Exhibit 10.2

CORPORATE INTEGRITY AGREEMENT

BETWEEN THE

OFFICE OF INSPECTOR GENERAL

OF THE

DEPARTMENT OF HEALTH AND HUMAN SERVICES

AND

ATRICURE, INC.

 

I. PREAMBLE

AtriCure, Inc. hereby enters into this Corporate Integrity Agreement (CIA) with
the Office of Inspector General (OIG) of the United States Department of Health
and Human Services (HHS) to promote compliance with the statutes, regulations,
and written directives of Medicare, Medicaid, and all other Federal health care
programs (as defined in 42 U.S.C. § 1320a-7b(f)) (Federal health care program
requirements). Contemporaneously with this CIA, AtriCure is entering into a
Settlement Agreement with the United States.

 

II. TERM AND SCOPE OF THE CIA

A. The period of the compliance obligations assumed by AtriCure, Inc. under this
CIA shall be five years from the effective date of this CIA, unless otherwise
specified. The effective date shall be the date on which the final signatory of
this CIA executes this CIA (Effective Date). Each one-year period, beginning
with the one-year period following the Effective Date, shall be referred to as a
“Reporting Period.”

B. Sections VII, IX, X, and XI shall expire no later than 120 days after OIG’s
receipt of: (1) AtriCure, Inc.’s final annual report; or (2) any additional
materials submitted by AtriCure, Inc. pursuant to OIG’s request, whichever is
later.

 

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C. The scope of this CIA shall be governed by the following definitions:

1. “Covered Persons” includes:

a. all owners of AtriCure, Inc. who are natural persons (other than shareholders
who: (1) have an ownership interest of less than 5%; and (2) acquired the
ownership interest through public trading);

b. all officers, directors, and employees of AtriCure, Inc. who are based in the
United States or have job responsibilities in the United States, except as
carved out below in this Section II.C.2; and

c. all contractors, subcontractors, agents, and other persons who perform
Promotion and Product Services Related Functions (as defined below in Section
II.C.3) on behalf of AtriCure, Inc.

Notwithstanding the above, this term does not include part-time or per diem
employees, contractors, subcontractors, agents, and other persons who are not
reasonably expected to work more than 160 hours per year, except that any such
individuals shall become “Covered Persons” at the point when they work more than
160 hours during the calendar year.

2. “Government Reimbursed Products” refers to all AtriCure, Inc. products that
are reimbursed by Federal health care programs.

3. The term “Promotional and Product Services Related Functions” includes:
(a) the selling, detailing, marketing, advertising, promoting, or branding of
Government Reimbursed Products; and (b) the preparation or dissemination of
materials or information about, or the provision of services relating to,
Government Reimbursed Products that are distributed in the United States.

4. “Relevant Promotional and Product Services Covered Persons” includes all
Covered Persons whose job responsibilities relate to Promotional and Product
Services Related Functions.

 

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III. CORPORATE INTEGRITY OBLIGATIONS

AtriCure, Inc. shall establish and maintain a Compliance Program that includes
the following elements:

A. Compliance Officer and Committee.

1. Compliance Officer. Within 90 days after the Effective Date, AtriCure, Inc.
shall appoint an individual to serve as its Compliance Officer and shall
maintain a Compliance Officer for the term of the CIA. The Compliance Officer
shall be responsible for developing and implementing policies, procedures, and
practices designed to ensure compliance with the requirements set forth in this
CIA and with Federal health care program requirements. The Compliance Officer
shall be a member of senior management of AtriCure, Inc., shall report directly
to the Chief Executive Officer of AtriCure, Inc., shall make periodic (at least
quarterly) reports regarding compliance matters directly to the Board of
Directors of AtriCure, Inc., and shall be authorized to report on such matters
to the Board of Directors at any time. The Compliance Officer shall not be, or
be subordinate to, the General Counsel or Chief Financial Officer. The
Compliance Officer shall be responsible for monitoring the day-to-day compliance
activities engaged in by AtriCure, Inc. as well as for any reporting obligations
created under this CIA. Any non-compliance job responsibilities of the
Compliance Officer must not interfere with the Compliance Officer’s ability to
perform the duties outlined in this CIA.

AtriCure, Inc. shall report to OIG, in writing, any changes in the identity of
the Compliance Officer, or any actions or changes that would affect the
Compliance Officer’s ability to perform the duties necessary to meet the
obligations in this CIA, within five days after the change.

2. Compliance Committee. Within 90 days after the Effective Date, AtriCure, Inc.
shall appoint a Compliance Committee. The Compliance Committee shall, at a
minimum, include the Compliance Officer and other members of senior management
necessary to meet the requirements of this CIA (e.g., senior executives of
relevant departments, such as legal, human resources, sales and marketing). The
Compliance Officer shall chair the Compliance Committee and the Committee shall
support the Compliance Officer in fulfilling his/her responsibilities (e.g.,
shall assist in the analysis of the organization’s risk areas and shall oversee
monitoring of internal and external audits and investigations).

 

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AtriCure, Inc. shall report to OIG, in writing, any changes in the composition
of the Compliance Committee, or any actions or changes that would affect the
Compliance Committee’s ability to perform the duties necessary to meet the
obligations in this CIA, within 15 days after such a change.

3. Board of Directors Compliance Obligations. A Committee of the Board of
Directors (Committee) shall be responsible for the review and oversight of
matters related to compliance with Federal health care program requirements, FDA
requirements, and the obligations of this CIA. The Committee shall, at a
minimum, be responsible for the following:

a. The Committee shall meet at least quarterly to review and oversee AtriCure,
Inc.’s Compliance Program, including but not limited to evaluating its
effectiveness and receiving updates about the activities of the Compliance
Officer and other compliance personnel.

b. The Committee shall consist of at least three members, at least one of whom
shall be an independent director. The Compliance Officer is required to make at
least four reports a year to the Committee or more often, if requested by the
Committee or the Compliance Officer.

c. The Committee shall arrange for the performance of a review on the
effectiveness of AtriCure, Inc.’s Compliance Program (Compliance Program Review)
for each Reporting Period of the CIA and shall review the results of the
Compliance Program Review as part of the review and assessment of AtriCure,
Inc.’s Compliance Program. A copy of the Compliance Program Review Report shall
be provided to OIG in each Annual Report submitted by AtriCure, Inc.

d. For each Reporting Period of the CIA, the Committee shall adopt a resolution,
signed by each individual member of the Committee, summarizing its review and
oversight of AtriCure, Inc.’s compliance with Federal health care program
requirements, FDA requirements, and the obligations of this CIA.

At minimum, the resolution shall include the following language:

 

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“The [insert name of Committee] Committee of the Board of Directors has made a
reasonable inquiry into the operations of AtriCure, Inc.’s Compliance Program,
including but not limited to evaluating its effectiveness and receiving updates
about the activities of its Compliance Officer and other compliance personnel.
The Board also has arranged for the performance of, and reviewed the results of,
the Compliance Program Review. Based on its inquiry, the Committee has concluded
that, to the best of its knowledge, AtriCure, Inc. has implemented an effective
Compliance Program to meet Federal health care program requirements, FDA
requirements, and the obligations of the CIA.”

If the Committee is unable to provide such a conclusion in the resolution, the
Committee shall include in the resolution a written explanation of the reasons
why it is unable to provide the conclusion and the steps it is taking to assure
implementation by AtriCure, Inc. of an effective Compliance Program.

AtriCure, Inc. shall report to OIG, in writing, any changes in the composition
of the Committee, or any actions or changes that would affect the Committee’s
ability to perform the duties necessary to meet the obligations in this CIA,
within 15 days after such a change.

The Board of Directors may by resolution reserve to itself the powers and
responsibilities assigned to the Committee under this CIA. In that event, all
references in this CIA to the Committee shall be deemed to be references to the
Board of Directors.

4. Management Accountability and Certifications: In addition to the
responsibilities set forth in this CIA for all Covered Persons, certain
AtriCure, Inc. employees (“Certifying Employees”) are specifically expected to
monitor and oversee activities within their areas of authority and shall
annually certify, in writing or electronically, that the applicable AtriCure,
Inc. component is compliant with Federal health care program requirements, FDA
requirements, and the obligations of this CIA. These Certifying Employees shall
include, at a minimum, the following individuals from AtriCure, Inc.:

 

  •  

David Drachman, President and CEO

 

  •  

Michael Rogge, Director of Marketing

 

  •  

Stewart Strong, VP, Domestic Sales

 

  •  

Tim Palmer, Director, Sales (East Region)

 

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  •  

Kevin Henderson, Director, Sales (West Region)

For each Reporting Period, each Certifying Employee shall sign a certification
that states:

“I have been trained on and understand the compliance requirements and
responsibilities as they relate to [department or functional area], an area
under my supervision. My job responsibilities include ensuring compliance with
regard to the          [insert name of the department or functional area.] To
the best of my knowledge, except as otherwise described herein, the         
[insert name of department or functional area] of AtriCure, Inc. is in
compliance with all applicable Federal health care program requirements, FDA
requirements, and the obligations of the CIA.”

B. Written Standards.

1. Code of Conduct. Within 90 days after the Effective Date, AtriCure, Inc.
shall develop, implement, and distribute a written Code of Conduct to all
Covered Persons. AtriCure, Inc. shall make the promotion of, and adherence to,
the Code of Conduct an element in evaluating the performance of all employees.
The Code of Conduct shall, at a minimum, set forth:

a. AtriCure, Inc.’s commitment to full compliance with all Federal health care
program and FDA requirements, including its commitment to market, sell, promote,
research, develop, provide information about, and advertise its products in
accordance with Federal health care program and FDA requirements and to prepare
and submit accurate claims consistent with such requirements;

b. AtriCure, Inc.’s requirement that all of its Covered Persons shall be
expected to comply with all Federal health care program and FDA requirements and
with AtriCure, Inc.’s own Policies and Procedures;

c. the requirement that all of AtriCure, Inc.’s Covered Persons shall be
expected to report to the Compliance Officer, or other appropriate individual
designated by AtriCure, Inc., suspected violations of any Federal health care
program and FDA requirements and of AtriCure, Inc.’s own Policies and
Procedures; and

 

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d. the right of all individuals to use the Disclosure Program described in
Section III.E, and AtriCure, Inc.’s commitment to nonretaliation and to
maintain, as appropriate, confidentiality and anonymity with respect to such
disclosures.

