(VASC) and Howard Root Found Not Guilty on All Charges in Short Kit Litigation

• Jury finds Vascular Solutions and Howard Root not guilty on all charges in criminal prosecution concerning alleged “off-label” promotion of Vari-Lase® Short Kit
• Jury’s verdict concludes litigation and is not subject to appeal
• Vascular Solutions demands Department of Justice retract its prior false and misleading public statements 

MINNEAPOLIS, Feb. 26, 2016  — Vascular Solutions, Inc. (Nasdaq:VASC) today reported that the jury in its federal trial in the Western District of Texas in San Antonio has returned a unanimous verdict of not guilty on all charges against the company and its CEO Howard Root regarding the alleged “off-label” promotion of the Vari-Lase Short Kit. Senior U.S. District Judge Royce Lamberth has entered an order dismissing the case that is final and is not subject to appeal.

Howard Root made the following comments:

“The company and I are vindicated by today’s verdict, but outraged by the obscene legal process we were forced to endure.” 

“We are appalled by the malicious behavior and lack of substantive oversight of the government officials who pursued this matter – in particular Assistant U.S. Attorneys Bud Paulissen and Christina Playton of the Western District of Texas, Consumer Protection Branch Trial Attorneys Timothy Finley and Charles Biro, and FDA Special Agent George Scavdis. There simply is no excuse for abusive and dishonest conduct in any U.S. governmental agency, much less in the Department of Justice and our law enforcement agencies.”

“We greatly appreciate the jury’s complete rejection of the government’s false allegations. But to get to this result, we were subjected to five years of attacks which forced us to hire 10 separate law firms at a cost of over $25 million to defend against a criminal prosecution that clearly was never warranted by the facts. This case centered on just one version of just one of our more than 100 medical devices – a version that was FDA-cleared, made up only 0.1% of our sales, and, by the government’s own admission, never harmed a single patient. To say that this prosecution was wrong-headed and disproportionate would be the understatement of the year.”

“While this matter is now over for Vascular Solutions and me, an upcoming criminal trial remains scheduled for one of the company’s sales representatives on obstruction of justice charges because he refused to change his grand jury testimony to match what these prosecutors wanted to hear.  It should now be obvious that our sales rep’s indictment was merely a malicious retribution by misguided prosecutors, an action that needs to be corrected immediately.  And after his indictment is dismissed, if the U.S. Attorney in San Antonio still wants to prosecute someone for obstruction of justice in this case, in my opinion he wouldn’t even have to leave his own office to find the most suitable person to indict.”

“Vascular Solutions is fortunate to have had the financial strength and dedicated employees necessary not only to fight, but to win. Most other companies would have been destroyed before they even set foot in the courtroom. In order to ensure that what happened to Vascular Solutions doesn’t happen to a defenseless company or individual, changes need to be made in the personnel and culture at the Department of Justice.”

“Every investigation that is being conducted by the prosecutors who were assigned to our case needs to be independently reviewed by the Department of Justice to make sure that their abusive and dishonest tactics are not being used on others. Furthermore, every current investigation of a medical device company concerning “off-label” promotion needs to be reviewed by the Department of Justice to make sure their prosecutors’ theories comply with the law, not just their wishes.”

“Looking forward, starting tomorrow Vascular Solutions will return our full focus and resources to developing medical devices to improve patient lives and create American jobs – vital pursuits that were clouded while we were defending ourselves against a malicious prosecution. Fortunately, throughout this process our employees have continued to carry on with business as usual. That commitment and our successful business model has positioned Vascular Solutions very well for continued success, especially now that this senseless distraction is behind us.”  

In order to correct the multiple false and misleading public allegations made by the Department of Justice concerning this matter, Vascular Solutions demands a prompt and complete corrective press release.

