August 7, 2023

Recent headlines have spotlighted Evoke Neuroscience, Inc. and its co-founder and CEO, Dr. David Hagedorn, for settling allegations related to the False Claims Act. The U.S. Attorney’s Office for the Eastern District of Pennsylvania has announced a combined settlement of $445,000. But what led to this outcome, and what does it signify for medical startups and professionals?

The Allegations

At the core of this case is Evoke’s product, the eVox device—a helmet-like apparatus that claims to assess specific brain functions within 20-60 minutes. Dr. Hagedorn, a psychologist by profession, played a pivotal role during the startup’s formative years, notably in selecting six billing codes for the eVox device.

From January 1, 2013, to May 31, 2021, Evoke and Dr. Hagedorn stand accused of promoting these codes to healthcare providers for Medicare reimbursement. The alleged misinformation wasn’t just about the codes themselves but also the methods of their application. The U.S. contends that these codes weren’t suitable for the eVox device. These codes usually demand longer testing times, specialized settings (like soundproof rooms), and administration by specific specialists.

Furthermore, Evoke and Dr. Hagedorn are alleged to have advised healthcare professionals to bill multiple codes for just one use of the eVox. However, it’s crucial to note that in 2018, upon learning that many of the codes were questionable, Evoke discontinued their promotion.

A Clear Message

U.S. Attorney Jacqueline C. Romero’s statement underscores a stark message for all startups: the False Claims Act doesn’t entertain exceptions based on a company’s ‘startup’ status. Like established companies, startups must adhere to regulations, especially when they impact Medicare— a federal program.

Whistleblowers: Unsung Heroes

This case wouldn’t have seen the light of day without the whistleblower efforts of Dr. Kevin Vance and Angel Vance, R.N. Under the False Claims Act, individuals privy to fraud against the government can file lawsuits on its behalf. For their efforts, the Vances will receive $89,000 from the settlement.

Historical Context

This isn’t the first instance of a False Claims Act case in the Eastern District of Pennsylvania related to the eVox. A previous case involving the device was settled, indicating an emerging pattern.

In Conclusion

The resolution of allegations against Evoke and Dr. Hagedorn serves as a cautionary tale for medical startups and professionals. It reiterates the importance of strict adherence to federal regulations and codes, particularly when they pertain to billing and claims. Companies, irrespective of their size or status, must ensure their processes are transparent, lawful, and in line with best practices to avoid hefty fines and potential legal battles.