Within 90 days after the Effective Date, each Covered Person shall certify, in
writing, that he or she has received, read, understood, and shall abide by
AtriCure, Inc.’s Code of Conduct. New Covered Persons shall receive the Code of
Conduct and shall complete the required certification within 30 days after
becoming a Covered Person or within 90 days after the Effective Date, whichever
is later.

AtriCure, Inc. shall periodically review the Code of Conduct to determine if
revisions are appropriate and shall make any necessary revisions based on such
review. Any revised Code of Conduct shall be distributed within 30 days after
any revisions are finalized. Each Covered Person shall certify, in writing, that
he or she has received, read, understood, and shall abide by the revised Code of
Conduct within 30 days after the distribution of the revised Code of Conduct.

2. Policies and Procedures. Within 90 days after the Effective Date, AtriCure,
Inc. shall implement written Policies and Procedures regarding the operation of
AtriCure, Inc.’s compliance program, including the compliance program
requirements outlined in this CIA, and AtriCure, Inc.’s compliance with Federal
health care program and FDA requirements. At a minimum, the Policies and
Procedures shall address:

a. the subjects relating to the Code of Conduct identified in Section III.B.1;

b. appropriate ways to conduct Promotional and Product Services Related
Functions in compliance with all applicable Federal healthcare program
requirements, including, but not limited to the Federal anti-kickback statute
(codified at 42 U.S.C. § 1320a-7b), and the False Claims Act (codified at 31
U.S.C. §§ 3729-3733);

c. appropriate ways to conduct Promotional and Product Services Related
Functions in compliance with all applicable FDA requirements, including FDA
regulatory approval requirements;

 

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d. the materials and information that may be distributed by AtriCure, Inc. sales
representatives and account executives about AtriCure, Inc.’s Government
Reimbursed Products and the manner in which AtriCure, Inc. sales representatives
and account executives respond to requests for information about non-FDA
approved (or “off-label”) uses of AtriCure, Inc.’s Government Reimbursed
Products; the form and content of information disseminated by AtriCure, Inc. in
response to such requests; and the internal review process for the information
disseminated.

The Policies and Procedures shall include a requirement that AtriCure, Inc.
develop a database to track requests for information about AtriCure, Inc.’s
Government Reimbursed Products that involve non-FDA approved (or “off-label”)
uses. This database shall be referred to as the “Inquiries Database.” The
Inquiries Database shall include the following items of information for each
unique inquiry (Inquiry) received for information about AtriCure, Inc.’s
products: 1) date of Inquiry; 2) form of Inquiry (e.g., fax, phone, etc.); 3)
name of the requesting HCP or HCI; 4) nature and topic of request (including
exact language of the Inquiry if made in writing); 5) nature/form of the
response from AtriCure, Inc. (including a record of the materials provided to
the HCP or HCI in response to the request); and 6) the name of the AtriCure,
Inc. representative who called on or interacted with the HCP or HCI. Any
response from AtriCure, Inc. to an HCP or HCI shall identify whether the
information provided addresses an indication that is part of the approved
product label. The status and findings of any follow-up review conducted by
AtriCure, Inc. in situations in which it appears that the Inquiry may have
related to improper off-label promotion shall be maintained by the Compliance
Officer and the information shall be included in the Inquiry Reports further
discussed in Section III.A.2 of Appendix B;

e. review of AtriCure, Inc.’s launch and marketing plans and the use of
Prolifiq, a centrally-controlled system to distribute information to AtriCure,
Inc. customers. During the term of the CIA, AtriCure, Inc.

 

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will continue to mandate the use of the “Prolifiq” system for reviewing and
tracking information requested by AtriCure, Inc. customers, and to disseminate
such information. The policy governing the use of “Prolifiq” shall continue to
ensure that AtriCure, Inc. is promoting its Government Reimbursed Products in a
manner that complies with all applicable Federal health care program and FDA
requirements and is consistent with representations made by AtriCure, Inc. to
the FDA. The review of AtriCure’s launch and marketing plans and compliance with
AtriCure’s Prolifiq system requirements shall occur at least annually and shall
also occur each time when the FDA approves a new or additional indication for a
Government Reimbursed Product;

f. review of all promotional and written materials and information intended to
be disseminated outside AtriCure, Inc., including promotional and written
materials and information related to the coding of Government Reimbursed
Products by health care professionals and health care institutions, to ensure
that legal, regulatory, and medical concerns are properly addressed during
AtriCure, Inc.’s review and approval process and are elevated when appropriate.
The Policies and Procedures shall be designed to ensure that such materials and
information, as approved, comply with all applicable Federal health care program
and FDA requirements;

g. Medical device reporting procedures, including those procedures required by
21 U.S.C. § 360i and 21 C.F.R. Part 803;

h. Post-approval medical device reporting procedures, including those required
by 21 U.S.C. §§ 360i and 360l and 21 C.F.R. §§ 814.80, 814.82, and 814.84;

i. Policies and procedures for the protections of human subjects required by 45
C.F.R. § Part 46;

j. Policies and procedures for seeking approval of devices and uses of devices
consistent with FDA statutes and regulations, including

 

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Investigational Device Exemption policies and procedures, required by 21 U.S.C.
§ 360j(g) and 21 C.F.R. Part 812; and

k. disciplinary policies and procedures for violations of AtriCure, Inc.’s
Policies and Procedures, including policies relating to Federal health care
program and FDA requirements.

Within 90 days after the Effective Date, the relevant portions of the Policies
and Procedures shall be distributed to all Covered Persons. Appropriate and
knowledgeable staff shall be available to explain the Policies and Procedures.

At least annually (and more frequently, if appropriate), AtriCure, Inc. shall
assess and update, as necessary, the Policies and Procedures. Within 30 days
after the effective date of any revisions, any such revised Policies and
Procedures shall be distributed to all individuals whose job functions relate to
those Policies and Procedures.

C. Training and Education.

1. General Training. Within 90 days after the Effective Date, AtriCure, Inc.
shall provide at least two hours of General Training to each Covered Person.
This training, at a minimum, shall explain AtriCure, Inc.’s:

a. CIA requirements; and

b. AtriCure, Inc.’s Compliance Program (including the Code of Conduct).

New Covered Persons shall receive the General Training described above within 30
days after becoming a Covered Person or within 90 days after the Effective Date,
whichever is later. After receiving the initial General Training described
above, each Covered Person shall receive at least one hour of General Training
in each subsequent Reporting Period.

2. Specific Training. Within 90 days after the Effective Date, each Relevant
Promotional and Product Services Covered Person shall receive at least four
hours of Specific Promotional and Product Services Training in addition to the
General Training required above. This Specific Training shall include a
discussion of:

 

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  a. all applicable Federal health care program and FDA requirements relating to
Promotional and Product Services Related Functions;

 

  b. all AtriCure, Inc. Policies and Procedures and other requirements
applicable to Promotional and Product Services Related Functions;

 

  c. the personal obligation of each individual involved in Promotional and
Product Services Related Functions to comply with all applicable Federal health
care program and FDA requirements and all other applicable legal requirements,
as well as AtriCure, Inc.’s Policies and Procedures;

 

  d. the legal sanctions for violations of the applicable Federal health care
program and FDA requirements, the False Claims Act, and the Anti-kickback
statute;

 

  e. examples of proper and improper practices related to Promotional and
Product Services Related Functions;

 

  f. the dissemination of information regarding Federal health care program
requirements concerning the accurate coding and submission of claims; and

 

  g. the legal sanctions to both AtriCure, Inc. and Relevant Covered Promotional
and Product Services Persons of failure to comply with Federal health care
program and FDA requirements and with AtriCure Inc.’s own Policies and
Procedures and the failure to report such non-compliance.

New Relevant Promotional and Product Services Covered Persons shall receive this
training within 90 days after the beginning of their employment or becoming a
Relevant Promotional and Product Services Covered Person, or within 90 days
after the Effective Date, whichever is later. An AtriCure, Inc. employee who has
completed the Specific Training shall review or supervise (as applicable) a new
Relevant Promotional and Product Services Covered Person’s work, to the extent
that the work relates to

 

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Promotional and Product Services Related Functions, until such time as the new
Relevant Promotional and Product Services Covered Person completes his or her
Specific Training.

After receiving the initial Specific Training described in this Section, each
Relevant Promotional and Product Services Covered Person shall receive at least
three hours of Specific Training in each subsequent Reporting Period.

3. Certification. Each individual who is required to attend training shall
certify, in writing, or in electronic form, if applicable, that he or she has
received the required training. The certification shall specify the type of
training received and the date received. The Compliance Officer (or designee)
shall retain the certifications, along with all course materials. These shall be
made available to OIG, upon request.

4. Qualifications of Trainer. Persons providing the training shall be
knowledgeable about the subject area of the training, including applicable
Federal health care program and FDA requirements. The training and education
required under this Section III.C may be provided by supervisory employees,
knowledgeable staff, and/or outside consultant trainers selected by AtriCure,
Inc., or may be satisfied by relevant continuing education programs provided
they cover the topics outlined above in Section III.C.2.

5. Update of Training. AtriCure, Inc. shall review the training annually, and,
where appropriate, update the training to reflect changes in Federal health care
program requirements, FDA requirements, any issues discovered during any
internal audits or any IRO Review, and any other relevant information.

6. Computer-based Training. AtriCure, Inc. may provide the training required
under this CIA through appropriate computer-based training approaches. If
AtriCure, Inc. chooses to provide computer-based training, it shall make
available appropriately qualified and knowledgeable staff or trainers to answer
questions or provide additional information to the Covered Persons receiving
such training.

 

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D. Review Procedures.

1. General Description.

a. Engagement of Independent Review Organization. Within 90 days after the
Effective Date, AtriCure, Inc. shall engage an entity (or entities), such as an
accounting, auditing, or consulting firm (hereinafter “Independent Review
Organization” or “IRO”), to perform reviews to assist AtriCure, Inc. in
assessing and evaluating its Promotional and Product Services Related Functions.
The applicable requirements relating to the IRO are outlined in Appendix A to
this CIA, which is incorporated by reference.

