CORRECTED-Former Magellan exec in lead testing device defect case to plead guilty

By Nate Raymond

BOSTON, March 4 (Reuters) - Magellan Diagnostics' former chief operating officer has agreed to plead guilty to U.S. charges that he helped distribute the company's lead-testing devices without reporting a malfunction that caused the products to generate inaccurately low results.

Hossein Maleknia on Monday became the second former Magellan executive in recent days to strike a deal to plead guilty rather than proceed to trial in federal court in Boston on April 7 alongside the company's former CEO, Amy Winslow.

He agreed to plead guilty to two counts of violating the Food, Drug and Cosmetic Act by introducing misbranded medical devices into interstate commerce with the intent to defraud or mislead.

Prosecutors agreed to recommend that Maleknia be sentenced to a year and a day in prison and a $20,000 fine. They also agreed to dismiss other charges against him, including that he committed wire fraud and conspired to defraud the U.S. Food and Drug Administration.

He is the second of three former executives to agree to admit wrongdoing following their indictment in April 2023. Reba Daoust, the company's former manager and director of quality assurance and regulatory affairs, struck her own plea deal last week.

That leaves Winslow as the last remaining defendant facing trial. She has pleaded not guilty to fraud charges.

Lawyers for Maleknia and Winslow did not respond to requests for comment.

Massachusetts-based Magellan, which is today owned by Meridian Bioscience, in May agreed to pay $42 million and plead guilty to resolve related charges concerning the reliability of devices it sold for detecting lead levels and lead poisoning in the blood of children and adults.

The malfunction affected three of Magellan's testing devices in its LeadCare line, including one that accounted for more than half of all blood lead tests conducted in the U.S. between 2013 and 2017, according to prosecutors.

In 2013, the company discovered a malfunction that could cause blood lead test values to be lower than actual values. Prosecutors said Daoust was one of the first employees to learn about the problem and informed Winslow and Maleknia about it.

But prosecutors said the three executives never reported the issue to the FDA and only notified the agency after Ohio-based Meridian had acquired the company for $66 million in 2016. A recall was launched in 2017.

The case is United States v. Winslow, et al, U.S. District Court for the District of Massachusetts, No. 1:23-cr-10094.

For the U.S.: Kelly Begg Lawrence, James Herbert and Leslie Wright of the U.S. Attorney's Office for the District of Massachusetts

For Maleknia: George Vien, Michelle Pascucci and Emma Notis-McConarty of Donnelly, Conroy & Gelhaar

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