Document:

Exhibit 10.1

 

	
   

  	
   

  	
  U.S.
  Department of Justice

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Michael J. Sullivan

  
	
   

  	
   

  	
  United States Attorney

  
	
   

  	
   

  	
  District of Massachusetts

  
	
   

  	
   

  	
   

  
	
  Main Reception: (617) 748-3100

  	
   

  	
  John Joseph Moakley United States Courthouse

  
	
   

  	
   

  	
  1 Courthouse Way

  
	
   

  	
   

  	
  Suite 9200

  
	
   

  	
   

  	
  Boston, Massachusetts 02210

  
	
   

  	
   

  	
   

  
	
   

  	
  January 26,
  2009

  

 

Joseph
F. Savage, Jr.

Goodwin
Procter, LLP

Exchange
Place

Boston,
MA, 02109

 

Re:
NeuroMetrix, Inc.

 

Dear
Mr. Savage:

 

This
letter sets forth the agreement ( the “Agreement”) between the United States
Attorney’s Office for the District of Massachusetts (“USAO”) and your client,
NeuroMetrix, Inc. (“NeuroMetrix”):

 

WHEREAS,
NeuroMetrix is a Delaware corporation with a principal place of business in
Waltham, Massachusetts, that is in the business of design, development, promotion,
sale, and distribution of a medical device known as the NC-stat System to
physicians nationwide.  The NC-stat
System is a medical device used in physicians’ offices to assist in the
diagnosis of neuropathies in peripheral nerves and the spine that can be caused
by or associated with carpal tunnel syndrome, leg pain, diabetes, and other
clinical disorders.

 

WHEREAS,
the USAO conducted a criminal investigation regarding certain marketing
referral programs in which NeuroMetrix engaged, to wit, allegations that from
in or about August 2004 through in or about October 2006, NeuroMetrix
offered and paid illegal remuneration to physicians in the form of free boxes
of disposable biosensors to induce them to recommend purchase of the NC-stat
System to their colleagues for the purpose of conducting nerve conduction
studies that were reimbursed in whole or in part by the Medicare Program (the “Subject
Matter”).  As a result of its
investigation, the USAO informed NeuroMetrix that the USAO has determined that there
is sufficient basis to seek an indictment of NeuroMetrix for violations of
federal criminal law, specifically for violations of the Medicare Anti-Kickback
Act, 42 U.S.C. § 1320a-7b(b)(2).

 

WHEREAS,
NeuroMetrix represents the following:

 

 

(a)                                  NeuroMetrix does not
endorse, ratify, or condone illegal conduct, and has taken steps to prevent
such conduct from occurring in the future;

 

(b)                                 NeuroMetrix discontinued all
marketing referral programs, which programs involved several hundred boxes of
free biosensors which were only a small fraction of the total number of
biosensors purchased by physicians during the relevant time period;

 

(c)                                  NeuroMetrix commenced a
thorough internal investigation under the supervision of a Special Committee of
the Board of Directors immediately upon notice of the allegations of improper
conduct;

 

(d)                                 NeuroMetrix cooperated with
the USAO in its investigation, which cooperation included making employees
available for interviews and testimony without subpoena; responding promptly to
requests for documents by producing hundreds of thousands of pages of
documents to the USAO, without subpoena and often within a week to ten days of
the request; and conducting and providing certain analyses on company computer
databases for data requested by the government;

 

(e)                                  NeuroMetrix instituted a
voluntary compliance program under the guidance of outside counsel (“compliance
counsel”);

 

(f)                                    NeuroMetrix reformed
relevant business practices based on its internal investigation and review by
compliance counsel, including discontinuance of all marketing referral
programs.

 

WHEREAS,
NeuroMetrix will enter into a five year corporate compliance agreement with the
Inspector General’s Office of the Department of Health and Human Services,
which requires NeuroMetrix to undertake various compliance obligations designed
to ensure compliance with Federal health care program requirements (“CIA”).  Among other provisions, the CIA includes “Specific
Training” obligations that require all remaining employees of NeuroMetrix to
receive annual training concerning proper methods for selling, marketing, and
promoting medical devices, including without limitation the antikickback laws
and regulations.  The HHS-OIG monitors
compliance with the CIA obligations and enforces any breaches in accordance
with the remedies set forth in the CIA.

 

WHEREAS,
the USAO has determined that an indictment of NeuroMetrix may cause
disproportionate harm to innocent individuals including current employees who
did not design or implement the marketing referral programs; NeuroMetrix’s
shareholders and customers who had no involvement in the criminal conduct under
investigation; and patients for whom the NC-stat System provides a
point-of-care alternative for nerve conduction studies; and the USAO does not
allege that the conduct in which NeuroMetrix engaged adversely affected patient
health or care.

 

NOW,
THEREFORE, the USAO and NeuroMetrix agree as follows:

 

2

 

1.                                       This agreement
shall be in effect for thirty-six (36) months from the date of its execution.

 

2.                                       NeuroMetrix
admits to and acknowledges that it is responsible for the acts of its employees
as set forth in the Information attached hereto as Appendix A, and agrees that
the marketing referral programs violated 42 U.S.C. § 320a-7b(b)(2)(B).  NeuroMetrix agrees that the facts in Appendix
A are accurate in their entirety and NeuroMetrix agrees not to contradict the
facts stated therein.