Each IRO engaged by AtriCure, Inc. shall have expertise in applicable Federal
health care program and FDA requirements as may be appropriate to the Review for
which the IRO is retained. Each IRO shall assess, along with AtriCure, Inc.,
whether it can perform the engagement in a professionally independent and
objective fashion, as appropriate to the nature of the review, taking into
account any other business relationships or other engagements that may exist.

The IRO(s) shall conduct reviews that assess AtriCure, Inc.’s systems,
processes, policies, procedures, and practices relating to Promotional and
Product Services Related Functions (Promotional and Product Services Reviews).

b. Frequency and Brief Description of Reviews. As set forth more fully in
Appendix B, the Promotional and Product Services Review shall consist of two
components - a Systems Review and a Transactions Review. The Systems Review
shall assess AtriCure, Inc.’s systems, processes, policies, and procedures
relating to Promotional and Product Services Related Functions. If there are no
material changes in AtriCure, Inc.’s systems, processes, policies, and
procedures relating to Promotional and Product Services Related Functions, the
Promotional and Product Services Systems Review shall be performed for the
periods covering the first and fourth

 

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Reporting Periods. If AtriCure, Inc. materially changes its systems, processes,
policies, and procedures relating to Promotional and Product Services Related
Functions, the IRO shall perform a Systems Review for the Reporting Period in
which such changes were made in addition to conducting the Systems Review for
the first and fourth Reporting Periods.

The Promotional and Product Services Transactions Review shall be performed
annually and shall cover each of the five Reporting Periods. The IRO(s) shall
perform all components of each annual Transaction Review. As set forth more
fully in Appendix B, the Transactions Review shall include several components,
including a review relating to AtriCure, Inc.’s marketing and outreach efforts
concerning atrial fibrillation, AtriCure, Inc.’s product-approval efforts, and a
review of records relating to information disseminated regarding the correct or
proper coding of AtriCure, Inc.’s Government Reimbursed Products.

c. Retention of Records. The IRO and AtriCure, Inc. shall retain and make
available to OIG, upon request, all work papers, supporting documentation,
correspondence, and draft reports (those exchanged between the IRO and AtriCure,
Inc.) related to the reviews.

2. IRO Review Reports. The IRO(s) shall prepare a report (or reports) based upon
each Review performed. The information and content to be included in the report
is described in Appendix B, which is incorporated by reference.

3. Validation Review. In the event OIG has reason to believe that: (a) any IRO
Review fails to conform to the requirements of this CIA; or (b) the IRO’s
findings or Review results are inaccurate, OIG may, at its sole discretion,
conduct its own review to determine whether the applicable IRO Review complied
with the requirements of the CIA and/or the findings or Review results are
inaccurate (Validation Review). AtriCure, Inc. shall pay for the reasonable cost
of any such review performed by OIG or any of its designated agents. Any
Validation Review of Reports submitted as part of AtriCure, Inc.’s final Annual
Report shall be initiated no later than one year after AtriCure, Inc.’s final
submission (as described in Section II) is received by OIG.

 

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Prior to initiating a Validation Review, OIG shall notify AtriCure, Inc. of its
intent to do so and provide a written explanation of why OIG believes such a
review is necessary. To resolve any concerns raised by OIG, AtriCure, Inc. may
request a meeting with OIG to: (a) discuss the results of any Review submissions
or findings; (b) present any additional information to clarify the results of
the applicable Review or to correct the inaccuracy of the Review; and/or
(c) propose alternatives to the proposed Validation Review. AtriCure, Inc.
agrees to provide any additional information as may be requested by OIG under
this Section III.D.3 in an expedited manner. OIG will attempt in good faith to
resolve any Review issues with AtriCure, Inc. prior to conducting a Validation
Review. However, the final determination as to whether or not to proceed with a
Validation Review shall be made at the sole discretion of OIG.

4. Independence and Objectivity Certification. The IRO shall include in its
report(s) to AtriCure, Inc. a certification or sworn affidavit that it has
evaluated its professional independence and objectivity, as appropriate to the
nature of the engagement, with regard to the applicable Review and that it has
concluded that it is, in fact, independent and objective.

E. Disclosure Program.

Within 90 days after the Effective Date, AtriCure, Inc. shall establish a
Disclosure Program that includes a mechanism (e.g., a toll-free compliance
telephone line) to enable individuals to disclose, to the Compliance Officer or
some other person who is not in the disclosing individual’s chain of command,
any identified issues or questions associated with AtriCure, Inc.’s policies,
conduct, practices, or procedures with respect to a Federal health care program
believed by the individual to be a potential violation of criminal, civil, or
administrative law. AtriCure, Inc. shall appropriately publicize the existence
of the disclosure mechanism (e.g., via periodic e-mails to employees or by
posting the information in prominent common areas).

The Disclosure Program shall emphasize a nonretribution, nonretaliation policy,
and shall include a reporting mechanism for anonymous communications for which
appropriate confidentiality shall be maintained. Upon receipt of a disclosure,
the Compliance Officer (or designee) shall gather all relevant information from
the disclosing individual. The Compliance Officer (or designee) shall make a
preliminary, good faith inquiry into the allegations set forth in every
disclosure to ensure that he or she has obtained all of the information
necessary to determine whether a further review should be

 

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conducted. For any disclosure that is sufficiently specific so that it
reasonably: (1) permits a determination of the appropriateness of the alleged
improper practice; and (2) provides an opportunity for taking corrective action,
AtriCure, Inc. shall conduct an internal review of the allegations set forth in
the disclosure and ensure that proper follow-up is conducted.

The Compliance Officer (or designee) shall maintain a disclosure log, which
shall include a record and summary of each disclosure received (whether
anonymous or not), the status of the respective internal reviews, and any
corrective action taken in response to the internal reviews. The disclosure log
shall be made available to OIG upon request.

F. Ineligible Persons.

1. Definitions. For purposes of this CIA:

a. an “Ineligible Person” shall include an individual or entity who:

i. is currently excluded, debarred, suspended, or otherwise ineligible to
participate in the Federal health care programs or in Federal procurement or
nonprocurement programs; or

ii. has been convicted of a criminal offense that falls within the scope of 42
U.S.C. § 1320a-7(a), but has not yet been excluded, debarred, suspended, or
otherwise declared ineligible.

b. “Exclusion Lists” include:

i. the HHS/OIG List of Excluded Individuals/Entities (available through the
Internet at http://www.oig.hhs.gov); and

ii. the General Services Administration’s List of Parties Excluded from Federal
Programs (available through the Internet at http://www.epls.gov).

 

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2. Screening Requirements. AtriCure, Inc. shall ensure that all prospective and
current Covered Persons are not Ineligible Persons, by implementing the
following screening requirements.

a. AtriCure, Inc. shall screen all prospective and current Covered Persons
against the Exclusion Lists prior to engaging their services and, as part of the
hiring or contracting process, shall require such Covered Persons to disclose
whether they are Ineligible Persons.

b. AtriCure, Inc. shall screen all Covered Persons against the Exclusion Lists
within 90 days after the Effective Date and on an annual basis thereafter.

c. AtriCure, Inc. shall implement a policy requiring all Covered Persons to
disclose immediately any debarment, exclusion, suspension, or other event that
makes that person an Ineligible Person.

Nothing in this Section affects the responsibility of (or liability for)
AtriCure, Inc. to refrain from billing Federal health care programs for items or
services furnished, ordered, or prescribed by an Ineligible Person. AtriCure,
Inc. understands that items or services furnished by excluded persons are not
payable by Federal health care programs and that AtriCure, Inc. may be liable
for overpayments and/or criminal, civil, and administrative sanctions for
employing or contracting with an excluded person regardless of whether AtriCure,
Inc. meets the requirements of Section III.F.

3. Removal Requirement. If AtriCure, Inc. has actual notice that a Covered
Person has become an Ineligible Person, AtriCure, Inc. shall remove such Covered
Person from responsibility for, or involvement with, AtriCure, Inc.’s business
operations related to the Federal health care programs and shall remove such
Covered Person from any position for which the Covered Person’s compensation or
the items or services furnished, ordered, or prescribed by the Covered Person
are paid in whole or part, directly or indirectly, by Federal health care
programs or otherwise with Federal funds at least until such time as the Covered
Person is reinstated into participation in the Federal health care programs.

 

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4. Pending Charges and Proposed Exclusions. If AtriCure, Inc. has actual notice
that a Covered Person is charged with a criminal offense that falls within the
scope of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is proposed for
exclusion during the Covered Person’s employment or contract term, AtriCure,
Inc. shall take all appropriate actions to ensure that the responsibilities of
that Covered Person have not and shall not adversely affect the quality of care
rendered to any beneficiary, patient, or resident, or any claims submitted to
any Federal health care program.

G. Notification of Government Investigation or Legal Proceedings.

Within 30 days after discovery by senior management at AtriCure, Inc., AtriCure,
Inc. shall notify OIG, in writing, of any ongoing investigation or legal
proceeding known to AtriCure, Inc. conducted or brought by a governmental entity
or its agents involving an allegation that AtriCure, Inc. has committed a crime
or has engaged in fraudulent activities. This notification shall include a
description of the allegation, the identity of the investigating or prosecuting
agency, and the status of such investigation or legal proceeding. AtriCure, Inc.
shall also provide written notice to OIG within 30 days after the resolution of
the matter, and shall provide OIG with a description of the findings and/or
results of the investigation or proceedings, if any.

H. Reporting.

1. Reportable Events.

a. Definition of Reportable Event. For purposes of this CIA, a “Reportable
Event” means anything that involves:

i. a matter that a reasonable person would consider a probable violation of
criminal, civil, or administrative laws applicable to any Federal health care
program and/or applicable to any FDA requirements relating to the promotion of
AtriCure, Inc. Government Reimbursed Products for which penalties or exclusion
may be authorized; or

ii. the filing of a bankruptcy petition by AtriCure, Inc.

