Ra Medical Systems Inc. (RMED) said it has reached a settlement agreement that resolves civil False Claims Act claims asserted by the United States Department of Justice in an investigation. It has settled the matters without admitting liability or wrongdoing.
The allegations resolved as part of the settlement agreement reached with the U.S. Attorney's Office for the Eastern District of Michigan pertain to the Company's marketing of the DABRA laser system and DABRA-related remuneration paid to certain physicians.
The company also has reached tentative agreements with the participating states that, if executed, resolve previously disclosed related investigations conducted by certain state attorneys general.
As per the terms of the settlement, Ra Medical Systems will pay in the near term a total of $2.5 million, an amount the Company has accrued in full since its fiscal second quarter.
If the company's revenue exceeds $10 million in any of the next four fiscal years, it also is required to pay an additional amount in settlement for the corresponding year: $500,000 for 2021, $750,000 for 2022, $1 million for 2023, and $1.25 million for 2024.
If the company is acquired or is otherwise involved in a change-in-control transaction prior to December 31, 2024, the company also is required to pay an additional settlement amount of $5 million, plus 4% of the value of the transaction if the value of the transaction is in excess of $100 million, with the total change-in-control payment not to exceed $28 million.
The company also entered into a five-year Corporate Integrity Agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services or HHS-OIG. The HHS-OIG agreed to waive its permissive exclusion authority for the conduct covered by the settlement agreement.
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