 

3.                                       NeuroMetrix
agrees that, if it violates any terms of this Agreement, the USAO may file the
attached criminal Information in the United States District Court for the
District of Massachusetts charging NeuroMetrix with a violation of 42 U.S.C. §
1320a-7b(b)(2).

 

4.                                       NeuroMetrix
will not, through its present or future directors, officers, employees, agents,
attorneys, affiliates, parents or subsidiaries, make any public statements,
including statements or positions in litigation in which any United States
department or agency is a party, contradicting any statement of fact set forth
in the Information attached as Appendix A. 
Any such contradictory public statement by NeuroMetrix, its present or
future directors, officers, employees, agents, attorneys, affiliates, parents
or subsidiaries shall constitute a breach of this Agreement, and subject to the
provisions in Paragraph 5 below, NeuroMetrix shall be subject to prosecution on
the Information attached to this agreement.

 

5.                                       The decision as
to whether any public statement by any such person contradicting a statement
contained in Appendix A will be imputed to NeuroMetrix for the purpose of
determining whether NeuroMetrix has breached this Agreement shall be at the
sole reasonable discretion of the USAO. 
Upon the USAO reaching a determination that such a contradictory
statement has been made by NeuroMetrix, the USAO shall so notify NeuroMetrix in
writing and NeuroMetrix may avoid a breach of this Agreement by publicly
repudiating such statement within five (5) days after written notification
by the USAO.  This paragraph is not
intended to apply to any statement made by any individual in the course of any
criminal, regulatory or civil matter initiated by the USAO against such
individual, unless such individual is speaking on behalf of NeuroMetrix.  Consistent with NeuroMetrix’s obligation not
to make a contradictory public statement, NeuroMetrix may take good faith
positions in litigation involving any private party.

 

6.                                       During the term
of this Agreement, NeuroMetrix agrees to continue to cooperate fully with the
USAO, and, as directed by the USAO, with any other federal, state or foreign
law enforcement or regulatory agency regarding the Subject Matter.  The duty to cooperate includes an affirmative
duty of full and truthful disclosure. 
NeuroMetrix shall truthfully disclose to the USAO all information
respecting the activities of NeuroMetrix and its present and former directors,
officers,

 

3

 

employees,
agents, attorneys, parents, affiliates and subsidiaries relating to Subject
Matter about which the USAO may inquire, or which NeuroMetrix reasonably
believes is material to the investigation by the USAO.  NeuroMetrix agrees that its cooperation
concerning the Subject Matter shall include, but is not limited to, the
following:

 

(a)                                  providing reasonable access
to NeuroMetrix’s documents, facilities and directors, officers, employees,
agents, affiliates and subsidiaries for matters relating to the investigation
of the Subject Matter;

 

(b)                                 assembling, organizing and
producing, or taking reasonable steps to effectuate the production of, on
request from the USAO, all documents, records, or other tangible evidence
related to the investigation in NeuroMetrix’s possession, custody or control in
such reasonable format that the USAO requests;

 

(c)                                  using its reasonable best
efforts to make available its present or former directors, officers, employees,
agents, affiliates and subsidiaries to provide information and/or testimony
related to the investigation of the Subject Matter as requested, including
sworn testimony before a federal grand jury or in federal trials, as well as
interviews with federal law enforcement authorities.  Cooperation under this sub-paragraph will
include identification of witnesses who, to NeuroMetrix’s knowledge, may have
material information regarding the investigation of the Subject Matter.

 

(d)                                 providing testimony and
other information deemed necessary by the USAO or the court to establish the
original location, authenticity, or other evidentiary foundation to admit into
evidence documents in any criminal case or other proceeding as requested by the
USAO; and

 

(e)                                  maintaining NeuroMetrix as a
lawfully organized and adequately capitalized entity for purposes of this
Agreement during the time this Agreement is in effect.

 

Nothing
in this paragraph constitutes an agreement that NeuroMetrix will waive the
attorney-client privilege or work product protections.  The cooperation provisions of this paragraph
shall not apply in the event that the USAO pursues a criminal prosecution
against NeuroMetrix.

 

7.                                       In exchange for
the agreement of the USAO set forth in Paragraph 8 below, NeuroMetrix agrees:

 

(a)                                  to accept
responsibility as set forth in Paragraph 2 through 5 above.

 

(b)                                 to pay one million two
hundred thousand dollars ($1,200,000) to the United States Treasury pursuant to
electronic fund transfer instructions

 

4

 

that
will be provided by the USAO.  This
payment is a material term of this Agreement. 
Failure to make payment within two business days of execution of this
Agreement renders the Agreement null and void.

 

(c)                                  to continue to cooperate
with the USAO in its investigation of the matters described herein as more
fully set forth in Paragraph 6 above.

 

8.                                       In light of
NeuroMetrix’s remedial actions to date and its willingness to (a) acknowledge
responsibility for the behavior of its employees; (b) cooperate with the
USAO and other governmental agencies; (c) demonstrate its future good
conduct through full compliance with the terms of the CIA; and (d) fully
comply with all the obligations undertaken this Agreement, the USAO agrees that
it will not prosecute NeuroMetrix on the attached Information or any other
matters investigated by the USAO as of the date of this Agreement.