 

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A Reportable Event may be the result of an isolated event or a series of
occurrences.

b. Reporting of Reportable Events. If AtriCure, Inc. determines (after a
reasonable opportunity to conduct an appropriate review or investigation of the
allegations) through any means that there is a Reportable Event, AtriCure, Inc.
shall notify OIG, in writing, within 30 days after making the determination that
the Reportable Event exists. The report to OIG shall include the following
information:

i. a complete description of the Reportable Event, including the relevant facts,
persons involved, and legal and Federal health care program and/or FDA
authorities implicated;

ii. a description of AtriCure, Inc.’s actions taken to correct the Reportable
Event; and

iii. any further steps AtriCure, Inc. plans to take to address the Reportable
Event and prevent it from recurring.

iv. If the Reportable Event involves the filing of a bankruptcy petition, the
report to the OIG shall include documentation of the filing and a description of
any Federal health care program authorities and/or FDA authorities implicated.

v. AtriCure, Inc. shall not be required to report as a Reportable Event any
matter previously disclosed under Section III.G.

I. Notification of Communications with FDA.

Within 30 days after the date of any written report, correspondence, or
communication between AtriCure, Inc. and the FDA that materially discusses
AtriCure, Inc.’s or a Covered Person’s actual or potential unlawful or improper
promotion of AtriCure, Inc.’s products (including any improper dissemination of
information about unapproved uses), AtriCure, Inc. shall provide a copy of the
report, correspondence, or communication to the OIG. AtriCure, Inc. shall also
provide written notice to the OIG

 

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within 30 days after the resolution of any such disclosed matter, and shall
provide the OIG with a description of the findings and/or results of the matter,
if any.

Within 30 days after the date of any written report, correspondence, or
communication between AtriCure, Inc. and the FDA that materially discusses the
status of AtriCure, Inc.’s application for FDA approvals of Government
Reimbursed Products, including the status of studies related to the FDA approval
process, AtriCure, Inc. shall provide the OIG with a description of such written
report, correspondence, or communication.

 

IV. CHANGES TO BUSINESS UNITS OR LOCATIONS

A. Change or Closure of Unit or Location. In the event that, after the Effective
Date, AtriCure, Inc. changes locations or closes a business unit or location
related to the furnishing of items or services that may be reimbursed by Federal
health care programs, AtriCure, Inc. shall notify OIG of this fact as soon as
possible, but no later than within 30 days after the date of change or closure
of the location.

B. Purchase or Establishment of New Unit or Location. In the event that, after
the Effective Date, AtriCure, Inc. purchases or establishes a new business unit
or location related to the furnishing of items or services that may be
reimbursed by Federal health care programs, AtriCure, Inc. shall notify OIG at
least 30 days prior to such purchase or the operation of the new business unit
or location. This notification shall include the address of the new business
unit or location, phone number, fax number, Federal health care program provider
or supplier number (if applicable), and the name and address of the contractor
that issued each number (if applicable). Each new business unit or location and
all Covered Persons at each new business unit or location shall be subject to
the applicable requirements of this CIA.

C. Sale of Unit or Location. In the event that, after the Effective Date,
AtriCure, Inc. proposes to sell any or all of its business units or locations
that are subject to this CIA, AtriCure, Inc. shall notify OIG of the proposed
sale at least 30 days prior to the closing of the sale of such business unit or
location. This notification shall include a description of the business unit or
location to be sold, a brief description of the terms of the sale, and the name
and contact information of the prospective purchaser. This CIA shall be binding
on the purchaser of such business unit or location, unless otherwise determined
and agreed to in writing by the OIG.

 

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V. IMPLEMENTATION AND ANNUAL REPORTS

A. Implementation Report. Within 120 days after the Effective Date, AtriCure,
Inc. shall submit a written report to OIG summarizing the status of its
implementation of the requirements of this CIA (Implementation Report). The
Implementation Report shall, at a minimum, include:

1. the name, address, phone number, and position description of the Compliance
Officer required by Section III.A, and a summary of other noncompliance job
responsibilities the Compliance Officer may have;

2. the names and positions of the members of the Compliance Committee required
by Section III.A;

3. the names of the members of the Committee of the Board referenced in Section
III.A.3

4. the names and positions of the Certifying Employees required by Section
III.A.4;

5. a copy of AtriCure, Inc.’s Code of Conduct required by Section III.B.1;

6. a copy of all Policies and Procedures required by Section III.B.2;

7. the number of individuals required to complete the Code of Conduct
certification required by Section III.B.1, the percentage of individuals who
have completed such certification, and an explanation of any exceptions (the
documentation supporting this information shall be available to OIG, upon
request);

8. the following information regarding each type of training required by Section
III.C:

a. a description of the initial and annual training, including a summary of the
topics covered, the length of sessions, and a schedule of training sessions; and

 

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b. the number of individuals required to complete the initial and annual
training, the percentage of individuals who actually completed the initial and
annual training, and an explanation of any exceptions.

A copy of all training materials and the documentation supporting this
information shall be available to OIG, upon request.

9. a description of the Disclosure Program required by Section III.E;

10. the following information regarding the IRO(s): (a) identity, address, and
phone number; (b) a copy of the engagement letter; and (c) a summary and
description of any and all current and prior engagements and agreements between
AtriCure, Inc. and the IRO;

11. a certification from the IRO regarding its professional independence and
objectivity with respect to AtriCure, Inc.;

12. a description of the process by which AtriCure, Inc. fulfills the
requirements of Section III.F regarding Ineligible Persons;

13. the name, title, and responsibilities of any person who is determined to be
an Ineligible Person under Section III.F; the actions taken in response to the
screening and removal obligations set forth in Section III.F;

14. a list of all of AtriCure, Inc.’s U.S. locations (including locations and
mailing addresses) at which it performs Promotional and Product Services Related
Functions; the corresponding name under which each location is doing business;
the corresponding phone numbers and fax numbers; each location’s Federal health
care program provider or supplier number(s) (if applicable), and the name and
address of each Federal health care program contractor to which AtriCure, Inc.
currently submits claims (if applicable);

15. a description of AtriCure, Inc.’s corporate structure, including
identification of any parent and sister companies, subsidiaries, and their
respective lines of business; and

 

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16. the certifications required by Section V.C.

B. Annual Reports. AtriCure, Inc. shall submit to OIG annually a report with
respect to the status of, and findings regarding, AtriCure, Inc.’s compliance
activities for each of the five Reporting Periods (Annual Report).

Each Annual Report shall include, at a minimum:

1. an explanation of any change in the identity, position description, or other
non-compliance job responsibilities of the Compliance Officer and any change in
the membership of the Compliance Committee, the compliance Committee of the
Board of Directors, or the group of Certifying Employees described in Section
III.A.4, and a copy of the Compliance Program Review Report described in Section
III.A.3;

2. a summary of any significant changes or amendments to the Policies and
Procedures required by Section III.B and the reasons for such changes (e.g.,
change in contractor policy);

3. the number of Covered Persons required to complete the Code of Conduct
certification required by Section III.B.1, the percentage of individuals who
have completed such certification, and an explanation of any exceptions (the
documentation supporting this information shall be available to OIG, upon
request);

4. the following information regarding each type of training required by Section
III.C:

a. a description of the initial and annual training, including a summary of the
topics covered, the length of sessions, and a schedule of training sessions; and

b. the number of individuals required to complete the initial and annual
training, the, percentage of individuals who actually completed the initial and
annual training, and an explanation of any exceptions.

A copy of all training materials and the documentation supporting this
information shall be available to OIG, upon request.

 

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5. a complete copy of all reports prepared pursuant to Section III.D, along with
a copy of the IRO’s engagement letter (if applicable);

6. AtriCure, Inc.’s response to the reports prepared pursuant to Section III.D,
along with corrective action plan(s) related to any issues raised by the
reports;

7. a summary and description of any and all current and prior engagements and
agreements between AtriCure, Inc. and the IRO, if different from what was
submitted as part of the Implementation Report;

8. a certification from the IRO regarding its professional independence and
objectivity with respect to AtriCure, Inc.;

9. a summary of Reportable Events (as defined in Section III.H) identified
during the Reporting Period and the status of any corrective and preventative
action relating to all such Reportable Events;

10. a summary of the disclosures in the disclosure log required by Section III.E
that relate to Federal health care programs;

11. any changes to the process by which AtriCure, Inc. fulfills the requirements
of Section III.F regarding Ineligible Persons;

12. the name, title, and responsibilities of any person who is determined to be
an Ineligible Person under Section III.F; and the actions taken by AtriCure,
Inc. in response to the screening and removal obligations set forth in Section
III.F;

13. a summary describing any ongoing investigation or legal proceeding required
to have been reported pursuant to Section III.G. The summary shall include a
description of the allegation, the identity of the investigating or prosecuting
agency, and the status of such investigation or legal proceeding;

14. a description of all changes to the most recently provided list of AtriCure,
Inc.’s locations (including addresses) as required by Section V.A.12; the
corresponding name under which each location is doing business; and the
corresponding phone numbers and fax numbers;

 

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15. a summary describing any written communication with the FDA required to have
been reported pursuant to Section III.I. This summary shall include a
description of the matter and the status of the matter;

16. the certifications required by Section V.C.

The first Annual Report shall be received by OIG no later than 60 days after the
end of the first Reporting Period. Subsequent Annual Reports shall be received
by OIG no later than the anniversary date of the due date of the first Annual
Report.

