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Estech settles lawsuit over bogus Medicare claims and false advertising for $1.4 Million

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Endoscopic Technologies, Inc. or Estech recently settled a lawsuit for $1.4 million after the Food and Drug Administration accused the company of violating the Food, Drug and Cosmetic Act and the False Claims Act. Specifically, the FDA accused Estech of falsely marketing its product, and of encouraging bogus Medicare claims as well as paying kickbacks to healthcare providers.

The San Ramon, California company makes medical devices for surgical ablation, where focused energy is used to create scar tissue on a patient’s heart or other organs. However, Estech also marketed its product to treat atrial fibrillation (the most common type of heart arrhythmia), which was not a use of the device that was approved by the FDA. Furthermore, Estech promoted costly heart surgeries to increase use of their product, when other less invasive treatments were more appropriate. The company also advised doctors to classify surgical procedures using the devices to increase Medicare payments and paid kickbacks to health-care providers who used it devices.

The allegations were made in a lawsuit filed in the U.S. District Court for the Southern District of Texas by a private citizen, under the qui tam provisions in the False Claims Act. Under these specific provisions of the act, private citizens may act as “relators” who can bring lawsuits on behalf of the U.S. and receive a portion of the settlement award. In this case, the relator will receive $210,000 as their share of the settlement. However, Estech denies the accusations and has not admitted any wrongdoing in the settlement.