California-based medical device manufacturer Acclarent Inc., a subsidiary of Johnson & Johnson, will pay $18 million to resolve allegations that the company caused health care providers to submit false claims to Medicare and other federal healthcare programs by marketing its sinus spacer product for use as a drug delivery device without U.S. Food and Drug Administration (FDA) approval of that use.

“The FDA approval process serves an important role in ensuring that federal health care participants receive devices that are safe, effective and medically appropriate,” said Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will not permit companies to circumvent that process and put profits over patient safety.”

Acclarent sells a variety of medical devices used in sinus surgeries, including a device known as the Relieva Stratus MicroFlow Spacer (Stratus).

In 2006, Acclarent received FDA clearance to market the Stratus as a spacer to be used only with saline to maintain sinus openings following surgery.

Federal officials alleged that Acclarent intended for the Stratus to be used instead as a drug-delivery device for prescription corticosteroids, including Kenalog-40, and that the device was specifically designed and engineered for this use.

The government further alleged that Acclarent marketed the Stratus as a drug delivery device even after the FDA rejected the company’s 2007 request to expand the approved uses for the Stratus.

For example, Acclarent employees trained physicians using a video that demonstrated the Stratus being used with prescription corticosteroid Kenalog-40 and also used a white, milky substance resembling Kenalog-40 when demonstrating the Stratus.

In 2010, Acclarent added a warning to its label regarding use of active drug substances in the Stratus; however, the government alleged that Acclarent nonetheless continued to market the Stratus for drug delivery.

By May 2013, Acclarent discontinued all sales of the Stratus and the company agreed to withdraw all FDA marketing clearances for the device, which is no longer commercially available in the United States.

In April 2015, an indictment was unsealed in the District of Massachusetts charging Acclarent’s former Chief Executive Officer, William Facteau, 47, of Atherton, California and former Vice President of Sales, Patrick Fabian, 49, of Lake Elmo, Minnesota, with conspiracy, wire fraud, and violations of the Food, Drug and Cosmetic Act for their roles in the alleged conduct.  On July 20, following a six-week jury trial, Facteau and Fabian were convicted of 10 misdemeanor counts of introducing adulterated and misbranded medical devices into interstate commerce.

The civil settlement with Acclarent resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery.

The civil lawsuit was filed in the District of Massachusetts and is captioned United States ex rel. Melayna Lokosky v. Acclarent, Inc.

As part of the resolution, Lokosky will receive approximately $3.5 million from the settlement.