Criminal Defense Lawyers

Responding to Fraudulent Medical Device Marketing Allegations

Responding to Fraudulent Medical Device Marketing Allegations

Getting hit with allegations of fraudulent marketing practices can be a nightmare for medical device companies. The stakes are high, with hefty fines and even criminal charges on the table. Companies need to respond swiftly and strategically to mitigate damage. But where do you start when faced with such serious accusations?First, take a deep breath. Work through the initial shock and assemble your crisis response team. Legal, compliance, regulatory affairs, marketing and PR – all hands on deck. Do not let emotions or defensiveness cloud your judgment. Stick to the facts and focus on damage control.

Investigating the Claims

The first priority is investigating the specific allegations. Were false or misleading claims made about your product? Were clinical data misrepresented? Get input from your regulatory and legal teams to identify potential problem areas. Dig into the evidence behind the accusations.If the allegations have merit, be prepared to acknowledge mistakes. But don‘t jump to admissions of guilt. Not all marketing snafus necessarily cross the line into fraud. Work methodically to separate sloppy mistakes from intentional deception.

Assessing Areas of Risk

Carefully comb through your marketing materials and messaging. Scrutinize websites, brochures, sales pitches, and medical education programs. Look for any statements that overreach on safety or efficacy. Flag overly broad claims not backed up by clinical data.Also examine your relationships with physicians, hospitals and group purchasing organizations. Did sales reps make inappropriate claims or offers to clinch a deal? Were speaking fees, gifts or other incentives used to induce product orders? Any whiff of kickbacks or conflicts of interest is an added risk factor.Document your findings so you can correct problem areas. But resist internal finger pointing. Stay solution-focused and avoid blame games.

Communicating with Stakeholders

Be proactive in reaching out to key stakeholders. Contacting them early shows you have nothing to hide.Inform employees first to get ahead of the rumor mill. Reassure them you’re taking the matter seriously and have a plan. Encourage them to direct all press inquiries to PR.Notify board members about the allegations and your response strategy. Keep them looped in as the situation develops.Contact your legal counsel, insurance providers, auditors and financial backers. Update healthcare providers, hospital clients and anyone else directly impacted. Don’t wait for them to read alarming headlines.Regulatory bodies will be alerted by whistleblowers or through routine audits. Pledge your full cooperation with any government investigations. However, consult legal counsel before submitting to interviews or handing over documents.

Issuing a Public Statement

Work closely with your PR team to craft an appropriate public response. The statement should acknowledge the allegations and affirm your commitment to addressing them. Avoid deflecting blame or minimizing concerns.Stick to just the facts. Do not admit fault or speculate about penalties. Keep the tone neutral rather than defensive. Emphasize your cooperation with investigators and dedication to transparency.Decide whether the CEO or legal counsel should deliver the statement. Choose a spokesperson able to convey calm authority and compassion for any patients impacted.Time the statement to get ahead of media coverage. But resist pressure for an immediate knee-jerk reaction. Take time to ensure the messaging is clear and complete.

Developing a Corrective Action Plan

The public statement is only the first step. Now the real work begins in identifying and correcting breakdowns.Start by suspending any marketing or practices under scrutiny. Halt production of problematic materials. Remove questionable claims from your website immediately.Review compensation structures, sales quotas and incentive programs for red flags. Tie bonuses and commissions to ethical practices, not just sales numbers. Enhance compliance training for sales and marketing staff.Bolster your internal controls and oversight mechanisms. Add more checks and balances to sign off on materials before release. Conduct regular audits to catch issues early.If personnel changes are warranted, act decisively. But focus discipline on those directly involved in misrepresentations. Avoid punishing peripheral staff not at fault.Document each correction made and process improved. This demonstrates how seriously you’re rectifying matters. It also helps in negotiating settlements down the road.

Cooperating with Government Investigations

Chances are your case will spark probes by the FDA, FTC and DOJ. Their involvement signals the allegations have merit.Resist any temptation to stonewall investigators. Obstruction and evasion will only worsen outcomes. Cooperate fully, but protect your rights. Have counsel present during questioning. Invoke attorney-client privilege where appropriate.Ask to see the evidence behind charges. Don’t blindly accept assertions of fraud. Probe the strength of their case. Look for mitigating details or extenuating circumstances.Negotiate in good faith, but avoid rushing into settlements. Don’t let investigators pressure you into premature admissions of guilt.Hire experts to review data and materials related to allegations. Independent analysis can reveal overblown charges or reasonable differences in interpreting marketing claims.

Exploring Settlement Options

Settlement will likely emerge as the preferred route to resolve allegations short of trial. The key is negotiating an equitable deal with prosecutors.Trying to play hardball or stonewalling settlement talks are risky strategies. They can spur DOJ to make an example of your company with crippling fines or indictments.A modest settlement early on may be the best damage control route. But don’t cave too quickly to initial demands. Government opening offers typically exceed final settlement amounts.Insist on language stating you’re not admitting guilt by settling. Include non-prosecution terms for company executives. Request a deferred prosecution agreement rather than a corporate integrity agreement.Avoid settlement terms that could spur related civil suits. Include releases of liability for patients, payers and shareholders.Negotiate reasonable fines based on your ability to pay. Provide evidence of financial hardship if penalties seem exorbitant. Point to your cooperation and corrective actions already taken.

Learning from the Crisis

Emerging from allegations of fraud requires soul-searching about what went wrong. The temptation may be to blame a few bad apples, but probe deeper for systemic issues.Review sales incentives and quotas that may have encouraged exaggerations. Look at marketing processes that failed to catch misleading claims. Revisit training to ensure ethical standards are crystal clear.Consider an external audit of your ethics and compliance program. Fresh eyes may identify blind spots or weaknesses. Update policies and procedures accordingly.Foster an ethical culture where employees feel safe raising concerns. Provide anonymous hotlines to report misconduct without fear of retaliation.While a painful chapter, navigating allegations of fraud can spark needed reforms. Let it serve as a wake-up call to reaffirm your commitment to patients above profits. Use the lessons learned to rebuild trust and prevent future crises.Stay vigilant in monitoring marketing claims and sales tactics. Erring on the side of caution will help you weather future storms. One misstep does not define your company. How you respond speaks volumes about your integrity and determination to do better.