Invacare 2012 Annual Report Download - page 44

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the requirement to perform additional remediation activities as a result of the third-party expert audits, the
company expects the first two certification audits to be completed in the first quarter of 2013. As of the time of
this filing, the third expert certification audit has commenced and the company plans to complete the audit in the
second quarter of 2013. Because the FDA has the authority to reinspect at any time, the company cannot
determine whether the FDA will elect to inspect after either the first or second third-party expert audits.
According to the consent decree, the FDA has thirty (30) days after receipt of the third expert certification audit
results to commence its own inspection. It is not possible for the company to estimate the timing or potential
response of the FDA’s inspection and subsequent written notifications.
In a letter dated February 6, 2013, the FDA notified the company that, in the FDA’s review of approved
verification of medical necessity (VMN) forms submitted thus far, it found that the company failed to reject
certain VMN forms which the FDA considered inadequately completed, and that similar failures in the future
could result in the assessment of liquidated damages under the terms of the consent decree. The company has had
discussions with and responded to the FDA and has taken actions to address FDA’s concerns by enhancing the
company’s rigorous VMN review process. In addition, the company continues to provide training and feedback
to providers and clinicians to educate them on the expectations for properly completing the VMN forms.
For additional information regarding the consent decree, please see the following sections of this Annual
Report on Form 10-K: Item 1. Business - Government Regulation; Item 1A. Risk Factors; and Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Outlook and -
Liquidity and Capital Resources.
As previously disclosed, in December 2010, the company received a warning letter from the FDA related to
quality system processes and procedures at the company’s Sanford, Florida facility. At the time of this filing, this
matter remains pending. See Item 1A. Risk Factors in this Annual Report on Form 10-K.
The company received a subpoena in 2006 from the U.S. Department of Justice (“DOJ”) seeking documents
relating to three longstanding and well-known promotional and rebate programs maintained by the company. The
company believes that the programs described in the subpoena are in compliance with all applicable laws and the
company has cooperated fully with the government investigation. As of February 2013, the subpoena remains
pending; although the last communication with the DOJ was in 2007.
Additional information regarding our commitments and contingencies is included in Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations and in Contingencies in the Notes to
the Condensed Consolidated Financial Statements included in this Annual Report on Form 10-K.
I-38