Spectranetics says ex-worker has sued company

Sep 20, 2008 (The Gazette - McClatchy-Tribune News Service via COMTEX) -- SPNC | Quote | Chart | News | PowerRating -- Sep. 20--Spectranetics Corp. disclosed Friday that it has been sued by a former employee making allegations similar to those included in search warrants two federal agencies executed this month.

The Colorado Springs-based medical device manufacturer said Scott Schlesinger filed the lawsuit Sept. 5 in 4th Judicial District Court alleging wrongful termination and breach of contract. The suit also alleges Schlesinger was fired for bringing to senior management his allegations of illegal marketing of the company's lasers and stents.

Spectranetics disclosed the suit in a Securities and Exchange Commission filing and said it will "vigorously" defend itself.

The Food and Drug Administration and Immigration and Customs Enforcement executed search warrants Sept. 4 at the company's headquarters seeking information and correspondence relating to "the promotion, use, testing, marketing and sales practices" of products in two clinical trials, to the use of guide wires and balloon catheters made by other companies outside the United States, and to the payment of medical experts in the studies of those products.

The lawsuit, which seeks unspecified damages, alleges Spectranetics recruited Schlesinger and his wife, Lauren, from Abbott Laboratories Inc. in California. Scott Schlesinger was hired March 31, 2007, as director of marketing for Spectranetics, but the lawsuit alleges company executives promised he would be promoted to vice president of marketing by January and receive a "significant raise" and 50,000 stock options.

The lawsuit alleges Schlesinger discovered the company was illegally and "extensively" marketing its laser and catheters for uses that had not been approved by the FDA; that the company failed to report to the FDA that tests found its laser "caused significant damage" to stents it was using in the clinical trial; and that the company illegally tested several products on patients without FDA approval.

The lawsuit alleges Spectranetics fired Schlesinger in violation of federal laws protecting corporate whistle-blowers after reporting the alleged illegal conduct to several senior managers and declining to participate in the alleged illegal marketing.

In its answer to the lawsuit, Spectranetics denied "directing (Schlesinger) to condone or ignore illegal acts performed by others within the company." The company claimed, in a supporting affidavit, that he filed his complaint with the FDA only after he learned he would be fired. The same document also disclosed the "compliance issues that (Schlesinger) raised were already recognized by numerous Spectranetics employees" and management was working to ensure compliance.

Spectranetics announced Monday that VIVA Physicians Inc. has temporarily suspended enrolling new patients in a clinical trial started in February to evaluate the safety and performance of its laser, and of drug-coated stents made by W.L. Gore & Associates Inc., both used in clearing blocked stents in leg arteries. VIVA had enrolled 25 of a planned 100 patents before the FDA contacted VIVA about a "potential safety concern" with the laser.

Spectranetics sent a report to the FDA last week on testing that began in December that showed the type of stents used in the trial has not failed during "extensive" fatigue testing of the stents with Spectranetics' laser. Enrollment continues in another clinical trail in Germany involving the use of the company's laser to clear blocked stents; the company reported last month it had enrolled 23 of a planned 100 patients.

Spectranetics made the announcement about the suit after the nation's stock markets closed. On Friday, the company's stock fell 22 cents, or 5 percent, to $4.20. Spectranetics shares fell to a 4 1/2 -year low of $3.98 on Wednesday.

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