06.10.14
Medtronic Inc. will pay the U.S. Department of Justice (DOJ) $9.9 million to settle a lawsuit that accused the device behemoth 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.
The 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 (HHS) 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 that 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.
Medtronic paid $23.5 million in 2011 to settle another Justice Department investigation that the company had paid kickbacks to physicians to induce them to use the firm’s pacemakers and defibrillators.
This is not new territory for the medical device industry, which has been in the spotlight as a result of some companies allegedly using kickbacks and other illegal incentives to gain market share and increase the use of their devices among physicians.
And Medtronic hasn’t been alone in the government’s crosshairs.
Boston Scientific Subpoenaed
In early May, Natick, Mass.-based medical device maker Boston Scientific Corp. reported receiving subpoenas from HHS looking for information about some of its implantable cardioverter defibrillators (ICDs). Boston Scientific officials said the company would cooperate fully with the government’s request.
According to a regulatory filing by the company, in the subpoena (issued May 5), the government asked for documents related to the company’s Cognix and Teligen ICDs—specifically information related to the performance of the devices between 2007 and 2009, and the operation of a “Physician Guided Learning Program.”
The subpoena was issued by HHS’s Office of the Inspector General, which is responsible for identifying fraud and waste in government health programs such as Medicare and Medicaid.
This isn’t the company’s first experience with this. Late last year, Boston Scientific agreed to pay $30 million to settle DOJ allegations that Guidant Corp. (which Boston Scientific acquired in 2006) had knowingly sold defective defibrillators between 2002 and 2005 that were implanted in Medicare patients.
St. Jude in the Spotlight, Too
On May 6, according to a quarterly U.S. Securities and Exchange Commission report, officials with St. Paul, Minn.-based St. Jude Medical Inc. said the company was part of a DOJ investigation into whether the company paid doctors to implant its cardiovascular devices.
The government is investigating the company for possible violations of the False Claims Act, St. Jude said in the filing. The company received the DOJ’s request in April. According to the filing, investigators told the company that certain healthcare facilities and a physician group may have submitted false claims to federal healthcare programs “as a result of alleged inducements paid” by St. Jude, the company said in the filing.
St. Jude Medical officials said they would cooperate with the Justice Department. No other details were provided by the company.
Medtronic, which is based in the Minneapolis suburb of Fridley, Minn., did not admit any wrongdoing as a result of the settlement.
The 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 (HHS) 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 that 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.
Medtronic paid $23.5 million in 2011 to settle another Justice Department investigation that the company had paid kickbacks to physicians to induce them to use the firm’s pacemakers and defibrillators.
This is not new territory for the medical device industry, which has been in the spotlight as a result of some companies allegedly using kickbacks and other illegal incentives to gain market share and increase the use of their devices among physicians.
And Medtronic hasn’t been alone in the government’s crosshairs.
Boston Scientific Subpoenaed
In early May, Natick, Mass.-based medical device maker Boston Scientific Corp. reported receiving subpoenas from HHS looking for information about some of its implantable cardioverter defibrillators (ICDs). Boston Scientific officials said the company would cooperate fully with the government’s request.
According to a regulatory filing by the company, in the subpoena (issued May 5), the government asked for documents related to the company’s Cognix and Teligen ICDs—specifically information related to the performance of the devices between 2007 and 2009, and the operation of a “Physician Guided Learning Program.”
The subpoena was issued by HHS’s Office of the Inspector General, which is responsible for identifying fraud and waste in government health programs such as Medicare and Medicaid.
This isn’t the company’s first experience with this. Late last year, Boston Scientific agreed to pay $30 million to settle DOJ allegations that Guidant Corp. (which Boston Scientific acquired in 2006) had knowingly sold defective defibrillators between 2002 and 2005 that were implanted in Medicare patients.
St. Jude in the Spotlight, Too
On May 6, according to a quarterly U.S. Securities and Exchange Commission report, officials with St. Paul, Minn.-based St. Jude Medical Inc. said the company was part of a DOJ investigation into whether the company paid doctors to implant its cardiovascular devices.
The government is investigating the company for possible violations of the False Claims Act, St. Jude said in the filing. The company received the DOJ’s request in April. According to the filing, investigators told the company that certain healthcare facilities and a physician group may have submitted false claims to federal healthcare programs “as a result of alleged inducements paid” by St. Jude, the company said in the filing.
St. Jude Medical officials said they would cooperate with the Justice Department. No other details were provided by the company.