C. Certifications. The following certifications shall be included in the
Implementation Report and each Annual Report:

1. Certifying Employees: In each Annual Report, AtriCure, Inc. shall include the
certifications of Certifying Employees as required by Section III.A.4;

2. Compliance Officer: In the Implementation Report and Annual Reports,
AtriCure, Inc. shall include the following individual certification by the
Compliance Officer:

a. he or she has reviewed the report and has made reasonable inquiry regarding
its content and believes that the information in the report is accurate and
truthful;

b. to the best of his or her knowledge, except as otherwise described in the
report, AtriCure, Inc. is in compliance with the Federal health care program and
FDA requirements and the obligations of the CIA;

c. to the best of his or her knowledge, AtriCure, Inc. has complied with its
obligations under the Settlement Agreement: (a) not to resubmit to any Federal
health care program payors any previously denied claims related to the Covered
Conduct addressed in the Settlement Agreement, and not to appeal any such
denials of claims; (b) not to charge to or otherwise seek payment from federal
or state payors for unallowable costs (as defined in the Settlement Agreement);
and (c) to identify and adjust any past charges or claims for unallowable costs;

d. AtriCure, Inc.’s: 1) Policies and Procedures as referenced in

 

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Section III.B.2 above; 2) templates for standardized contracts and other similar
documents; and 3) the training materials used for purposes of Section III.C all
have been reviewed by competent legal counsel and/or legal personnel working at
their direction and have been found to be in compliance with all applicable
Federal health care program and FDA requirements. In addition, AtriCure, Inc.’s
promotional materials containing claims or information about Government
Reimbursed Products and other materials and information intended to be
disseminated outside AtriCure, Inc. have been reviewed by competent regulatory,
medical, and/or legal personnel in accordance with applicable Policies and
Procedures to ensure that legal, medical, and regulatory concerns are properly
addressed and are elevated when appropriate, and that the materials and
information when finally approved are in compliance with all applicable Federal
health care program and FDA requirements. If the applicable legal requirements
have not changed, after the initial review of the documents listed above, only
material changes to the documents must be reviewed by competent regulatory,
medical, and/or legal personnel. The certification shall include a description
of the document(s) reviewed and approximately when the review was completed. The
documentation supporting this certification shall be available to OIG, upon
request; and

e. AtriCure, Inc.’s launch and marketing plans for Government Reimbursed
Products were reviewed at least once during the Reporting Period (consistent
with Section III.B.2.e) and, for each product the plans were found to be
consistent with AtriCure, Inc.’s policy objectives as referenced above in
Section III.B.2.e.

f. AtriCure, Inc. is making good-faith efforts to obtain all necessary approvals
for each of its Government Reimbursed Products.

D. Designation of Information. AtriCure, Inc. shall clearly identify any
portions of its submissions that it believes are trade secrets, or information
that is commercial or financial and privileged or confidential, and therefore
potentially exempt from disclosure under the Freedom of Information Act (FOIA),
5 U.S.C. § 552. AtriCure, Inc. shall refrain from identifying any information as
exempt from disclosure if that information does not meet the criteria for
exemption from disclosure under FOIA.

 

VI. NOTIFICATIONS AND SUBMISSION OF REPORTS

Unless otherwise stated in writing after the Effective Date, all notifications
and reports required under this CIA shall be submitted to the following
entities:

 

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OIG:   Administrative and Civil Remedies Branch   Office of Counsel to the
Inspector General   Office of Inspector General   U.S. Department of Health and
Human Services   Cohen Building, Room 5527   330 Independence Avenue, S.W.  
Washington, DC 20201   Telephone: 202.619.2078   Facsimile: 202.205.0604
AtriCure:   Jim Lucky   VP, Quality Assurance & Regulatory Affairs   Compliance
Officer   AtriCure, Inc.   6033 Schumacher Park Drive   West Chester, Ohio 45069
  Phone: 513.755.4100

Unless otherwise specified, all notifications and reports required by this CIA
may be made by certified mail, overnight mail, hand delivery, or other means,
provided that there is proof that such notification was received. For purposes
of this requirement, internal facsimile confirmation sheets do not constitute
proof of receipt. Upon request by OIG, AtriCure, Inc. may be required to provide
OIG with an electronic copy of each notification or report required by this CIA
in searchable portable document format (.pdf), either instead of or in addition
to, a paper copy.

 

VII. OIG INSPECTION, AUDIT, AND REVIEW RIGHTS

In addition to any other rights OIG may have by statute, regulation, or
contract, OIG or its duly authorized representative(s) may examine or request
copies of AtriCure, Inc.’s books, records, and other documents and supporting
materials and/or conduct on-site reviews of any of AtriCure, Inc.’s locations
for the purpose of verifying and evaluating: (a) AtriCure, Inc.’s compliance
with the terms of this CIA; and (b) AtriCure, Inc.’s compliance with the
requirements of the Federal health care programs and FDA applicable to its
Government Reimbursed Products. The documentation described above shall be made
available by AtriCure, Inc. to OIG or its duly authorized representative(s) at
all reasonable times for inspection, audit, or reproduction. Furthermore, for
purposes

 

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of this provision, OIG or its duly authorized representative(s) may interview
any of AtriCure, Inc.’s employees, contractors, or agents who consent to be
interviewed at the individual’s place of business during normal business hours
or at such other place and time as may be mutually agreed upon between the
individual and OIG. AtriCure, Inc. shall assist OIG or its duly authorized
representative(s) in contacting and arranging interviews with such individuals
upon OIG’s request. AtriCure, Inc.’s employees may elect to be interviewed with
or without a representative of AtriCure, Inc. present.

 

VIII. DOCUMENT AND RECORD RETENTION

AtriCure, Inc. shall maintain for inspection all documents and records relating
to reimbursement from the Federal health care programs, or to compliance with
this CIA, for six years (or longer if otherwise required by law) from the
Effective Date.

 

IX. DISCLOSURES

Consistent with HHS’s FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall
make a reasonable effort to notify AtriCure, Inc. prior to any release by OIG of
information submitted by AtriCure, Inc. pursuant to its obligations under this
CIA and identified upon submission by AtriCure, Inc. as trade secrets, or
information that is commercial or financial and privileged or confidential,
under the FOIA rules. With respect to such releases, AtriCure, Inc. shall have
the rights set forth at 45 C.F.R. § 5.65(d).

 

X. BREACH AND DEFAULT PROVISIONS

AtriCure, Inc. is expected to fully and timely comply with all of its CIA
obligations.

A. Stipulated Penalties for Failure to Comply with Certain Obligations. As a
contractual remedy, AtriCure, Inc. and OIG hereby agree that failure to comply
with certain obligations as set forth in this CIA may lead to the imposition of
the following monetary penalties (hereinafter referred to as “Stipulated
Penalties”) in accordance with the following provisions.

1. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after
the date the obligation became due) for each day AtriCure, Inc. fails to
establish and

 

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implement any of the following obligations as described in Section III:

a. a Compliance Officer;

b. a Compliance Committee;

c. a written Code of Conduct;

d. written Policies and Procedures;

e. the training of Covered Persons and Relevant Covered Persons;

f. a Disclosure Program;

g. Ineligible Persons screening and removal requirements;

h. notification of Government investigations or legal proceedings; and

i. reporting of Reportable Events.

2. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after
the date the obligation became due) for each day AtriCure, Inc. fails to engage
an IRO, as required in Section III.D and Appendices A and B.

3. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after
the date the obligation became due) for each day AtriCure, Inc. fails to submit
the Implementation Report or any Annual Reports to OIG in accordance with the
requirements of Section V by the deadlines for submission.

4. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after
the date the obligation became due) for each day AtriCure, Inc. fails to submit
the annual IRO Review Report(s) in accordance with the requirements of Section
III.D and Appendices A and B.

5. A Stipulated Penalty of $2,000 (which shall begin to accrue on the date the
failure to comply began) for each day AtriCure, Inc. employees or contracts with
an

 

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Ineligible Person and that person: (i) has responsibility for, or involvement
with, AtriCure, Inc.’s business operations related to Federal health care
programs; or (ii) is in a position for which the person’s salary or the items or
services rendered or ordered by the person are paid in whole or part, directly
or indirectly, by Federal health care programs or otherwise with Federal funds
(the Stipulated Penalty described in this paragraph shall not be demanded for
any time period during with AtriCure, Inc. can demonstrate that it did not
discover the person’s exclusion or other ineligibility after making a reasonable
inquiry (as described in section III.F) as to the status of the person.

6. A Stipulated Penalty of $1,500 for each day AtriCure, Inc. fails to grant
access as required in Section VII. (This Stipulated Penalty shall begin to
accrue on the date AtriCure, Inc. fails to grant access.)

7. A Stipulated Penalty of $5,000 for each false certification submitted by or
on behalf of AtriCure, Inc. as part of its Implementation Report, Annual Report,
additional documentation to a report (as requested by the OIG), or otherwise
required by this CIA.

8. A Stipulated Penalty of $1,000 for each day AtriCure, Inc. fails to comply
fully and adequately with any obligation of this CIA. OIG shall provide notice
to AtriCure, Inc. stating the specific grounds for its determination that
AtriCure, Inc. has failed to comply fully and adequately with the CIA
obligation(s) at issue and steps AtriCure, Inc. shall take to comply with the
CIA. (This Stipulated Penalty shall begin to accrue 10 days after AtriCure, Inc.
receives this notice from OIG of the failure to comply.) A Stipulated Penalty as
described in this Subsection shall not be demanded for any violation for which
OIG has sought a Stipulated Penalty under Subsections 1-7 of this Section.

B. Timely Written Requests for Extensions. AtriCure, Inc. may, in advance of the
due date, submit a timely written request for an extension of time to perform
any act or file any notification or report required by this CIA. Notwithstanding
any other provision in this Section, if OIG grants the timely written request
with respect to an act, notification, or report, Stipulated Penalties for
failure to perform the act or file the notification or report shall not begin to
accrue until one day after AtriCure, Inc. fails to meet the revised deadline set
by OIG. Notwithstanding any other provision in this Section, if OIG denies such
a timely written request, Stipulated Penalties for failure to perform the act or
file the notification or report shall not begin to accrue until three

 

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business days after AtriCure, Inc. receives OIG’s written denial of such request
or the original due date, whichever is later. A “timely written request” is
defined as a request in writing received by OIG at least five business days
prior to the date by which any act is due to be performed or any notification or
report is due to be filed.

C. Payment of Stipulated Penalties.

1. Demand Letter. Upon a finding that AtriCure, Inc. has failed to comply with
any of the obligations described in Section X.A and after determining that
Stipulated Penalties are appropriate, OIG shall notify AtriCure, Inc. of:
(a) AtriCure, Inc.’s failure to comply; and (b) OIG’s exercise of its
contractual right to demand payment of the Stipulated Penalties (this
notification is referred to as the “Demand Letter”).