 

9.                                       For the term of
this Agreement, should the USAO in its sole reasonable discretion, determine
that NeuroMetrix (a) has knowingly and willfully given false, incomplete
or misleading information under this Agreement; (b) engaged in conduct
subsequent to the execution of this Agreement that constitutes a federal crime;
or (c) has otherwise knowingly breached any provision of this Agreement
(these three circumstances, (a), (b) and (c), are collectively referred to
herein as “Breach”), NeuroMetrix shall, in the USAO’s sole reasonable
discretion, thereafter be subject to prosecution(s) for any federal
criminal violations, including, without limitation, the offense charged in the
Information.  NeuroMetrix waives any
right it may have to proceed by way of Indictment for the offense covered by
the attached Information.  NeuroMetrix
waives venue and any legal or procedural defects in the attached
Information.  NeuroMetrix agrees that the
applicable statute of limitations period (or any other legal equitable or
constitutional basis for barring prosecution based on the passage of time) for
the offense charged in the Information shall be tolled for a period of time
equal to the term of this Agreement at the time a Breach is declared plus an
additional six months after the declaration of the Breach.  For all other offenses not charged in the
Information that are not time-barred as of the date of this Agreement,
NeuroMetrix agrees that the applicable statute of limitations period (or any
other legal, equitable or constitutional basis upon which a prosecution may be
time-barred), shall be tolled for the time period equal to the term of this
Agreement at the time a Breach is declared plus an additional six months after
the declaration of the Breach.  Further,
NeuroMetrix waives any rights it may have to a speedy trial pursuant to the
Fifth or Sixth Amendments to the United States Constitution, 18 U.S.C. § 3161,
Federal Rule of Criminal Procedure 48(b), any applicable local rule of
the United States District Court for the District of Massachusetts, or any
other applicable legal or equitable principle. 
NeuroMetrix’s agreements herein are knowing and voluntary and in express
reliance on the advice of counsel.

 

5

 

10.                                 The decision as to whether
conduct and statements of any individual will be imputed to NeuroMetrix for the
purpose of determining whether NeuroMetrix has committed a Breach shall be in
the sole reasonable discretion of the USAO.

 

11.                                 Should the USAO determine
that NeuroMetrix has committed a Breach, the USAO shall provide written notice
to NeuroMetrix of the alleged breach and provide NeuroMetrix with a two-week
period in which to make a presentation to the USAO to demonstrate that: (a) no
Breach has occurred, (b) the Breach is not a knowing breach, or (c) the
Breach has been cured.  The parties
hereto expressly understand and agree that should NeuroMetrix fail to make a
presentation to the USAO within a two-week period, it shall be conclusively
presumed, at the USAO’s option, that NeuroMetrix has committed a Breach.  In the event of a Breach that results in a
prosecution of NeuroMetrix, such a prosecution may be premised upon any
information provided by or on behalf of NeuroMetrix to the USAO at any time,
unless otherwise agreed when the information was provided.

 

12.                                 NeuroMetrix agrees that in
the event that the USAO, in its sole reasonable discretion, determines that
NeuroMetrix has committed a Breach:  (a) NeuroMetrix
will not contest the filing of the Information nor the admissibility into
evidence of the facts set forth in the Information (paragraphs 1-14)  as binding admissions of NeuroMetrix; (b) NeuroMetrix
will not contradict the contents of the Information; (c) all statements
made by or on behalf of NeuroMetrix and any employee (current or former), or
any testimony given by NeuroMetrix and any employee (current or former) before
a grand jury or elsewhere, and any leads derived from such statements and
testimony, shall be admissible in evidence against NeuroMetrix if proffered by
the USAO in any criminal proceedings brought by the USAO against NeuroMetrix; (d) NeuroMetrix
shall not assert any claim under the U.S. Constitution, the rules of
evidence, common law or any other legal or equitable principle, that statements
made by or on behalf of NeuroMetrix prior to or subsequent to this Agreement,
or any leads therefrom, should be suppressed; and (e) NeuroMetrix shall
not assert that the conduct set forth in the Information fails to provide a
sufficient factual or legal basis to support the charge set forth in the
Information.

 

13.                                 NeuroMetrix agrees that the
consequences for a Breach as set forth in this Agreement, including without
limitation, those set forth in paragraph 3 of this Agreement, are remedies to
which the USAO is entitled in the event of a Breach and shall survive in the
event of a Breach.  NeuroMetrix further
agrees that the USAO’s remedies for a Breach are not limited to those set forth
in this Agreement.  NeuroMetrix further
agrees that in the event of a Breach, NeuroMetrix shall nevertheless be bound
by its waivers of any legal, equitable or constitutional rights set forth in
this Agreement, including, without limitation, its waivers in paragraphs 9 and
12 of this Agreement, and those provisions shall survive even in the event of a
Breach.

 

6

 

14.                                 NeuroMetrix agrees that if
it sells or merges all or substantially all of the business operations as they
exist as of the date of this Agreement, it shall include in any contract for
sale or merger a provision binding the purchaser/successor to the obligations
described in this Agreement.

