellular carcinoma (“HCC”) and metastatic colorectal cancer (“mCRC”).

    In the settlement agreement, the government further contends that LC Bead used as a drug-eluting bead in combination with prescription drugs constituted a new combination drug-device product that was not approved or cleared by the FDA. The government states that in October 2006, Biocompatibles sought to obtain a 510(k) marketing clearance that identified transarterial chemoembolization as the intended use for LC Bead. FDA responded that such an intended use would require a Premarket Approval (PMA) before it could be legally marketed. In December 2009, Biocompatibles filed a PMA application for a drug-eluting bead combination product, intended for use in transarterial chemoembolization of unresectable HCC. In February 2010, FDA informed Biocompatibles that FDA was not accepting the PMA application because the predetermined endpoint, overall tumor response rate, of the clinical studies included in the application did not provide adequate evidence of a therapeutic benefit. The government states that to date, Biocompatibles has not obtained approval or clearance from FDA for a drug-eluting bead combination product.

    For example, training provided by Biocompatibles’ U.S. distributor to its LC Bead sales force described the product as “a drug-delivery device” and stated that it was “specifically designed for chemoembolization.” Instructions for selling the LC Bead included directions to tell physicians the product was “unique” because “LC Bead is designed to ‘upload’ doxorubicin and then slowly elute it over 14 days.” Certain sales representatives went so far as to state that LC Bead was FDA “approved” for chemoembolization. Sales representatives routinely claimed DEB-TACE procedures using LC bead was a “better” or “superior” therapy for treating HCC and mCRC without disclosing the company’s unsuccessful attempts to obtain FDA approval or clearance for a drug-eluting bead combination product. According to the government, sales representatives also routinely told physicians that DEB-TACE with LC Bead was “safer” and “less toxic” than alternative treatments when, in fact, there was insufficient clinical evidence that LC Bead had a superior safety profile.

    Finally, the government states that Biocompatibles was aware that many insurers declined to provide coverage for DEB-TACE due, in part, to the lack of FDA approval of the LC Bead as a drug delivery combination product. Nonetheless, Biocompatibles allowed its U.S. distributor to develop materials that instructed providers to submit claims for DEB-TACE
    procedures by using billing codes intended for bland embolization procedures because there was no established procedure code that precisely described DEB-TACE.

    The whistleblower lawsuit was filed under seal on July 23, 2013 and the seal was partially lifted on October 11, 2016. The next day, BTG settled the civil case with the DOJ over violations of the Federal False Claims Act for $25 million. BTG entered a plea on the criminal charge and agreed to pay a criminal fine of $11 million on November 7, 2016, at which point both the civil and criminal settlements were publicly announced. Whistleblower Ryan Bliss will be rewarded with 21.5% of the civil settlement for his courage in coming forward.

    Mr. Bliss was represented by Wm. Paul Lawrence, II, Charles Siegel and Kay Gunderson Reeves of Waters Kraus & Paul and co-counsel Jeffrey A. Newman of Jeffrey Newman Law in Boston. “This false claims fraud settlement demonstrates that companies are not free to play fast and loose with the FDA, then bill government healthcare programs,” concluded Waters Kraus & Paul partner Charles Siegel.

    The case is United States of America, ex rel. Bliss v. Biocompatibles, et al.; U.S. District Court for the Western District of Texas, San Antonio Division. The case number has not been made public as portions of the case remain under seal.