A former California executive was charged today and has agreed to plead guilty in connection with failing to file adverse event reports with the intent to defraud and mislead the Food and Drug Administration (FDA) in connection with a blood filtration device. used on cancer patients who traveled to Antigua for treatment. A plea hearing has not yet been scheduled by the court.
Separately, ExThera Medical Corporation (ExThera) has entered into a three-year deferred prosecution agreement (DPA) with the Department of Justice in connection with a criminal information filed in the District of Massachusetts charging it with failure to file adverse event reports with the intent to defraud or mislead the FDA.
According to court documents, Sanja Ilic, 58, of Carlsbad, California, was the Chief Regulatory Officer of ExThera, a Northern California-based medical technology company. ExThera manufactured a blood filtration device that removed pathogens from a patient’s bloodstream. In or around 2024, Ilic concealed reportable adverse events from the FDA with the intent to defraud and mislead, including the deaths of two patients treated with the blood filtration device at a clinic in Antigua.
Before starting the treatments at the Antigua clinic, Ilic notified some of ExThera’s leadership and regulatory staff of potential adverse events, including “life-threatening” complications, that patients could experience from using the device. Some patients at the clinic in Antigua and their treating physicians reported that they believed those patients had subsequently experienced some of these medical events after being treated with the device. In or around March and April 2024, Ilic learned of the declining health and deaths of at least two Antigua clinic patients, who died within days of each other.
Ilic understood that disclosure of the adverse events could have triggered regulatory scrutiny from the FDA, caused clinical trial partners to withdraw their participation and jeopardized ExThera’s and Ilic’s future financial prospects. At the time the clinic began treating patients in Antigua, ExThera had just secured $10 million and the potential for millions more in future distribution agreements, and Ilic was overseeing ExThera’s first U.S. clinical study involving the use of the device to treat cancer. Ilic and ExThera potentially stood to lose financially if negative adverse event reports related to the Antigua clinic were filed with the FDA. Rather than comply with her legal obligation to report the events, Ilic suppressed this critical information to defraud and mislead the FDA.
Following public reporting about the blood filtration device and after Ilic was terminated from ExThera, ExThera filed several adverse event reports with the FDA relating to use of the device to treat cancer outside the United States.
As part of the DPA, ExThera admitted that, through Ilic, the company acted with intent to defraud and mislead the FDA. The DPA requires ExThera to, among other obligations, provide ongoing cooperation with and disclosures to the Department of Justice, implement a compliance and ethics program to prevent violations of the Food, Drug, and Cosmetic Act’s adverse event reporting requirements and report to the Department of Justice regarding remediation and implementation of these compliance measures. As part of the DPA, ExThera also agreed to pay a criminal penalty of $750,000, which was adjusted based on ExThera’s ability to pay. ExThera has agreed to establish an escrow account and deposit $750,000 in the escrow account within 60 days. In the event ExThera is not able to pay amounts owed, if any, in civil litigation, related to the conduct described in the Statement of Facts, the escrow amount shall be used to pay amounts owed. ExThera has also agreed to consent to entry of a forfeiture order of $5,694,750.
The government reached its resolution with ExThera based on several factors, including the nature and seriousness of the offense conduct, and that the company has minimal remaining operations. ExThera also did not voluntarily and timely self-disclose the conduct to the Department of Justice but did receive credit for clearly accepting responsibility for its criminal conduct, fully cooperating with the government’s investigation and timely implementing remedial measures.
Ilic was charged with one count of failure to report adverse events with the intent to defraud or mislead the FDA. She faces a maximum sentence of three years in prison, supervised release for one year, a fine of the greatest of $250,000 or twice the gross gain or twice the gross loss pursuant to 18 U.S.C. § 3571, forfeiture and restitution. A federal judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The FDA, FBI, Department of Health and Human Services Office of Inspector General, Homeland Security Investigations and U.S. Postal Inspection Service are investigating the case.
Assistant Chiefs Kevin Lowell and William Schurmann and Trial Attorneys John Howard and Sarah Rocha of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mackenzie Queenin, Chief of the Health Care Fraud Unit, and Sarah Hoefle for the District of Massachusetts are prosecuting the case.
Today’s announcement is the first resolution of a corporate defendant by the Health Care Fraud Unit’s New England Strike Force since it expanded to Massachusetts. More information can be found at https://www.justice.gov/opa/pr/justice-department-expands-health-care-fraud-unit-target-health-care-fraud-massachusetts.
The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of eight strike forces operating in federal districts across the country, has charged more than 6,200 defendants who collectively billed federal health care programs and private insurers more than $45 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.
