ACell Inc. Pleads Guilty, Will Pay $15M to Settle Criminal, Civil Allegations

The company knew in January 2012 that some of its MicroMatrix devices were tainted with high endotoxin levels, but failed to notify the FDA.

Medical device maker ACell Inc. has pleaded guilty and will pay $15 million to settle criminal and civil whistleblower allegations that it failed to tell federal regulators about a recall of its MicroMatrix wound dressing powder, the Department of Justice announced.

According to criminal information unsealed this week, Columbia, Maryland-based ACell knew in January 2012 that more than 30,000 MicroMatrix devices were tainted with endotoxin levels that could cause fever, infection, septic shock, and death.

ACell "clandestinely" removed some sizes of MicroMatrix from its inventories, hospitals, and other healthcare venues, but admitted that it did not tell the Food and Drug Administration.  

ACell admitted that it hid the reason for the product removal from doctors, hospitals, and its own sales reps, and did not tell doctors who had already used potentially tainted MicroMatrix about the elevated endotoxin levels, DOJ said.

Under the criminal plea agreement, ACell will plead guilty to one misdemeanor count of failure to report a medical device removal and pay a $3 million fine. 

Under the civil settlement, ACell will pay $12 million over five years to resolve False Claims Act violations that it allowed healthcare providers to bill federal healthcare programs for the tainted product.

DOJ said ACell sales reps told physicians that MicroMatrix powder non-topically and internally was safe and effective, when the reps knew that no such clinical data existed.

DOJ said ACell also gave codes to healthcare providers for ACell devices that were incorrect and improperly inflated reimbursement from Medicare, and that ACell continued to do so even after two separate coding consultants told them it was incorrect.

And finally, DOJ alleged that ACell induced providers to use its product through improper inducements that included free products, entertainment, and payments for being part of ACell's speaker program, and free product.

The civil settlement resolves a lawsuit filed by whistleblower John Murtaugh, a former employee of ACell, who will receive $2.3 million.  

ACell Responds

ACell issued a statement saying "the activities DOJ investigated occurred many years ago, when ACell was headed by a different management team."  

ACell President and CEO Patrick McBrayer said the company "looks forward to putting this matter behind us."

"We are focused on moving forward with positive momentum and growth," he said.