Ra Medical Systems announced it has settled federal and state investigations into whether the company made false marketing claims when seeking FDA clearance for its laser ablation treatment for cardiovascular and skin conditions.
The investigation by the U.S. Department of Justice (DOJ) was first disclosed in October 2019, following issues uncovered by an internal probe led by Ra Medical’s own audit committee.
At that time, the committee found that the company’s DABRA catheter—a disposable, minimally invasive excimer system designed to break down artery-blocking plaque deposits—”frequently failed to calibrate and occasionally overheated,” risking injury to patients and physicians. The audit also found Ra Medical failed to immediately report the issues to the FDA and began quiet product recalls.
In addition, salespeople were directed to promote DABRA for use in wider atherectomy, though the device had not been cleared for that procedure and specific payment code, the company said. The FDA’s 510(k) clearance covers crossing chronic total occlusions in patients with vascular disease in the lower extremities.
The settlement with the DOJ, in which Ra Medical does not admit any liability or wrongdoing, resolves civil investigations under the False Claims Act as part of an agreement with the fals which had also been scrutinizing DABRA-related payments made to physicians amounting to about $300,000, as previously disclosed by the audit committee.
“The Company has fully cooperated with these government investigations, and I am pleased settlements have been reached to resolve these matters,” Ra Medical CEO Will McGuire said. “Ra Medical Systems, under its new leadership, remains dedicated to the use of our advanced excimer laser-based platform for the treatment of vascular and dermatological immune-mediated inflammatory diseases.”
The settlement also includes tentative agreements with participating states that could resolve separate investigations by state attorneys general, the company said.
Ra Medical will pay an initial $2.5 million, plus more depending on future revenues. If sales exceed $10 million annually in any of the next four years, the company will be required to pay $500,000 for 2021, $750,000 for 2022, $1 million for 2023 and $1.25 million for 2024.
According to Ra Medical’s latest earnings report, the company brought in $3.2 million over the first three quarters of 2020, down from $5.8 million over the same nine-month period in 2019, and $7.2 million in revenue for that full year.
Additionally, if the company is bought before the end of 2024, it will be required to pay another $5 million, plus 4% of the deal’s value if the transaction tops $100 million.