 

15.                                 The parties understand and
acknowledge that this Agreement is binding on NeuroMetrix and the USAO, but
specifically does not bind any other federal agencies, or any state or local
law enforcement or licensing authorities.

 

16.                                 Nothing in this Agreement
restricts in any way the ability of the USAO from proceeding against any
individual or entity not a party to this Agreement.

 

17.                                 This Agreement expires
thirty-six (36) months from the Effective Date; provided that if on the
Effective Date the USAO or any other federal law enforcement or regulatory
agency with which the USAO has directed NeuroMetrix to cooperate is then
conducting any investigation, prosecution or proceeding relating to this
investigation, then this Agreement shall expire on the date that any such
investigation, prosecution or proceeding is finally terminated, as determined
by the governmental department or agency conducting the investigation,
prosecution or proceeding.  Between
thirty (30) and sixty (60) calendar days before the expiration of this
Agreement, NeuroMetrix shall submit to the USAO a written certification that
NeuroMetrix is in compliance with this Agreement.

 

18.                                 NeuroMetrix and the USAO
agree that this Agreement, including Appendix A,  shall be made available to the public.

 

19.                                 NeuroMetrix warrants and
represents that its Board of Directors has duly authorized, in a specific
resolution, the execution and delivery of this Agreement by NeuroMetrix, and
that the person signing the Agreement has authority to bind NeuroMetrix.  NeuroMetrix further agrees that it will
deliver concurrently with an executed copy of the Agreement a copy of the
requisite corporate resolution authorizing it to enter into this Agreement.

 

20.                                 This Agreement (including
Appendix A) constitutes the entire agreement, and supersedes all other prior
agreements or understandings, both oral and written, among the parties with
respect to the subject matter hereof.

 

21.                                 This Agreement may not be
modified except in writing signed by the parties.

 

22.                                 This Agreement may be
executed in counterparts, each of which shall be deemed an original but all of
which taken together shall constitute one and the same agreement.  The exchange of copies of this Agreement and
of signature pages by facsimile or electronic transmission shall
constitute effective execution and delivery of this Agreement as to the parties
and may be used in lieu of the original Agreement for all purposes.  Signatures of the parties transmitted by
facsimile or

 

7

 

electronic
transmission shall be deemed to be their original signatures for all purposes.

 

23.                                 NeuroMetrix agrees that
should a dispute between NeuroMetrix and the USAO arise as to the meaning of
any provision of this Agreement, any ambiguities as to the terms of this
Agreement shall be construed in favor of the USAO.

 

24.                                 The Effective Date of this
Agreement shall be the date upon which this Agreement is fully executed by the
parties.

 

 

	
   

  	
   

  	
  MICHAEL
  J. SULLIVAN

  
	
   

  	
   

  	
  United
  States Attorney

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Diane C. Freniere  

  
	
   

  	
   

  	
  Diane
  C. Freniere

  
	
   

  	
   

  	
  White
  Collar Section Chief

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Susan G. Winkler

  
	
   

  	
   

  	
  Susan
  G. Winkler

  
	
   

  	
   

  	
  Health
  Care Fraud Chief

  
	
   

  	
   

  	
   

  
	
  NeuroMetrix, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
  /s/
  Shai Gozani

  	
   

  	
   

  	
   

  
	
  Its:
  

  	
   President & CEO

  	
   

  	
  Dated:
  

  	
  2/5/09

  	
   

  
	
  NeuroMetrix, Inc.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Joseph F. Savage, Jr.

  	
   

  	
  Dated:
  

  	
  2/5/09

  	
   

  
	
  Joseph
  F. Savage, Jr.

  	
   

  	
   

  	
   

  
	
  Goodwin
  Procter, LLP

  	
   

  	
   

  	
   

  
	
  Counsel
  to NeuroMetrix, Inc.

  	
   

  	
   

  	
   

  

 

8Exhibit 10.2

 

SETTLEMENT AGREEMENT AND RELEASE

 

I.  PARTIES

 

This Settlement Agreement (“Agreement”) is entered into by the United
States of America, acting through the United States Attorney’s Office for the
District of Massachusetts, and the Office of Inspector General (“OIG-HHS”) of
the United States Department of Health and Human Services (“HHS”); and
NeuroMetrix, Inc. (“NeuroMetrix”), a Delaware corporation with a principal
place of business in Waltham, Massachusetts, through their authorized representatives.  Collectively, all of the above shall be
referred to as “the Parties.”

 

II.  PREAMBLE

 

A.                                   WHEREAS,
at all relevant times, NeuroMetrix developed, designed, distributed, marketed,
and sold a medical device known as the NC-stat System (the “medical device”) to
physicians nationwide for the purpose of conducting nerve conduction studies
on-site to assist in the diagnosis of neuropathies in the peripheral nerves and
spine frequently caused by or associated with carpal tunnel syndrome, leg pain,
diabetes, and other clinical disorders;

 

B.                                     WHEREAS,
NeuroMetrix has agreed to enter into a deferred prosecution agreement with the
United States Attorney for the District of Massachusetts (the “Deferred
Prosecution Agreement”), under which NeuroMetrix will acknowledge that it is
guilty of a violation of 42 U.S.C. §1320a-7b(b)(2) by offering and paying
illegal remuneration to physicians to induce them to refer and recommend the
use of the NC-stat System to other physicans, as set forth in an Information
attached to the Deferred Prosecution Agreement;