2. Response to Demand Letter. Within 10 days after the receipt of the Demand
Letter, AtriCure, Inc. shall either: (a) cure the breach to OIG’s satisfaction
and pay the applicable Stipulated Penalties or (b) request a hearing before an
HHS administrative law judge (ALJ) to dispute OIG’s determination of
noncompliance, pursuant to the agreed upon provisions set forth below in Section
X.E. In the event AtriCure, Inc. elects to request an ALJ hearing, the
Stipulated Penalties shall continue to accrue until AtriCure, Inc. cures, to
OIG’s satisfaction, the alleged breach in dispute. Failure to respond to the
Demand Letter in one of these two manners within the allowed time period shall
be considered a material breach of this CIA and shall be grounds for exclusion
under Section X.D.

3. Form of Payment. Payment of the Stipulated Penalties shall be made by
electronic funds transfer to an account specified by OIG in the Demand Letter.

4. Independence from Material Breach Determination. Except as set forth in
Section X.D.1.c, these provisions for payment of Stipulated Penalties shall not
affect or otherwise set a standard for OIG’s decision that AtriCure, Inc. has
materially breached this CIA, which decision shall be made at OIG’s discretion
and shall be governed by the provisions in Section X.D, below.

 

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D. Exclusion for Material Breach of this CIA.

1. Definition of Material Breach. A material breach of this CIA means:

a. a repeated or flagrant violation of the obligations under this CIA,
including, but not limited to, the obligations addressed in Section X.A;

b. a failure by AtriCure, Inc. to report a Reportable Event or take corrective
action, as required in Section III.H

c. a failure to enage and use an IRO in accordance with Section III.D and
Appendices A and B; or

d. a failure to respond to a Demand Letter concerning the payment of Stipulated
Penalties in accordance with Section X.C.

2. Notice of Material Breach and Intent to Exclude. The parties agree that a
material breach of this CIA by AtriCure, Inc. constitutes an independent basis
for AtriCure, Inc.’s exclusion from participation in the Federal health care
programs. Upon a determination by OIG that AtriCure, Inc. has materially
breached this CIA and that exclusion is the appropriate remedy, OIG shall notify
AtriCure, Inc. of: (a) AtriCure, Inc.’s material breach; and (b) OIG’s intent to
exercise its contractual right to impose exclusion (this notification is
hereinafter referred to as the “Notice of Material Breach and Intent to
Exclude”).

3. Opportunity to Cure. AtriCure, Inc. shall have 30 days from the date of
receipt of the Notice of Material Breach and Intent to Exclude to demonstrate to
OIG’s satisfaction that:

a. AtriCure, Inc. is in compliance with the obligations of the CIA cited by OIG
as being the basis for the material breach;

b. the alleged material breach has been cured; or

c. the alleged material breach cannot be cured within the 30-day period, but
that: (i) AtriCure, Inc. has begun to take action to cure

 

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the material breach; (ii) AtriCure, Inc. is pursuing such action with due
diligence; and (iii) AtriCure, Inc. has provided to OIG a reasonable timetable
for curing the material breach.

4. Exclusion Letter. If, at the conclusion of the 30-day period, AtriCure, Inc.
fails to satisfy the requirements of Section X.D.3, OIG may exclude AtriCure,
Inc. from participation in the Federal health care programs. OIG shall notify
AtriCure, Inc. in writing of its determination to exclude AtriCure, Inc. (this
letter shall be referred to hereinafter as the “Exclusion Letter”). Subject to
the Dispute Resolution provisions in Section X.E, below, the exclusion shall go
into effect 30 days after the date of AtriCure, Inc.’s receipt of the Exclusion
Letter. The exclusion shall have national effect and shall also apply to all
other Federal procurement and nonprocurement programs. Reinstatement to program
participation is not automatic. After the end of the period of exclusion,
AtriCure, Inc. may apply for reinstatement by submitting a written request for
reinstatement in accordance with the provisions at 42 C.F.R. §§ 1001.3001-.3004.

E. Dispute Resolution

1. Review Rights. Upon OIG’s delivery to AtriCure, Inc. of its Demand Letter or
of its Exclusion Letter, and as an agreed-upon contractual remedy for the
resolution of disputes arising under this CIA, AtriCure, Inc. shall be afforded
certain review rights comparable to the ones that are provided in 42 U.S.C. §
1320a-7(f) and 42 C.F.R. Part 1005 as if they applied to the Stipulated
Penalties or exclusion sought pursuant to this CIA. Specifically, OIG’s
determination to demand payment of Stipulated Penalties or to seek exclusion
shall be subject to review by an HHS ALJ and, in the event of an appeal, the HHS
Departmental Appeals Board (DAB), in a manner consistent with the provisions in
42 C.F.R. § 1005.2-1005.21. Notwithstanding the language in 42 C.F.R. §
1005.2(c), the request for a hearing involving Stipulated Penalties shall be
made within 10 days after receipt of the Demand Letter and the request for a
hearing involving exclusion shall be made within 25 days after receipt of the
Exclusion Letter.

2. Stipulated Penalties Review. Notwithstanding any provision of Title 42 of the
United States Code or Title 42 of the Code of Federal Regulations, the only
issues in a proceeding for Stipulated Penalties under this CIA shall be:
(a) whether AtriCure, Inc. was in full and timely compliance with the
obligations of this CIA for which OIG demands payment; and (b) the period of
noncompliance. AtriCure, Inc. shall have the burden of proving its full and
timely compliance and the steps taken to cure the

 

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noncompliance, if any. OIG shall not have the right to appeal to the DAB an
adverse ALJ decision related to Stipulated Penalties. If the ALJ agrees with OIG
with regard to a finding of a breach of this CIA and orders AtriCure, Inc. to
pay Stipulated Penalties, such Stipulated Penalties shall become due and payable
20 days after the ALJ issues such a decision unless AtriCure, Inc. requests
review of the ALJ decision by the DAB. If the ALJ decision is properly appealed
to the DAB and the DAB upholds the determination of OIG, the Stipulated
Penalties shall become due and payable 20 days after the DAB issues its
decision.

3. Exclusion Review. Notwithstanding any provision of Title 42 of the United
States Code or Title 42 of the Code of Federal Regulations, the only issues in a
proceeding for exclusion based on a material breach of this CIA shall be:

a. whether AtriCure, Inc. was in material breach of this CIA;

b. whether such breach was continuing on the date of the Exclusion Letter; and

c. whether the alleged material breach could not have been cured within the
30-day period, but that: (i) AtriCure, Inc. had begun to take action to cure the
material breach within that period; (ii) AtriCure, Inc. has pursued and is
pursuing such action with due diligence; and (iii) AtriCure, Inc. provided to
OIG within that period a reasonable timetable for curing the material breach and
AtriCure, Inc. has followed the timetable.

For purposes of the exclusion herein, exclusion shall take effect only after an
ALJ decision favorable to OIG, or, if the ALJ rules for AtriCure, Inc., only
after a DAB decision in favor of OIG. AtriCure, Inc.’s election of its
contractual right to appeal to the DAB shall not abrogate OIG’s authority to
exclude AtriCure, Inc. upon the issuance of an ALJ’s decision in favor of OIG.
If the ALJ sustains the determination of OIG and determines that exclusion is
authorized, such exclusion shall take effect 20 days after the ALJ issues such a
decision, notwithstanding that AtriCure, Inc. may request review of the ALJ
decision by the DAB. If the DAB finds in favor of OIG after an ALJ decision
adverse to OIG, the exclusion shall take effect 20 days after the DAB decision.
AtriCure, Inc. shall waive its right to any notice of such an exclusion if a
decision upholding the exclusion is rendered by the ALJ or DAB. If the DAB finds
in favor of

 

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AtriCure, Inc., AtriCure, Inc. shall be reinstated effective on the date of the
original exclusion.

4. Finality of Decision. The review by an ALJ or DAB provided for above shall
not be considered to be an appeal right arising under any statutes or
regulations. Consequently, the parties to this CIA agree that the DAB’s decision
(or the ALJ’s decision if not appealed) shall be considered final for all
purposes under this CIA.

 

XI. EFFECTIVE AND BINDING AGREEMENT

AtriCure, Inc. and OIG agree as follows:

A. This CIA shall be binding on the successors, assigns, and transferees of
AtriCure, Inc.;

B. This CIA shall become final and binding on the date the final signature is
obtained on the CIA;

C. This CIA constitutes the complete agreement between the parties and may not
be amended except by written consent of the parties to this CIA;

D. OIG may agree to a suspension of AtriCure, Inc.’s obligations under the CIA
in the event of AtriCure, Inc.’s cessation of participation in Federal health
care programs. If AtriCure, Inc. ceases participating in Federal health care
programs and is relieved of its CIA obligations by OIG, AtriCure, Inc. shall
notify OIG at least 30 days in advance of AtriCure, Inc.’s intent to resume
participating as a provider or supplier with any Federal health care program.
Upon receipt of such notification, OIG shall evaluate whether the CIA should be
reactivated or modified.

E. The undersigned AtriCure, Inc. signatories represent and warrant that they
are authorized to execute this CIA. The undersigned OIG signatory represents
that he is signing this CIA in his official capacity and that he is authorized
to execute this CIA.

F. This CIA may be executed in counterparts, each of which constitutes an
original and all of which constitute one and the same CIA. Facsimiles of
signatures shall constitute acceptable, binding signatures for purposes of this
CIA.

 

CORPORATE INTEGRITY AGREEMENT

ATRICURE, INC.

 

35

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ON BEHALF OF ATRICURE, INC.

 

/s/ David Drachman

    

2/1/2010

   DAVID DRACHMAN      DATE    Chief Executive Officer         AtriCure, Inc.  
     

/s/ Stuart M. Gerson

    

1/20/2010

   STUART M. GERSON      DATE    Epstein Becker & Green, P.C.        

 

CORPORATE INTEGRITY AGREEMENT

ATRICURE, INC.

 

36

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ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL

OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES

 

/s/ Gregory E. Demske

    

1/27/2010

   GREGORY E. DEMSKE      DATE    Assistant Inspector General for Legal Affairs
        Office of Inspector General         U. S. Department of Health and Human
Services   

 

CORPORATE INTEGRITY AGREEMENT

ATRICURE, INC.

 

37

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APPENDIX A

INDEPENDENT REVIEW ORGANIZATION

This Appendix contains the requirements relating to the Independent Review
Organization (IRO) required by Section III.D of the CIA.

