Home 5 News 5 Medical Device Executives Nailed with Fraud Charges

Medical Device Executives Nailed with Fraud Charges

by | Apr 12, 2023 | News, Open Content

The three Magellan Diagnostics executives are accused of FDA violations, as well as wire fraud and conspiracy.

Of the enforcement actions announced over the past week, only one involved diagnostic testing, but it was a doozy. In that case, three former executives from medical device company Magellan Diagnostics, Inc., received several charges on April 5 relating to hiding “a device malfunction” that allegedly caused inaccurate lead test results in thousands of patients, according to the U.S. Attorney’s Office of the District of Massachusetts.

The company’s former CEO, Amy Winslow; COO, Hossein Maleknia; and director of quality assurance and regulatory affairs, Reba Daoust, each face the following four charges:

  • Introduction of misbranded medical devices into interstate commerce
  • Conspiracy to defraud an agency of the United States
  • Conspiracy to commit wire fraud
  • Wire fraud

The charges involve the Massachusetts-based company’s LeadCare Ultra, LeadCare II, and LeadCare Plus devices used to detect lead poisoning and lead levels in blood samples of both adults and children. LeadCare Plus and LeadCare Ultra were mainly used to test samples taken via venous blood draw, while LeadCare II mostly tested fingerstick samples. According to the Massachusetts U.S. Attorney’s Office, LeadCare II “accounted for more than half of all blood lead tests conducted in the United States from 2013 through 2017.”

However, those LeadCare devices apparently had a “serious malfunction” impacting their accuracy in testing venous blood samples, which the Magellan executives “repeatedly misled” both their customers and the FDA about, leading “an estimated tens of thousands of children and other patients to receive inaccurately low lead test results,” the U.S. Attorney’s Office of the District of Massachusetts stated.

“We believe these executives knew about this malfunction for years, but failed to come clean to their customers and the FDA about it in order to boost their company’s bottom line,” said Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division, in the U.S. Attorney’s Office press release. “The last thing sick children and their parents should have to worry about is whether diagnostic tests and devices live up to their manufacturer’s claims. This case should make it crystal clear to all companies that do business in Massachusetts, healthcare or otherwise, that they will be brought to justice for misleading consumers with false promises about their products.”

If convicted, the three executives could face a maximum three years in prison, plus up to a year of supervised release, and a $250,000 fine for the introduction of misbranded medical devices charge; a maximum five years in prison, plus up to three years of supervised release, and a maximum $250,000 fine for the conspiracy to defraud a US agency charge; and as many as 20 years in prison, plus up to three years supervised release, and a maximum fine of $250,000 for the wire fraud and wire fraud conspiracy charges.