 

C.                                     WHEREAS,
the United States alleges that NeuroMetrix caused to be submitted claims for
payment for the technical and professional component of use of the medical
device to the Medicare Program, established pursuant to Title XVIII of the
Social Security Act, § 1395-1395hhh, which is administered by HHS;

 

D.                                    WHEREAS,
the United States contends that it has certain civil claims against NeuroMetrix
as specified in Paragraph 2 below for engaging in the following conduct:

 

 

(i)                                     The
United States contends that, from August 2004 through October 2006,
NeuroMetrix knowingly and willfully offered and paid illegal remuneration to
induce physicians to refer and recommend purchase of the NC-stat System, in
violation of 42 U.S.C. §1320a-7b(b)(2) through marketing programs known as
the “Referral Rewards Program” and “Customer Referral Program.”  As a result, NeuroMetrix knowingly caused the
submission of false or fraudulent claims to the Medicare Programs for nerve
conduction studies performed with the NC-stat System for which no payments
should have been made.

 

(ii)                                  The
United States contends that, from January 2003 through April 2006,
NeuroMetrix knowingly caused the submission of false or fraudulent claims for
payment to Medicare by providing coding reports to physicans that falsely
indicated the nerve conduction studies performed with the NC-stat System should
be billed under CPT Codes 95903 when no F-wave had been obtained, and which
services should have been billed under CPT Code 95900 instead, a specific code
for nerve conduction studies where no F-wave was obtained.  As a result, NeuroMetrix knowingly caused the
submission of false or fraudulent claims to Medicare that resulted in excess
payments from Medicare to which the physicians were not entitled.

 

E.                                      NeuroMetrix’s
conduct as described in the Information attached to the Deferred Prosecution
Agreement and Preamble Paragraph D is hereafter referred to as the “Covered
Conduct.”

 

F.                                      WHEREAS,
HHS-OIG contends that it has certain administrative claims against NeuroMetrix,
as specified in Paragraph 4 below, for engaging in the Covered Conduct.

 

G.                                     WHEREAS,
this Agreement is neither an admission of facts or liability by NeuroMetrix nor
a concession by the United States that its claims are not well-founded, and
NeuroMetrix denies that it engaged in any conduct giving rise to criminal or
civil liability with the sole exception of such admissions as NeuroMetrix makes
in connection with  the Deferred Prosecution
Agreement referenced in Paragraph B above.

 

2

 

H.                                    WHEREAS,
to avoid the delay, expense, inconvenience, and uncertainty of protracted
litigation of these claims, the Parties mutually desire to reach a full and
final settlement as set forth below.

 

III. TERMS AND CONDITIONS

 

NOW, THEREFORE, in reliance on the representations contained herein and
in consideration of the mutual promises, covenants, and obligations set forth
below in this Agreement, and for good and valuable consideration as stated
herein, the Parties agree as follows:

 

1.                                       NeuroMetrix
agrees to pay to the United States the sum of two million four hundred ninety
eight thousand three hundred thirty seven dollars ($2,498,337), plus interest
in an amount of 2.75% per annum on the Settlement Amount as further set forth
below ($188.23 per day) from January 1, 2009 and continuing until and
including the day before complete payment is made (the “Settlement Amount”).  This sum shall constitute a debt immediately
due and owing to the United States on the Effective Date of this
Agreement.  The Settlement Amount shall
be electronically transferred pursuant to instructions provided by the United
States Attorney’s Office for the District of Massachusetts no later than the
second business day following the date on which this Agreement is fully
executed by the parties.

 

2.                                       Subject
to the exceptions in Paragraphs 3 and 4 below, and in consideration of the
obligations of NeuroMetrix set forth in this Agreement, conditioned upon
NeuroMetrix’s payment in full of the Settlement Amount, subject to Paragraph 12
below (concerning bankruptcy proceedings commenced within 91 days of the
Effective Date of this Agreement or any payment under this Agreement), and
subject to the simultaneous execution of the Deferred Prosecution Agreement
described in Preamble Paragraph B, the United States, on behalf of itself, and
its officers, agents, agencies, and departments, agrees to release NeuroMetrix,
its predecessors, and its current and former parents, affiliates, divisions,
subsidiaries, successors and assigns, and their current and former directors,
officers , and employees, from any civil or administrative monetary claim that
the United States has or may have under the False Claims

 

3

 

Act, 31 U.S.C. §§ 3729-33; the Program Fraud Civil Remedies Act, 31
U.S.C. §§ 3801-12;  the Civil Monetary
Penalties Law, 42 U.S.C. § 1320a-7a;  any
statutory provision applicable to the federal funded program in this Agreement
for which the Civil Division, United States Department of Justice has actual
and present authority to assert and compromise pursuant to 28 C.F.R. Part O,
Subpart I, Section 0.45(d); and common law claims for fraud, unjust
enrichment, payment by mistake, or disgorgement for the Covered Conduct.

