Medical device company to pay $42 million to resolve US lead-testing defect charges

[May 22, 2024]  By Nate Raymond

BOSTON (Reuters) - A medical device company has agreed to pay $42 million and plead guilty to resolve U.S. charges that it concealed a malfunction in its lead-testing devices that resulted in thousands of children and other patients receiving inaccurate, low test results.

Federal prosecutors in Boston in court filings on Tuesday said Magellan Diagnostics, now owned by Ohio-based Meridian Bioscience, had entered into a deferred prosecution agreement to resolve felony fraud conspiracy charges and agreed to plead guilty to two misdemeanors.

The deal came ahead of three former executives facing trial in September on charges that they deceived customers and the U.S. Food and Drug Administration about the reliability of devices it sold for detecting lead levels and lead poisoning in the blood of children and adults.

The malfunction affected three of Magellan's testing devices in its LeadCare line, including one that accounted for more than half of all blood lead tests conducted in the U.S. between 2013 and 2017, according to prosecutors.

Magellan, headquartered in Billerica, Massachusetts, agreed to plead guilty to two violations of the Food, Drug, and Cosmetic Act for failing to timely notify the FDA of the malfunction as part of a deal that calls for it to be sentenced to pay $32.7 million in fines and forfeitures.

Its deferred prosecution agreement runs for two years and calls for Magellan to cooperate with prosecutors, retain an outside compliance monitor, and pay $9.3 million to victims to resolve the felony charges.

A general view of The John Joseph Moakley United States Courthouse in Boston, Massachusetts, U.S., July 27, 2021. REUTERS/Nicholas Pfosi/File Photo

"Magellan takes seriously our responsibility to provide reliable, FDA-cleared products to support some of our most vulnerable populations," Tony Serafini-Lamanna, president of Magellan Diagnostics, said in a statement.

Prosecutors last year announced fraud charges against Amy Winslow, the former Magellan chief executive, and two other ex-executives, Hossein Maleknia and Reba Daoust.

Winslow, Maleknia, the former chief operating officer, and Daoust, the former director of quality assurance and regulatory affairs, pleaded not guilty to conspiracy and wire fraud charges and are slated to face trial on Sept. 16.

Prosecutors alleged the executives concealed a serious malfunction in the LeadCare devices and only notified customers and the FDA about the problem after Meridian acquired Magellan in 2016 for $66 million.

The FDA ultimately ordered a recall of the devices in 2021. The company resumed distribution in 2022.

(Reporting by Nate Raymond in Boston; Editing by Bill Berkrot)

[© 2024 Thomson Reuters. All rights reserved.]This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.