Abbott Laboratories unit Alere Inc. agreed to pay $33.2 million to resolve a federal investigation regarding the company's sale of allegedly faulty diagnostic devices for detecting drug abuse and heart disease.
The U.S. Department of Justice claimed that Alere induced submission of false claims by hospitals to federal healthcare programs by knowingly selling unreliable Triage point-of-care testing devices between 2006 and 2012.
The Waltham, Mass.-based company allegedly continued to sell the devices despite receiving customer complaints about erroneous results, which in turn adversely affected clinical decision-making.
The U.S. Food and Drug Administration issued a warning letter to the company in 2012 after inspecting its San Diego facility, which later prompted a nationwide product recall of its Triage devices.
Alere divested its Triage assets to Quidel Corp. in 2017 as part of a $680 million deal to gain antitrust approval for its acquisition by Abbott Laboratories.
The lawsuit was filed by a former Alere senior quality control analyst, Amanda Wu, under the whistleblower provision of the False Claims Act, which allows private parties to file a case on behalf of the government.
Under the settlement, Alere will pay about $28.4 million to the federal government out of which roughly $4.9 million will be returned to individual states, which jointly funded claims for Triage devices submitted to state Medicaid programs.
Wu will receive about $5.6 million as part of her share of the amount recovered by the government from the lawsuit.
The parties had reached an agreement in principle in September 2017 to settle the potential civil claims.