The settlement is one of the largest in U.S. history under the federal False Claims Act involving a medical device where the government declined to intervene. The Dallas law firm Standly Hamilton, LLP, joined the case on Ms. Sullivan's behalf in 2014.

A former sales representative and territory business manager for Atrium from 2007 to 2012, Ms. Sullivan alleged that the company engaged in an extensive nationwide scheme to promote its iCast brand stent for use in the vascular system even though it was federally approved only for treating tracheobronchial obstructions.

According to the lawsuit, Atrium used a system of referral dinners to induce physicians to implant the stents in the arteries of elderly patients while submitting payment claims to Medicare.

The lawsuit also alleged Atrium provided financial grants and other kickbacks to doctors in violation of the federal Anti-Kickback Statute.

Atrium sold an estimated $382 million in iCast stents from 2007 to 2012. Ms. Sullivan said she believed nearly 100 percent of those were implanted for unapproved uses and that more than 70 percent were paid for by Medicare, Medicaid, military hospitals and the U.S. Department of Veterans Affairs.

In addition to Mr. Hamilton, the legal team representing Ms. Sullivan included Meagan Martin and Kevin Colquitt from Standly Hamilton and attorneys from Waters & Kraus, LLP, in Dallas; Taibi Kornbluth Law Group, P.A., in Durham, North Carolina; and The Law Offices of Jeffrey A. Newman & Associates in Boston.

"We are extremely happy to help resolve this matter for Grace, and it is particularly gratifying since this case was declined by the government," says Mr. Hamilton, who is experienced in False Claims Act cases.

 "This was a victory not only for our client but for the many people whose taxes were spent on a device that was used in a way that was never approved by the FDA."

Ms. Sullivan is eligible for a money award based on her role in exposing the scheme, with most of the settlement money going to the government agencies that paid for the iCast devices that were used inappropriately.