AtriCure (ATRC) recently received a copy of a “whistleblower” complaint that was unsealed last Friday. The complaint charges AtriCure and some other medical device manufactures – including Boston Scientific (BSX), St. Jude Medical (STJ) and Medtronic (MDT) – with adopting illegal marketing and inducement practices for their surgical cardiac ablation devices. AtriCure had been notified in December that the company was undergoing investigation by the U.S. Department of Justice for such alleged violations.
The complaint was originally filed by a former employee of Boston Scientific in August 2007 and is currently pending in the U.S. District Court for the Southern Districts of Texas.
The complainant alleged that these companies offered physicians illegal kickbacks for “off-label” usages of their surgical cardiac ablation devices. These “off-label” usages were costlier than those approved by the Food and Drug Administration (FDA) and increased the burden of the Government’s Medicare program.
AtriCure is presently evaluating the allegations. Shares of AtriCure closed at $2.99 on Wednesday’s trade. We continue to maintain our Hold recommendation for the company.