Medtronic (NYSE:MDT) agreed to pay $23.5 million to settle U.S. Justice Dept. allegations that it offered illegal kickbacks to encourage doctors to use its implantable pacemakers and defibrillators.
The DOJ accused Medtronic of using physician payments related to post-market studies and device registries as a kickbacks scheme, violating the False Claim Act.
The Fridley, Minn.-based med-tech titan admitted to no improper or unlawful action in settling the case.
"Medtronic is happy to have this investigation behind us, so we can continue designing and executing clinical trials that generate evidence to improve patient care, outcomes, and cost effectiveness," cardiac and vascular group VP Dr. Marshall Stanton said in prepared remarks.
The DOJ accused Medtronic of paying physicians $1,000 to $2,000 per patient to implant the company’s pacemakers and implantable cardiac defibrillators in order to "convert their business from a competitor’s product and/or persuade the physicians to continue using Medtronic products" during two post-market studies and two device registries.
"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," assistant attorney general for the DOJ civil division Tony West said in prepared remarks. "Kickbacks, like those alleged here, distort sound medical judgments with financial incentives paid for by the taxpayers."
The False Claims Act collected more than $4 billion in fines for fiscal year 2011, according to watchdog group Taxpayers Against Fraud. Over 80 percent of all the claims and all of the top 10 settlements come from the health care sector.
Medtronic launched a voluntary quarterly reporting program detailing payments made to doctors in the summer of 2010, ahead of a federal law mandating such disclosures which is set to go into effect by 2013. Payments less than $5,000 weren’t reported.
The new settlement resolves allegations made in two whistleblower lawsuits, which will receive nearly $4 million from the settlement.
There was no indication that the physicians involved would face any penalties for their participation. Recipients of illegal kickbacks traditionally avoid consequences when companies are accused, although an army doctor broke the mold last October when he was fined $12,700 for taking kickbacks from Boston Scientific Corp. (NYSE:BSX) subsidiary Guidant.
In 2006, Medtronic agreed to a $40 million settlement two federal lawsuits alleging that it paid kickbacks to physicians in exchange for using its spinal products.
In other Medtronic legal news, a Minnesota federal judge ruled yesterday to grant class certification to a group of shareholders filing suit over the company’s controversial Infuse bone growth protein, Law360.com reported.
The shareholders’ lawsuit accuses the firm of artificially inflating its stock price with an off-label promotion scheme for a bone morphogenetic protein used in the Infuse device. The suit alleges that "Medtronic and its stable of highly paid doctor-consultants recklessly downplayed the safety risks of Infuse – especially in off-label procedures – and that Medtronic’s improper off-label marketing and revenue growth were directly tied to a troubling and financially dangerous rise in safety concerns linked to Infuse, including ‘potentially serious, and even deadly, adverse events, particularly in the cervical spine,’" according to court documents.