Opinion ID: 212733
Heading Depth: 3
Heading Rank: 6

Heading: Conference Call, Third Quarter 2006

Text: On October 26, 2006, NeuroMetrix held a conference call for analysts and investors. In it, the defendants spoke at some length about reimbursements: We wanted to cover some basic information which may offer some insights towards the reimbursement landscape. First and foremost, the NC-Stat System is a FDA-cleared technology that is supported by strong language held within our FDA clearance. And I quote, Clinical data submitted in the 510(k) demonstrates the nerve conduction measurements obtained using the NC-Stat System are comparable to those obtained using conventional nerve conduction measurement equipment. As detailed here, the NC-Stat System performs standard nerve conduction measurements.    Furthermore, as reported by our customers, we believe the technology has been routinely reimbursed by over 600 payors, including all Medicare carriers and nearly all commercial and worker's compensation payors throughout the nation. Several Medicare carriers have draft LCDs or local coverage determinations, which includes select potential concerns for NeuroMetrix, which if implemented as a final policy could adversely impact the reimbursement for the NC-Stat. ... Another Medicare carrier, Cigna, has issued a draft LCD for NCS test[s] recently. And in our review with Cigna, we noted that this does not include any reference to the NC-Stat System. Of course, this does not surprise us, as the NC-Stat System performs standard nerve conduction measurements. Our concern with the draft is that if it implies that needle EMG should be performed with the majority of nerve conduction studies, we believe that the decision to perform NCS and/or needle EMG should be left up to the physician's clinical judgment and also supported by the evidence-based medical guidelines. R.32 at 50 (omissions in original). The principals then took questions from the analysts. Specifically, an analyst noted: Obviously, there are a couple of policies out there, a couple of others in draft. Just wanted to see what type of feedback you are getting from your client base. ... Are we continuing to see good reimbursement etcetera? Id. at 50-51. In response, Mr. Gregory replied: The reimbursement landscape today remains straightforward for the vast majority of our customers. And if you look at the areas where we have some draft LCDs in question, when you really distill it, it's a relatively small portion of the country. As importantly, it's only for Medicare, which we estimate to be less than 30% of the total testing that is done with the NC-Stat System. So, as a broad sweeping statement, the landscape on reimbursement for our customers is straightforward and it remains so for nearly all of them. As importantly and as you all know, many of these areas of question are just thatstill in question. And the LCDs are just that draft and not implemented. So, that gives you a little bit of a flavor but I think that the landscape has certainly got some elements in front [of] it before us but nothing has been implemented and we have already given you some good flavor I believe on our view on this and how we are approaching it. Id. at 51. Thereafter, another analyst asked how the reimbursement team had responded to the draft coverage determinations. Id. Mr. Gozani stated that the position of NeuroMetrix is always to deliver the facts to our customer base ... and allow[] the customer to be equipped with the information to be able to perform their own activities and billing practices. Id. Anima claims that all of these statements on the call were misleading for failing to state the serious risk of non-reimbursement, the opinions of the reimbursement experts, and the facts concerning use by non-medical office staff. We find no merit to these objections, for reasons set forth above. Anima also submits that in these statements, the Defendants failed to disclose that the Company was by this time receiving widespread and pervasive complaints from sales representatives, physicians and other customers regarding reimbursement and billing problems. Id. at 51-52. As noted above, the factual allegations are simply insufficient to support the charge that the company was aware of widespread and pervasive complaints at this time or any other. See supra note 7.