 

A. IRO Engagement

AtriCure, Inc. shall engage an IRO that possesses the qualifications set forth
in Paragraph B, below, to perform the responsibilities in Paragraph C, below.
The IRO shall conduct the review in a professionally independent and objective
fashion, as set forth in Paragraph D. Within 30 days after OIG receives written
notice of the identity of the selected IRO, OIG will notify AtriCure, Inc. if
the IRO is unacceptable. Absent notification from OIG that the IRO is
unacceptable, AtriCure, Inc. may continue to engage the IRO.

If Atricure, Inc. engages a new IRO during the term of the CIA, this IRO shall
also meet the requirements of this Appendix. If a new IRO is engaged, Atricure,
Inc. shall submit the information identified in Section V.A.10 of the CIA to OIG
within 30 days of engagement of the IRO. Within 30 days after OIG receives
written notice of the identity of the selected IRO, OIG will notify Atricure,
Inc. if the IRO is unacceptable. Absent notification from OIG that the IRO is
unacceptable, Atricure, Inc. may continue to engage the IRO.

 

B. IRO Qualifications.

The IRO shall:

1. assign individuals to conduct the Promotional and Product Services Review who
have expertise in all applicable Federal health care program and FDA
requirements relating to Promotional and Product Services Related Functions. The
assigned individuals shall also be knowledgeable about the general requirements
of the Federal health care program(s) under which Atricure, Inc. products are
reimbursed;

2. assign individuals to design and select the samples for the Transaction
Reviews who are knowledgeable about the appropriate statistical sampling
techniques; and

3. have sufficient staff and resources to conduct the reviews required by the
CIA on a timely basis.

 

Appendix A

Atricure, Inc. CIA

 

1

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C. IRO Responsibilities.

The IRO shall:

1. perform each Promotional and Product Services Review in accordance with the
specific requirements of the CIA;

2. follow all applicable Federal health care program and FDA requirements in
making assessments in each Promotional and Product Services Review;

3. if in doubt of the application of a particular Federal health care program or
FDA requirement, policy, or regulation, request clarification from the
appropriate authority (e.g., CMS or FDA);

4. respond to all OIG inquires in a prompt, objective, and factual manner; and

5. prepare timely, clear, well-written reports that include all the information
required by Appendix B to the CIA.

 

D. IRO Independence and Objectivity.

The IRO must perform the Promotional and Product Services Review in a
professionally independent and objective fashion, as appropriate to the nature
of the engagement, taking into account any other business relationships or
engagements that may exist between the IRO and Atricure, Inc.

 

E. IRO Removal/Termination.

1. Atricure, Inc. Termination of IRO. If Atricure, Inc. terminates its IRO
during the course of the engagement, Atricure, Inc. must submit a notice
explaining its reasons to OIG no later than 30 days after termination. Atricure,
Inc. must engage a new IRO in accordance with Paragraph A of this Appendix.

2. OIG Removal of IRO. In the event OIG has reason to believe that the IRO does
not possess the qualifications described in Paragraph B, is not independent
and/or objective as set forth in Paragraph D, or has failed to carry out its
responsibilities as described in Paragraph C, OIG may, at its sole discretion,
require Atricure, Inc. to engage a new IRO in accordance with Paragraph A of
this Appendix.

Prior to requiring Atricure, Inc. to engage a new IRO, OIG shall notify
Atricure, Inc. of its intent to do so and provide a written explanation of why
OIG believes such a step is necessary. To resolve any concerns raised by OIG,
Atricure, Inc. may request a

 

Appendix A

Atricure, Inc. CIA

 

2

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meeting with OIG to discuss any aspect of the IRO’s qualifications, independence
or performance of its responsibilities and to present additional information
regarding these matters. Atricure, Inc. shall provide any additional information
as may be requested by OIG under this Paragraph in an expedited manner. OIG will
attempt in good faith to resolve any differences regarding the IRO with
Atricure, Inc. prior to requiring Atricure, Inc. to terminate the IRO. However,
the final determination as to whether or not to require Atricure, Inc. to engage
a new IRO shall be made at the sole discretion of OIG.

 

Appendix A

Atricure, Inc. CIA

 

3

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Appendix B to CIA for AtriCure, Inc.

Promotional and Product Services Review

 

I. Promotional and Product Services Review, General Description

As specified more fully below, AtriCure, Inc. (AtriCure) shall retain an
Independent Review Organization (IRO) to perform reviews to assist AtriCure in
assessing and evaluating its systems, processes, policies, procedures, and
practices related to AtriCure’s Promotional and Product Services Related
Functions (Promotional and Product Services Review). The Promotional and Product
Services Review shall consist of two components - a systems review (the
“Promotional and Product Services Systems Review” or “Systems Review”), and a
transactions review (the “Promotional and Product Services Transactions Review”
or “Transactions Review”) as described more fully below. AtriCure may engage, at
its discretion, a single IRO to perform both components of the Promotional and
Product Services Review provided that the entity has the necessary expertise and
capabilities to perform both.

If there are no material changes in AtriCure’s systems, processes, policies, and
procedures relating to Promotional and Product Services Related Functions, the
IRO shall perform the Promotional and Product Services Systems Review for the
first and fourth Reporting Periods. If AtriCure materially changes its systems,
processes, policies, and procedures relating to Promotional and Product Services
Related Functions, the IRO shall perform a Promotional and Product Services
Systems Review for the Reporting Period(s) in which such changes were made in
addition to conducting the Review for the first and fourth Reporting Periods.
The additional Systems Review(s) shall consist of: 1) an identification of the
material changes; 2) an assessment of whether other systems, processes,
policies, and procedures previously reported did not materially change; and 3) a
review of the systems, processes, policies, and procedures that materially
changed. The IRO shall conduct the Promotional and Product Services Transactions
Review for each Reporting Period of the CIA.

 

II. Promotional and Product Services Systems Review

 

A. Description of Reviewed Policies and Procedures

The Promotional and Product Services Systems Review shall be a review of
AtriCure’s systems, processes, policies, and procedures (including the controls
on those systems, processes, policies, and procedures) relating to certain
Promotional and Product Services Related Functions. Where practical, AtriCure
personnel may compile documentation, schedule and organize interviews, and
undertake other efforts to assist the IRO in performing the Systems Review. The
IRO is not

 

Appendix B

AtriCure, Inc.

 

1

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required to undertake a de novo review of the information gathered or activities
undertaken by AtriCure pursuant to the preceding sentence.

Specifically, the IRO shall review AtriCure’s systems, processes, policies, and
procedures associated with the following (hereafter “Reviewed Policies and
Procedures”):

1) AtriCure’s systems, policies, processes, and procedures applicable to the
manner in which AtriCure representatives (including sales representatives and
marketing personnel) handle requests or inquiries relating to information about
the uses of AtriCure products (including non-FDA-approved (i.e., off-label)
uses) and the dissemination of materials relating to off-label uses of products.
This review includes:

 

  a) the manner in which AtriCure sales representatives and marketing personnel
handle requests for information about off-label uses of AtriCure products;

 

  b) the form and content of information and materials related to AtriCure’s
products disseminated to physicians, pharmacists, or other health care
professionals (collectively “HCPs”) or health care institutions (“HCIs”) by
AtriCure;

 

  c) AtriCure’s systems, processes, and procedures (including the Inquiries
Database) to track requests for information about off-label uses of products and
responses to those requests;

 

  d) the manner in which AtriCure collects and supports information reported in
any systems used to track and respond to requests for product information,
including its Inquiries Database;

 

  e) the processes and procedures by which the Compliance Officer (and other
appropriate individuals within AtriCure) identify situations in which it appears
that improper off-label promotion may have occurred; and

 

  f) AtriCure’s processes and procedures for investigating, documenting,
resolving, and taking appropriate disciplinary action for potential situations
involving off-label promotion;

2) AtriCure’s systems, policies, processes, and procedures relating to
AtriCure’s internal review and approval of information and

 

Appendix B

AtriCure, Inc.

 

2

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materials related to AtriCure’s products disseminated to HCPs or HCIs by
AtriCure;

3) AtriCure’s systems, polices, processes and procedures relating to incentive
compensation for Covered Persons who are sales representatives, with regard to
whether the systems, policies, processes, and procedures are designed to ensure
that financial incentives do not inappropriately motivate such individuals to
engage in the improper promotion, sales, and marketing of AtriCure’s products.
This shall include a review of the bases upon which compensation is determined
and the extent to which compensation is based on product performance;

4) AtriCure’s systems, policies, processes and procedures relating to its
efforts to obtain FDA-required approvals for its Government Reimbursed Products;
and

5) AtriCure’s systems, processes, policies, and procedures relating to the
development and review of launch and marketing plans for AtriCure’s products.
This shall include a review of the bases upon which HCPs and HCIs belonging to
specified medical specialties are included in, or excluded from, AtriCure’s
launch and marketing plans based on expected utilization of AtriCure products
for FDA-approved uses or non-FDA-approved uses.

 

B. Promotional and Product Services Systems Review Report

The IRO shall prepare a report based upon each Systems Review. For each of the
Reviewed Policies and Procedures identified in Section II.A above, the report
shall include the following items:

1) a description of the documentation (including policies) reviewed and any
personnel interviewed;

2) a detailed description of AtriCure’s systems, policies, processes, and
procedures relating to the items identified in Sections II.A.1-5 above,
including a general description of AtriCure’s control and accountability systems
(e.g., documentation and approval requirements, and tracking mechanisms) and
written policies regarding the Reviewed Policies and Procedures;

3) a description of the manner in which the control and accountability systems
and the written policies relating to the items

 

Appendix B

AtriCure, Inc.

 

3

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identified in Sections II.A.1-5 above are made known or disseminated within
AtriCure;

4) a detailed description of any system(s) used to track and respond to requests
for information about AtriCure’s products (including the Inquiries Database);

5) a detailed description of AtriCure’s incentive compensation system for
Covered Persons who are sales representatives, including a description of the
bases upon which compensation is determined and the extent to which compensation
is based on product performance. To the extent that AtriCure may establish
compensation differently for individual products, the IRO shall report
separately on each such type of compensation arrangement;

6) findings and supporting rationale regarding any weaknesses in AtriCure’s
systems, processes, policies, and procedures relating to the Reviewed Policies
and Procedures, if any; and

7) recommendations to improve any of the systems, policies, processes, or
procedures relating to the Reviewed Policies and Procedures, if any.

