Bloomberg News

Medtronic to Pay $23.5 Million to Settle False Claims Case

December 13, 2011

(Updates with Medtronic’s comment in sixth paragraph.)

Dec. 12 (Bloomberg) -- Medtronic Inc., the world’s largest maker of heart rhythm devices, agreed to pay $23.5 million to resolve allegations that it paid kickbacks to doctors who implanted its pacemakers and defibrillators in patients, the U.S. Justice Department said in a statement.

Medtronic agreed today to settle two lawsuits filed in federal courts in California and Minnesota accusing the company of violating the federal False Claims Act by paying physicians $1,000 to $2,000 for each patient who was implanted with one of the company’s devices, according to the Justice Department.

“Patients who rely on their health-care providers to implant vital medical devices expect that those decisions will be made with the patients’ best interests in mind,” Tony West, assistant attorney general for the Justice Department’s Civil Division, said in an e-mailed statement. “Kickbacks, like those alleged here, distort sound medical judgments with financial incentives paid for by the taxpayers.”

The lawsuits were filed by whistle-blowers who will receive more than $3.96 million from the federal recovery.

The company caused false claims to be submitted to Medicare and Medicaid by using two post-market studies and two device registries as vehicles to pay participating physicians illegal kickbacks to induce them to implant its pacemakers and defibrillators, the Justice Department said in the statement.

Investigation ‘Behind Us’

Medtronic said in an e-mailed statement that it makes no admissions that the studies were “improper or unlawful.” The company also said it established a reserve for the anticipated payment in the fourth quarter of fiscal year 2011.

“We are happy that the investigation is behind us, so we can continue designing and executing clinical trials that generate evidence to improve patient care, outcomes and cost effectiveness,” Marshall Stanton, vice president of clinical research and reimbursement for the cardiac and vascular group at Minneapolis-based Medtronic, said in the statement.

In 2006, Medtronic agreed to pay $40 million to settle allegations that its Sofamor Danek unit violated state laws and the False Claims Act by paying sham consulting fees and providing lavish trips to doctors who used its products from 1998 to 2003.

--Editors: Michael Hytha, Glenn Holdcraft

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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