 

3.                                       Notwithstanding
any term of this Agreement, the United States specifically does not release any
person or entity from any of the following claims or liabilities:  (a) any criminal, civil, or
administrative claims arising under Title 26, U.S. Code (Internal Revenue
Code); (b) any criminal liability except as set forth in the Deferred
Prosecution Agreement;  (c) any
liability to the United States (or any agencies thereof) for any conduct other
than the Covered Conduct; (d) any claims based upon obligations created by
this Agreement; (e) except as explicitly stated in this Agreement, any
administrative liability, including mandatory exclusion from Federal health
care programs; (f) any express or implied warranty claims or other claims
for defective or deficient products and services provided by NeuroMetrix; (g) any
claims for personal injury or property damage or for other consequential
damages arising from the Covered Conduct; (h) any claim based on a failure
to deliver items or services due; or (i) any civil or administrative
claims against individuals, including current and former directors, officers,
and employees of NeuroMetrix, its predecessors, subsidiaries, and affiliates,
who receive written notification that they are the target of a criminal
investigation, are criminally indicted or charged, or are convicted, or who
enter into a criminal plea agreement.

 

4.                                       In
consideration of the obligations of NeuroMetrix set forth in this Agreement,
and the Corporate Integrity Agreement (“CIA”) entered into between OIG-HHS and
NeuroMetrix, conditioned on NeuroMetrix’s payment in full of the Settlement
Amount, and subject to Paragraph 12 below (concerning bankruptcy proceedings
commenced within 91 days of the effective date of this Agreement or any payment
under this Agreement), OIG-HHS agrees to release and refrain from instituting,
directing, or maintaining any administrative action seeking

 

4

 

exclusion from the Medicare, Medicaid, or other Federal health care
programs (as defined in 42 U.S.C. § 1320a-7b(f)) against NeuroMetrix, its
predecessors, and its current or former parents, affiliates, divisions,
subsidiaries, successors, and assigns, under 42 U.S.C. § 1320a-7a (Civil
Monetary Penalties Law), or 42 U.S.C. § 1320a-7(b)(7) (permissive
exclusion for fraud, kickbacks or other prohibited activities), for the Covered
Conduct, except as reserved in Paragraph 3 above, and as reserved in this
Paragraph.  The OIG-HHS expressly
reserves all rights to comply with any statutory obligations to exclude
NeuroMetrix from the Medicare, Medicaid, or other Federal health care program
under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based upon the Covered
Conduct.  Nothing in this Paragraph
precludes the OIG-HHS from taking action against entities or persons, or for
conduct and practices, for which claims have been reserved in Paragraph 3
above.

 

5.                                       The
Parties each represent that this Agreement is freely and voluntarily entered
into without any degree of duress or compulsion whatsoever.

 

6.                                       NeuroMetrix
waives and shall not assert any defense it may have to criminal prosecution or
administrative action relating to the Covered Conduct, which defense may be
based in whole or in part on a contention that, under the Double Jeopardy
Clause of the Fifth Amendment of the Constitution or the Excessive Fines Clause
of the Eighth Amendment of the Constitution, this  Agreement bars a remedy sought in such
criminal prosecution or administrative action.

 

7.                                       In
consideration of the obligations of the United States set forth in this
Agreement, NeuroMetrix, on behalf of itself and its predecessors, its current
and former parents, affiliates, divisions, subsidiaries, successors and assigns
fully and finally releases, waives and discharges the United States, its
agencies, employees, servants, and agents from any claims (including attorneys’
fees, costs, and expenses of every kind and however denominated) which
NeuroMetrix has asserted, could have asserted, or may assert in the future
against the United States, its agencies, employees, servants, and agents,
related to or arising from the United States’ investigation and prosecution of
the Covered Conduct.

 

5

 

8.                                       The
Settlement Amount that NeuroMetrix must pay pursuant to Paragraph 1 above will
not be decreased as a result of the denial of claims for payment now being
withheld from payment by any State or Federal payer, related to the Covered
Conduct; and, if applicable, NeuroMetrix agrees not to resubmit to any State
and Federal payer any previously denied claims, which denials were based on the
Covered Conduct, and agrees not to appeal or cause the appeal of any such
denials of claims.

 

9.                                       NeuroMetrix
agrees to the following:

 

a.                                       Unallowable
Costs Defined: that all costs (as defined in the Federal Acquisition
Regulation (“FAR”), 48 C.F.R. § 31.205-47 and in Titles XVIII and XIX of the
Social Security Act, 42 U.S.C. §§ 1395-1395hhh and 1396-1396v, and the
regulations and official program directives promulgated thereunder) incurred by
or on behalf of NeuroMetrix, its predecessors, parents, divisions,
subsidiaries, or affiliates, and its present or former officers, directors,
employees, and agents in connection with: 
(1) the matters covered by this Agreement and the related Deferred
Prosecution Agreement; (2) the United States’ civil and criminal
investigation relating to matters covered by this Agreement; (3) NeuroMetrix’s
investigation, defense, and any corrective actions undertaken in response to
the United States’ civil and criminal investigations in connection with the
matters covered by this Agreement (including attorneys’ fees); (4) the
negotiation and performance of this Agreement and the Deferred Prosecution
Agreement; (5) the payments made to the United States pursuant to this
Agreement and the Deferred Prosecution Agreement; and (6) the negotiation
of and obligations undertaken pursuant to the CIA to: (a) retain an
independent review organization to perform annual reviews as described in Section III
of the CIA; and (b) prepare and submit reports to the OIG-HHS, are
unallowable costs on Government contracts under the Medicare Program, Medicaid
Program, TRICARE Program, Department of Veterans Affairs (DVA), and the Federal
Employees Health Benefits Program (FEHBP).  
However, nothing in this Paragraph affects the status of costs that are
not allowable based on any other authority applicable to NeuroMetrix.  (All costs described or set forth in this
Paragraph are hereafter, “Unallowable Costs”).