In particular, on November 13, 2014 the Department of Justice, Office of Public Affairs issued a press release that quoted Joyce Branda, the Acting Assistant Attorney General for the Civil Division, alleging that this matter was “a deceptive sales campaign led by the CEO of a public company.” The press release further quoted Ms. Branda alleging that the “sales campaign persisted in the face of FDA warnings, a whistleblower’s complaint to the CEO and a failed clinical trial showing that the device was less safe and less effective than a product that had already been approved.” As demonstrated by the evidence presented under oath at trial, all of these allegations were false.

Similarly, in a press release issued on July 28, 2014 by the Department of Justice, Office of Public affairs, Assistant Attorney General Stuart F. Delery was quoted characterizing Vascular Solutions as a company that “put profits over patient safety.” In the same press release, U.S. Attorney Robert Pitman was quoted describing Vascular Solutions as a company that “knowingly promote[d] medical devices for unapproved uses, causing federal health care programs to pay for services that cannot be reimbursed.” Again, the evidence presented under oath at trial demonstrated that all of these allegations were false.

Furthermore, at a medical devices conference held on October 15, 2015, Julie Taitsman, MD, JD, the Chief Medical Officer at Health and Human Services, Officer of Inspector General, publicly stated that Vascular Solutions had persisted in off-label marketing even when a clinical trial failed, and that Vascular Solutions had data showing that the Short Kit was less safe than a competitor’s. She further stated that this case was “hand-picked” by the government because it was such a strong case, and that the government “went on the offensive” in prosecuting Vascular Solutions. Not only did the evidence presented under oath at trial demonstrate that Dr. Taitsman’s allegations were false when made, but her characterization of the prosecution strategy documented its malicious nature and violated judicial rules against the making of extrajudicial public statements during the pendency of a case.

Mr. Root concluded with the following statement:

“Gratuitous public allegations are easy for the Department of Justice to make when a lawsuit starts and the accused is unable to respond. But now that the trial is over and the jury has rejected all of the government’s accusations, the Department of Justice needs to set the record straight in the interests of justice.  And after that, the Department of Justice needs to investigate what went wrong in our case and make internal changes in order to ensure that its next ‘hand-picked’ and ‘offensive’ criminal prosecution isn’t based on false allegations made by a money-motivated disgruntled former employee, which is what happened here.”

Background

The Vari-Lase Short Kit was sold by Vascular Solutions in the U.S. from October 2007 through July 2014 under an FDA 510(k) clearance for the treatment of varicose veins and varicosities associated with superficial reflux of the great saphenous vein and for treatment of incompetence and reflux of superficial veins in the lower extremity. Sales of the Short Kit during the seven years it was on the U.S. market totaled $534,000, representing just 0.1% of Vascular Solutions’ U.S. sales of all products during those years.  Over two-thirds of Vascular Solutions’ sales representatives never sold even a single unit of the Short Kit, and the Short Kit was never the subject of any reported serious adverse event in any patient.

The allegations advanced by the prosecutors at trial concerned whether Vascular Solutions and Howard Root engaged in a promotional campaign to encourage members of Vascular Solutions’ sales force to speak to physicians about the use of the Short Kit to treat varicose perforator veins in the leg and whether that use was outside the Short Kit’s FDA-cleared labeled indications for use and therefore an “off-label” use.  The jury unanimously rejected all of the prosecutors’ allegations.

About Vascular Solutions

Since its founding by Howard Root in 1997, Vascular Solutions has developed over 100 new medical devices that are used by physicians to treat a wide variety of vascular diseases, from heart attacks to peripheral arterial disease. The company’s most recent major product in development is RePlas™ freeze-dried plasma, which is being developed in collaboration with the U.S. Army for use on the battlefield to save the lives of soldiers suffering blood loss, due to a bullet wound or roadside bomb. The Vari-Lase Short Kit matter is the only allegation of a legal compliance issue that the company has received in its 20-year history.

For further information on Vascular Solutions, connect to www.vasc.com.

 

Investors:

Phil Nalbone
VP of Vascular Solutions
PNalbone@vasc.com (763) 656-4371

Media:

Jon Austin
J Austin & Associates
jon@jaustingroup.com (612) 839-5172