Ra Medical pays $2.5 million to settle false claims investigation

Ra Medical Systems Inc. has entered into a settlement agreement that resolves civil False Claims Act claims asserted by the U.S. Department of Justice in an investigation previously disclosed by the company. Ra Medical Systems has settled these matters without admitting liability or wrongdoing. The allegations resolved as part of the settlement agreement reached with the U.S. Attorney’s Office for the Eastern District of Michigan pertain to the company’s marketing of the DABRA laser system and DABRA-related remuneration paid to certain physicians. In connection with this settlement, the company also has reached tentative agreements with the participating states that, if executed, resolve previously disclosed related investigations conducted by certain state attorneys general.

Pursuant to the terms of the settlement agreement and tentative agreements, Ra Medical Systems will pay in the near term a total of $2.5 million, an amount the company has accrued in full since its fiscal second quarter. If the company’s revenue exceeds $10 million in any of the next four fiscal years, it also is required to pay an additional amount in settlement for the corresponding year: $500,000 for 2021, $750,000 for 2022, $1 million for 2023, and $1.25 million for 2024. If the company is acquired or is otherwise involved in a change-in-control transaction prior to Dec. 31, 2024, the company also is required to pay an additional settlement amount of $5 million, plus 4 percent of the value of the transaction if the value of the transaction is in excess of $100 million, with the total change-in-control payment not to exceed $28 million.

As is common in settlements of this nature, the company also entered into a five-year Corporate Integrity Agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services (HHS-OIG), and HHS-OIG agreed to waive its permissive exclusion authority for the conduct covered by the settlement agreement.

“The company has fully cooperated with these government investigations, and I am pleased settlements have been reached to resolve these matters,” said Ra Medical Systems CEO Will McGuire. “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. We remain committed to meeting the expectations of the federal and various state governments as we fulfill our mission of serving the needs of patients.” – Business Wire