 

6

 

b.                                      Future
Treatment of Unallowable Costs: If applicable, these Unallowable Costs
shall be separately estimated and accounted for by NeuroMetrix and NeuroMetrix
shall not charge such Unallowable Costs directly or indirectly to any contracts
with the United States or any State Medicaid program, or seek payment for such
Unallowable Costs through any cost report, cost statement, information
statement, or payment request submitted by NeuroMetrix, its predecessors,
divisions, subsidiaries, or affiliates to Medicare, Medicaid, TRICARE, FEHBP or
DVA.

 

c.                                       Treatment
of Unallowable Costs Previously Submitted for Payment: If applicable,
NeuroMetrix further agrees that within 60 days of the Effective Date of this
Agreement, it shall identify to applicable Medicare and TRICARE fiscal
intermediaries, carriers, and/or contractors, and Medicaid, DVA, and FEHBP
fiscal agents, any Unallowable Costs (as defined in this Paragraph) included in
payments previously sought from the United States, or any State Medicaid
Program, including, but not limited to, payments sought in any cost reports,
cost statements, information reports, or payment requests already submitted by
NeuroMetrix, its predecessors, parents, divisions, subsidiaries, or affiliates
and shall request, and agree, that such cost reports, cost statements,
information reports, or payment requests, even if already settled, be adjusted
to account for the effect of the inclusion of the Unallowable Costs.  NeuroMetrix agrees that the United States, at
a minimum, shall be entitled to recoup from NeuroMetrix any overpayment, plus
applicable interest and penalties, as a result of the inclusion of such
Unallowable Costs on previously-submitted cost reports, information reports,
cost statements, or requests for payment. 
Any payments due after the adjustments have been made shall be paid to
the United States pursuant to the direction of the Department of Justice,
and/or the affected agencies.  The United
States reserves its rights to disagree with any calculations submitted by
NeuroMetrix or its parents, divisions, subsidiaries or affiliates on the effect
of inclusion of Unallowable Costs on NeuroMetrix or its divisions, subsidiaries
or affiliates’ cost reports, cost statements, or information reports.  Nothing in this Agreement shall constitute a
waiver of the

 

7

 

rights of the United States to examine or re-examine the Unallowable
Costs described in this Paragraph.

 

10.                                 NeuroMetrix
agrees that it shall not seek payment for any of the health care billings
covered by this Agreement from any health care beneficiaries or their parents,
sponsors, legally responsible individuals, or third party payors.  NeuroMetrix waives any causes of action
against these beneficiaries or their parents, sponsors, legally responsible
individuals, or third party payors based upon the claims for payment covered by
this Agreement.

 

11.                                 NeuroMetrix
expressly warrants that it has reviewed its financial condition and that it is
currently solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and
548(a)(1)(B)(ii)(I), and shall remain solvent following payment of the
Settlement Amount.  Further, the Parties
expressly warrant that, in evaluating whether to execute this Agreement, the
Parties (a) have intended that the mutual promises, covenants, and
obligations set forth herein constitute a contemporaneous exchange for new
value given to NeuroMetrix within the meaning of 11 U.S.C. § 547(c)(1), and (b) have
concluded that these mutual promises, covenants and obligations do, in fact,
constitute such a contemporaneous exchange.

 

12.                                 In
the event NeuroMetrix commences, or another party commences, within 91 days of
the Effective Date of this Agreement or any payment made hereunder, any case,
proceeding, or other action under any law relating to bankruptcy, insolvency,
reorganization, or relief of debtors (a) seeking to have any order for
relief of NeuroMetrix’s debts, or seeking to adjudicate NeuroMetrix as bankrupt
or insolvent, or (b) seeking appointment of a receiver, trustee, custodian
or other similar official for NeuroMetrix or for all or any substantial part of
NeuroMetrix’s assets, NeuroMetrix agrees as follows:

 

a.                                       NeuroMetrix’s
obligations under this Agreement may not be avoided pursuant to 11 U.S.C. §§
547 or 548, and NeuroMetrix shall not argue or otherwise take the position in
any such case, proceeding or action that: (i) NeuroMetrix’s obligations
under this Agreement may be avoided under 11 U.S.C. §§ 547 or 548; (ii) NeuroMetrix
was insolvent at the time this Agreement was entered into, or became insolvent
as a result of the payment made to the

 

8

 

United States hereunder; or (iii) the mutual promises, covenants,
and obligations set forth in this Agreement do not constitute a contemporaneous
exchange for new value given to NeuroMetrix.

