California Medical Device Maker Settles Allegations it Improperly Compensated VA Podiatrists

          A medical device manufacturer based in Sunnyvale, California has agreed to pay $3 million to settle allegations it improperly compensated podiatrists at four Veterans Affairs medical facilities to promote use of its product.  Government investigators allege that Spiracur, Inc. improperly compensated VA podiatrists with gifts, gratuities and excessive speaking fees in order to increase sales of its product. 

            “The law is clear: Government employees are not allowed to accept gifts and gratuities for steering business to a particular company,” said U.S. Attorney Annette L. Hayes.  “Care decisions should not be based on who has provided the biggest gift.  Taxpayers need to know medical facilities are choosing the right product at the right price for our veterans and others who rely on publicly-funded medical programs.”

          Spiracur manufactures and sells a negative pressure wound treatment product, known as “the SNaP system,” which is used primarily in the treatment of diabetic ulcers.  Spiracur improperly compensated VA podiatrists who worked at VA facilities in Phoenix, Atlanta, San Francisco and Cleveland.  Between 2010 and 2015, Spiracur sold those facilities just over $3.3 million in SNaP systems.

            “The integrity of VA’s procurement process of healthcare devices is essential to providing effective care to our nation’s veterans,” said Michael E. Seitler, Special Agent in Charge for the U.S. Department of Veterans Affairs, Office of Inspector General, Northwest Field Office.  “This case is one example of the OIG investigating allegations of undue influence into that process.  The settlement of this case returns funds to VA that will be used to help care for veterans.” 

            Under the terms of the settlement agreement, Spiracur admits no wrongdoing and agrees to cooperate with any further investigation into the medical staff who accepted the improper compensation.  As part of a separate transaction, Spiracur’s assets are in the process of being acquired by KCI USA, Inc.

            The matter was investigated by the Veterans Affairs Office of Inspector General.  The case was handled by Assistant United States Attorney Kayla Stahman.