The Associated Press May 31, 2012, 6:22PM ET

St. Jude Medical pays $3.7M to end investigation

The U.S. Department of Justice said Thursday that St. Jude Medical Inc. will pay almost $3.7 million to settle allegations it overcharged the government for implantable heart devices.

The Justice Department said St. Jude overcharged the Department of Defense and the Department of Veterans Affairs for replacement pacemakers and defibrillators.

It said the St. Paul, Minn., company marketed the devices to the government "by touting the generous credits available should a device need to be replaced while covered under warranty," but when a device was replaced while still under warranty, it often failed to grant the appropriate credits.

The government said that St. Jude's actions amounted to overstating the cost of replacement devices.

St. Jude Medical said it was pleased to resolve the investigation. It said it believes its warranty practices were proper, and it is not admitting liability or wrongdoing by settling the investigation.

The case began as a lawsuit brought by two people and joined by the government as a whistleblower complaint. The people who bought the original lawsuit will receive $730,000 from the settlement amount.

Shares of St. Jude Medical lost 12 cents to $38. 42 in Thursday trading.

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