Medtronic Settles DOJ Whistleblower Lawsuit

Medtronic Inc. will pay the U.S. Department of Justice $9.9 million to settle a lawsuit that accused the company of giving doctors gifts in return for using its defibrillators and pacemakers.

Medtronic, which is based in the Minneapolis suburb of Fridley, Minn., did not admit any wrongdoing as a result of the settlement.

he lawsuit alleged that Medtronic “funneled millions of dollars in unrestricted grant money to physicians” to get them to encourage the use of Medtronic defibrillators and pacemakers in patients whose “mild heart failure symptoms did not meet [U.S. Food and Drug Administration] criteria for an implantable device.”

“Improper financial incentives have the potential to compromise physician medical judgment,” said Assistant Attorney General Stuart F. Delery of the Justice Department’s Civil Division. “This case demonstrates the Department of Justice’s commitment to pursue medical device manufacturers that use improper financial relationships to influence physician decision-making.”

The alleged kickbacks, according to the newly unsealed suit, included gifts of wine and alcohol and trips to strip clubs paid for by Medtronic. The lawsuit also indicated that Medtronic paid to fly doctors to events in San Francisco, Calif.; Las Vegas, Nev.; New Orleans, La.; New York, N.Y.; Minneapolis and other cities that some physicians used as “a free vacation.”

“As this settlement indicates, healthcare executives who try to boost profits by paying kickbacks to doctors will instead pay the government for their improper conduct,” Ivan Negroni, lead investigator for the U.S. Department of Health and Human Services said in a statement.

Medtronic said the settlement brings to a close a long-running review from 2001 to 2009 and that it has taken steps to prevent inappropriate sales practices, including voluntarily disclosing payments to healthcare professionals on its website–which is now required by law.

“Over the last several years we have adopted a number of important policies and procedures related to collaboration with healthcare professionals,” the company said.

The settlement is the result of a whistleblower complaint filed by a former Medtronic employee, Adolfo Schroeder. Schroeder will receive about $1.7 million for his role in bringing the matter to light, the Department of Justice said.

The lawsuit also alleged Medtronic paid thousands of dollars in speaking fees to doctors for attending dinners at which they spoke for only a few minutes, if at all. In other cases, Medtronic allegedly prepared entire presentations for the physicians.

The Justice Department had accused Medtronic of violating the federal False Claims Act by providing speaking fees, developing free marketing plans and providing tickets to sports events to doctors who used its defibrillators and pacemakers in Medicare and Medicaid patients and who recommended their use to others.