 

III. Promotional and Product Services Transaction Review

As described more fully below in Sections III.A-D, the Promotional and Product
Services Transactions Review shall include: (1) a review of a sample of
Inquiries reflected in the Inquiries Database; (2) a review of AtriCure’s launch
and marketing plans and AtriCure’s plan review process; (3) a review of records
relating to AtriCure’s good-faith efforts to obtain FDA approval for its
Government Reimbursed Products; and (4) a review of the coding information
AtriCure provides to HCPs and HCIs. The IRO shall report on all aspects of its
reviews in the Promotional and Product Services Transactions Review Reports.

 

A. Review of Inquiries and Inquiries Database

 

  1) Description of Inquiries Database

As set forth in Section III.B.2.d of the CIA, AtriCure shall establish a
database to track information relating to requests for information received by
AtriCure about its products (hereafter “Inquiries”). Specifically, AtriCure
shall document and record all Inquiries received from HCPs or HCIs regarding
AtriCure’s products in a

 

Appendix B

AtriCure, Inc.

 

4

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database (the “Inquiries Database”). AtriCure shall record in the Inquiries
Database the following information for each Inquiry received: 1) date of
Inquiry; 2) form of Inquiry (e.g., fax, phone, medical information request
form); 3) name of requesting HCP or HCI; 4) nature and topic of request
(including exact language of the Inquiry if made in writing); 5) nature/form of
the response from AtriCure (including a record of any materials provided in
response to the request); and 6) the name of the AtriCure sales representative
or marketing department employee who called upon or interacted with the HCP or
HCI. Any response from AtriCure to an HCP or HCI shall identify whether the
information provided addresses an indication that is part of an approved product
label. The status and findings of any follow-up review conducted by AtriCure in
situations in which improper off-label promotion is suspected shall be
maintained by Global Compliance.

 

  2) Internal Review of Inquiries Database

On a semi-annual basis, the Compliance Officer or other appropriate personnel
shall review the Inquiries Database and related information, as appropriate, and
shall generate a report summarizing the items of information outlined in Section
III.A.1 above for each Inquiry received during the preceding two quarters
(“Inquiry Report”). The Compliance Officer or other appropriate personnel shall
review the Inquiry Reports to assess whether the information contained in the
report suggests that improper off-label promotion may have occurred in
connection with any Inquiry(ies). If the Compliance Officer or other appropriate
personnel, in consultation with other appropriate AtriCure personnel, suspects
that improper off-label promotion may have occurred in connection with any
Inquiry, the Compliance Officer or other appropriate personnel shall undertake a
follow-up review of the Inquiry (Off-Label Review), make specific findings based
on his/her Off-Label Review, and take all appropriate responsive action
(including disciplinary action of the Covered Person and reporting of the
conduct, including disclosing Reportable Events pursuant to Section III.H of the
CIA, if applicable).

 

  3) IRO Review of Inquiries Reflected in Inquiries Database

The IRO shall select and review a random sample of 20 Inquiries from among the
Inquiries reflected in the Inquiries Database for each Reporting Period. Ten of
the Inquiries reviewed by the IRO shall be

 

Appendix B

AtriCure, Inc.

 

5

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Inquiries for which AtriCure conducted an Off-Label Review, and the other 10
shall be Inquiries for which AtriCure did not conduct an Off-Label Review. For
each Inquiry reviewed, the IRO shall determine:

 

  a) Whether each item of information listed above in Section III.A.1 is
reflected in the Inquiries Database for each reviewed Inquiry; and

 

  b) For each Inquiry for which the Compliance Officer or other appropriate
personnel conducted an Off-Label Review, the basis for suspecting that improper
off-label promotion may have occurred; the steps undertaken as part of the
Off-Label Review; the findings of the Compliance Officer or other appropriate
personnel as a result of the Off-Label Review; and any follow-up actions taken
by AtriCure based on the Off-Label Review findings.

 

B. IRO Review of AtriCure’s Launch and Marketing Plans and Plan Review Process

The IRO shall conduct a review and assessment of AtriCure’s review of its launch
and marketing plans for Government Reimbursed Products and compliance with the
mandated use of the Prolifiq system as set forth in Section III.B.2.e of the
CIA. AtriCure shall provide the IRO with: i) a list of products promoted by
AtriCure during the Reporting Period; ii) information about the FDA-approved
uses for each AtriCure product; and iii) the launch and marketing plans for each
product. AtriCure shall also provide the IRO with information about the reviews
of launch and marketing plans that AtriCure conducted during the Reporting
Period and any modifications to the plans made as a result of AtriCure’s
reviews.

The IRO shall select a sample of 10 of the HCPs and HCIs who were recipients of
information derived from AtriCure’s launch and marketing plans. For each plan,
the IRO shall compare the sampled HCPs and HCIs against the criteria (e.g.,
medical specialty or practice area) used by AtriCure in conducting its review
and/or modification of the plan in order to determine whether AtriCure followed
its criteria and Policies and Procedures in reviewing and modifying the launch
and marketing plan and distributing related information through Prolifiq.

The IRO shall note any instances in which it appears that the sampled HCPs and
HCIs are inconsistent with AtriCure’s criteria relating to the launch or
marketing plan and/or AtriCure’s Policies and Procedures. The IRO shall also
note any

 

Appendix B

AtriCure, Inc.

 

6

--------------------------------------------------------------------------------

instances in which it appears that AtriCure failed to follow its criteria or
Policies and Procedures.

 

C. IRO Review of AtriCure Materials Concerning Coding of Government Reimbursed
Products

The IRO shall conduct a review and assessment of AtriCure’s documents and
materials related to the coding of its Government Reimbursed Products. AtriCure
shall provide the IRO with: i) a list of Government Reimbursed Products promoted
by AtriCure during the Reporting Period; ii) information about the CMS-approved
coding for each AtriCure product; and iii) any materials produced or
disseminated to HCIs and HCPs by AtriCure regarding coding for each product.

 

D. IRO Review of AtriCure’s Efforts To Obtain FDA Approval for Government
Reimbursed Products

The IRO shall conduct a review and assessment of AtriCure’s efforts to obtain
all necessary approvals to market from the FDA for each of its Government
Reimbursed Products for any use. AtriCure shall provide the IRO with sufficient
information for the IRO to assess whether AtriCure has adequate approvals to
support its marketing for each of its Government Reimbursed Products. If
AtriCure does not have adequate approvals, AtriCure shall further provide the
IRO with sufficient information for the IRO to assess whether AtriCure 1) has
set realistic internal goals and timelines to obtain FDA approvals; 2) is making
a good-faith effort to initiate studies or other clinical trials necessary to
obtain FDA approvals; and 3) is marketing its products in a manner consistent
with each product’s then-current certification by the FDA.

 

E. Promotional and Product Services Transactions Review Report

For each Reporting Period, the IRO shall prepare a report based on its
Promotional and Product Services Transactions Review. The report shall include
the following:

 

  1) General Elements to Be Included in Report

 

  a) Review Objectives: A clear statement of the objectives intended to be
achieved by each part of the review;

 

  b) Review Protocol: A detailed narrative description of the procedures
performed and a description of the sampling unit and universe utilized in
performing the procedures for each sample reviewed; and

 

Appendix B

AtriCure, Inc.

 

7

--------------------------------------------------------------------------------

  c) Sources of Data: A full description of documentation and other information,
if applicable, relied upon by the IRO in performing the Promotional and Product
Services Transactions Review.

 

  2) Results to be Included in Report

The following results shall be included in each Promotional and Product Services
Review Report:

(Relating to the Review of Inquiries)

 

  a) in connection with the review of Inquiries, a description of each type of
sample unit reviewed, including the number of each type of sample units reviewed
(e.g., the number of Inquiries) and an identification of the types of documents
and information reviewed for the Inquiries;

 

  b) for each Inquiry sample unit, the IRO shall summarize the information about
the Inquiry contained in the Inquiries Database;

 

  c) for each Inquiry sample unit, findings and supporting rationale as to
whether: (i) each item of information listed in Section III.A.1 is reflected in
the Inquiries Database; and (ii) for each Inquiry for which an Off-Label Review
was conducted, the basis for suspecting that improper off-label promotion may
have occurred; the steps undertaken as part of the Off-Label Review; the
findings of the Compliance Officer as a result of the Off-Label Review; and any
follow-up actions taken by AtriCure as a result of the Compliance Officer’s
findings;

 

  d) the findings and supporting rationale regarding any weaknesses in
AtriCure’s systems, processes, policies, procedures, and practices relating to
the Inquiries, and the Inquiries Database, if any;

 

  e) recommendations for improvement in AtriCure’s systems, processes, policies,
procedures, and practices relating to the Inquiries and the Inquiries Database,
if any;

 

Appendix B

AtriCure, Inc.

 

8

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(Relating to the Launch and Marketing Plan Reviews)

 

  f) a list of the products promoted by AtriCure during the Reporting Period and
a summary of the FDA-approved uses for such products;

 

  g) for each AtriCure product: i) a description of the criteria used by
AtriCure in developing or reviewing the launch and marketing plans and for
including or excluding specified types of HCPs or HCIs from the plans; ii) a
description of the review conducted by AtriCure of the plans and an indication
of whether AtriCure reviewed the plans as required by Section III.B.3.e of the
CIA; iii) a description of all instances for each plan in which it appears that
the HCPs and HCIs included on the plan are inconsistent with AtriCure’s criteria
relating to the plan and/or AtriCure’s Policies and Procedures; and iv) a
description of all instances in which it appears that AtriCure failed to follow
its criteria or Policies and Procedures relating to plans or the review of the
plans;

 

  h) the findings and supporting rationale regarding any weaknesses in
AtriCure’s systems, processes, policies, procedures, and practices relating to
AtriCure’s launch and marketing plans, the use of Prolifiq with respect to those
plans, or review of the plans, if any;

 

  i) recommendations, if any, for changes in AtriCure’s systems, processes,
policies, procedures, and practices that would correct or address any weaknesses
or deficiencies uncovered during the Transactions Review with respect to launch
and marketing plans or the review of the plans;

 

Appendix B

AtriCure, Inc.

 

9