Alere, Inc. and its San Diego subsidiary, agreed to pay $38.75 million to resolve False Claims Act charges for billing the Medicare program for defective rapid point-of-care testing devices. Alere sold diagnostic devices knowing that the devices had a materially defective algorithm. 

During the period 2008 to 2016, Alere sold defective INRatio-blood coagulation monitors used by Medicare patients taking anticoagulant drugs (e.g., warfarin).  Blood coagulation monitors are important to protect against ingestion of too much anticoagulant drugs that can cause major bleeding or too little of the drug which can cause blood clots and strokes.

Staring in 2008, Alere knew that the software algorithm used in its monitors suffered from a material defect.  Its own research, as well as customer complaints, revealed that its monitors had a “system limitation” that produced inaccurate and unreliable results for some patients.

As Alere acknowledged internally, “[t]he INRatio meter software cannot reliably determine PTs [Prothrombin Time values, a measure of how long it takes blood to clot] for certain impedance curve shapes.” For such curves, Alere knew that the INRatio algorithm could return a discrepant result to some patients and healthcare providers. Alere further knew that patients and healthcare providers relied on INRatio’s results in making healthcare decisions, including changing or maintaining anticoagulant dosages.

Alere received repeated warnings, including from their own personnel, that INRatio’s algorithm was flawed. The software developer advised Alere that the issue could be “identified & mitigated” by changing the INRatio algorithm, which “[w]ould eliminate many serious errors with [the] current [algorithm].” The developer attempted to fix the algorithm but did not identify an acceptable solution that meaningfully reduced discrepant results.

Rather than pursue further work to fix the problem, Alere acknowledged internally to making “a business decision” to close their Corrective and Preventive Action (CAPA) investigation without fixing the INRatio algorithm defect. Alere did not pursue the further software improvement efforts that its software developer warned were “sorely needed” and failed to inform patients, healthcare providers, and insurers of the defect.

Alere falsely represented to the Food and Drug Administration (FDA) in medical device reports that it had “investigat[ed]” INRatio meters reported to have returned discrepant results and “did not uncover any deficiencies” in the meters. Alere did not correct its prior written and oral statements to the FDA that the “root cause” of the discrepant results was “unknown.”

INRatio remained on the market for years after Alere knew that the tio algorithm could cause discrepant results. Alere admitted internally in 2014 that the INRatio algorithm defect was “a design issue that has been part of the INRatio product since the early days,” and that they had “[r]ecognition of the issue in 2008.”

For over eight years, despite knowing of the INRatio defect, Alere continued to distribute and sell INRatio systems. Throughout this time, Alere was aware that INRatio systems were linked to over a dozen deaths and hundreds of injuries, including bleeding requiring surgery, gastrointestinal bleeding, bleeding requiring endoscopic cautery or repair, bleeding requiring a blood transfusion, intra-cerebral hemorrhaging, and cardiovascular events following a bleeding episode. As Alere admitted internally, “[i]n some cases [INRatio’s defect] has led to patient harm.”

Alere knowingly submitted false claims to Medicare for the purchase and/or use of Alere’s INRatio system. If Alere had properly disclosed INRatio’s defect, Medicare would not have paid those claims, which were for the use of an INRatio system that was neither reasonable and necessary, nor safe and effective.

It was not until 2016 when Alere took corrective actions after the FDA ordered ma Class I product recall from the market.