Frederick whistleblower receives $2.2M reward in medical-device settlement

A Frederick sales agent-turned-whistleblower will receive $2.2 million after alleging to federal agents that his former employer was marketing unapproved uses for its spinal-treatment device and improperly inducing doctors to treat patients with it at several Maryland hospitals, including Johns Hopkins and St. Agnes.

Kevin J. Ryan’s allegations against NuVasive Inc. were leveled in a federal lawsuit that the U.S. Department of Justice joined and which resulted this week in a $13.5 million settlement between the San Diego-based company and the federal government.

The Justice Department had alleged NuVasive violated the federal False Claims Act, as the government was wrongly billed for the device’s off-label uses and erroneously paid millions in reimbursements under Medicare and Medicaid.

Ryan will receive the $2.2 million under the reward provisions of the False Claims Act, the Justice Department stated in announcing the settlement. He handled sales and marketing of NuVasive’s spinal devices to Maryland hospitals from 2010 to 2012. Besides Johns Hopkins and St. Agnes, Ryan also worked with Montgomery General and Howard County General, according to court documents.

“He didn’t do anything wrong,” said Ryan’s attorney, Jay P. Holland. “He marketed in the way he was trained [by NuVasive] to market.”

When Ryan discovered the marketing was “inappropriate,” he brought his concerns to DOJ’s attention, added Holland, of Joseph, Greenwald & Laake P.A. in Greenbelt.

Ryan first filed suit in September 2012 in U.S. District Court in Baltimore. The settlement resolves the lawsuit.

“Health care providers need to be free to make medical decisions without improper influence by material incentives from manufacturers,” Maryland U.S. Attorney Rod J. Rosenstein said in a statement. “A medical device manufacturer violates the law if it knowingly causes physicians to use its products for purposes that are not medically reasonable and necessary and to bill federal health insurance programs.”

NuVasive admitted no wrongdoing in agreeing to the settlement.

“Recognizing the government’s responsibility to ensure the appropriateness of industry practices, the company cooperated fully with the inquiry and has continued to work hard to create and sustain a culture of compliance throughout its operations,” the company said in a statement.

The federal Food and Drug Administration has approved NuVasive’s CoRoent system for the treatment of minor spinal conditions affecting the lumbar and thoracic regions of the spine. But from 2008 to 2013, the Justice Department alleged NuVasive marketed the system for treatment of severe spinal deformities, including scoliosis and spondylolisthesis.

The department also claimed that NuVasive’s erroneous marketing caused doctors and hospital to submit false Medicare and Medicaid claims for the surgeries, which were not eligible for reimbursements.

In addition, DOJ alleged that NuVasive “knowingly offered and paid illegal remuneration to certain physicians to induce them to use the CoRoent system in spine fusion surgeries, in violation of the federal Anti-Kickback Statute.” The unlawful compensation consisted of promotional speaker fees, honoraria and expenses related to the doctors’ attendance at events sponsored by the Society of Lateral Access Surgery, an organization funded and operated by NuVasive, the department alleged.

The hospitals and doctors have not been accused of wrongdoing.

Holland, Ryan’s lawyer, lauded his client’s “bravery” in blowing the whistle on a former employer, particularly when his desire was to remain in the sales industry and not knowing for several years if he would receive any reward.

“There are tremendous risks,” Holland said. “They [whistleblowers] have to be willing to do this, whether there is a reward or not.”

The case was United States ex rel. Kevin J. Ryan v. NuVasive Inc., 1:12-cv-02683-WDQ.