 

b.                                      If
NeuroMetrix’s obligations under this Agreement are avoided for any reason,
including, but not limited to, through the exercise of a trustee’s avoidance
powers under the Bankruptcy Code, the United States, at its sole option, may
rescind the releases provided in this Agreement, and bring any civil and/or
administrative claim, action or proceeding against NeuroMetrix for the claims
that would otherwise be covered by the releases provided in this
Agreement.  If the United States chooses
to do so, NeuroMetrix agrees that for purposes only of any claims, actions or
proceeding referenced in this first clause of this Paragraph (i) any such
claims, actions, or proceedings brought by the United States (including any
proceedings to exclude NeuroMetrix from participation in Medicare, Medicaid, or
other Federal health care programs) are not subject to an “automatic stay”
pursuant to 11 U.S.C. § 362(a) as a result of the action, case, or
proceeding described in the first clause of this Paragraph, and that
NeuroMetrix shall not argue or otherwise contend that the United States’
claims, actions, or proceedings are subject to an automatic stay; (ii) NeuroMetrix
shall not plead, argue, or otherwise raise any defenses under the theories of
statute of limitations, laches, estoppel, or similar theories, to any such
civil or administrative claims, actions, or proceedings which are brought by
the United States within 90 calendar days of written notification to
NeuroMetrix that the releases herein have been rescinded pursuant to this
Paragraph, except to the extent such defenses were available before the
Effective Date of this Agreement; and (iii) the United States has a valid
claim against NeuroMetrix in the amount of 
three million seven hundred twenty five thousand dollars ($3,725,000)
plus applicable multipliers and penalties and they may pursue their claims,
inter alia, in the case, action, or proceeding referenced in the first clause
of this Paragraph, as well as in any other case, action or proceeding; and

 

c.                                       NeuroMetrix
acknowledges that its agreements in this Paragraph are provided in exchange for
valuable consideration provided in this Agreement.

 

9

 

13.                                 Except
as otherwise stated in this Agreement, this Agreement is intended to be for the
benefit of the Parties only, and by this instrument the Parties do not release
any claims against any other person or entity.

 

14.                                 Nothing
in this Agreement constitutes an agreement by the United States concerning the
characterization of the amounts paid hereunder for purposes of  the Internal Revenue laws, Title 26 of the
United States Code.

 

15.                                 Each
party to this Agreement shall bear its own legal and other costs incurred in
connection with this matter, including the preparation and performance of this
Agreement.

 

16.                                 This
Agreement is governed by the laws of the United States.  The Parties agree that the exclusive
jurisdiction and venue for any dispute arising between and among the Parties
under this Agreement shall be the United States District Court for the District
of Massachusetts, except that disputes rising under the CIA shall be resolved
exclusively through the dispute resolution provisions set forth in the CIA.

 

17.                                 The
undersigned NeuroMetrix signatory represents and warrants that he is authorized
by the Board of Directors to execute this Agreement.  The undersigned United States signatories
represent that they are signing this Agreement in their official capacities and
they are authorized to execute this Agreement on behalf of the United States.

 

18.                                 The
“Effective Date” of this Agreement shall be on the date of signature of the
last signatory to the Agreement. 
Facsimiles of signatures shall constitute acceptable binding signatures
for purposes of this Agreement.

 

19.                                 This
Agreement shall be binding on all successors, transferees, heirs, and assigns
of the Parties.

 

20.                                 This
Agreement shall not be amended except by written consent of the Parties, except
that only NeuroMetrix and OIG-HHS must agree in writing to modification of the
CIA, without the consent of any other party to this Agreement or the Deferred
Prosecution Agreement.

 

10

 

21.                                 NeuroMetrix
hereby consents to the disclosure of this Agreement and the Deferred
Prosecution Agreement, and information about these agreements, by the United
States to the public.

 

22.                                 This
Agreement may be executed in counterparts, each of which shall constitute an
original and all of which shall constitute one and the same Agreement.

 

/

 

/

 

/

 

/

 

/

 

11

 

UNITED STATES OF AMERICA

 

	
  By:

  	
  /s/ Jennifer A. Serafyn

  	
   

  	
  Dated: 2/9/09

  
	
   

  	
  JENNIFER A. SERAFYN

  	
   

  	
   

  
	
   

  	
  Assistant U.S. Attorney

  	
   

  	
   

  
	
   

  	
  United States Attorney’s Office

  	
   

  	
   

  
	
   

  	
  District of Massachusetts

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/Gregory E. Demske

  	
   

  	
  Dated: 2/6/09

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GREGORY E. DEMSKE

  	
   

  	
   

  
	
   

  	
  Assistant Inspector General for Legal Affairs

  	
   

  	
   

  
	
   

  	
  Office of Counsel to the Inspector General

  	
   

  	
   

  
	
   

  	
  U.S. Department of Health and Human Services

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  NeuroMetrix, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Shai Gozani

  	
   

  	
  Dated: 2/5/09

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Shai Gozani

  	
   

  	
   

  
	
   

  	
  Title: President & CEO

  	
   

  	
   

  
	
   

  	
  NeuroMetrix, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Joseph F. Savage, Jr.

  	
   

  	
  Dated: 2/5/09

  
	
   

  	
  JOSEPH F. SAVAGE, JR.

  	
   

  	
   

  
	
   

  	
  Goodwin Procter LLP

  	
   

  	
   

  
	
   

  	
  Counsel to NeuroMetrix, Inc.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}]]