AtriCure Inc. (NASDAQ: ATRC) has agreed to pay $2.8 million to settle a class-action shareholder lawsuit that stems from claims it promoted its surgical cardiac ablation devices for unapproved uses.
The proposed settlement follows a settlement by the company in February with the U.S. Department of Justice over essentially the same matter. In the settlement with the DOJ, AtriCure agreed to pay $3.8 million to settle claims the company marketed its surgical devices as a treatment for atrial fibrillation, despite not having regulatory approval for that condition.
In the proposed $2.8 million settlement, a Cincinnati judge will hold a hearing on Oct. 7 to determine whether the amount is “fair, reasonable and adequate,” according to a statement from the Cincinnati law firm that filed the lawsuit, Strauss & Troy.
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Unfortunately for AtriCure, the latest settlement doesn’t represent the last dollar it is likely to spend on the atrial fibrillation marketing matter. The company has set aside $2 million to settle another class-action shareholder suit, according to the company’s latest quarterly regulatory filing.
However, AtriCure expects to recover all of the losses related to the two shareholder lawsuits through insurance claims, according to the filing. Further, in agreeing to the settlement amounts, AtriCure has admitted no wrongdoing.
Aside from its legal woes, recent months have brought good news for West Chester, Ohio-based AtriCure. Earlier in the month, the company reported its smallest-ever quarterly loss, losing $764,000 in the second quarter. More importantly, in June AtriCure received U.S. regulatory approval to sell its AtriClip device, which is a clip used during heart surgery to exclude the left atrial appendage. The exclusion helps protect atrial fibrillation patients from strokes.
The company estimates the U.S. market for the device at $150 million per year for open-heart surgeries, and that number could grow significantly if the device is approved for use in less-invasive surgeries.
