The U.S. Justice Dept. (DOJ) announced that Medtronic (NYSE:MDT) will pay a total of about $9.2 million to settle improper payment allegations.
Fridley, Minn.-based Medtronic agreed to pay $8.1 million to resolve allegations of False Claims Act violations regarding kickbacks for a South Dakota neurosurgeon, along with an additional $1.11 million related to allegations of Open Payments Program violations after the company allegedly failed to accurately report payments to the neurosurgeon to CMS.
“Kickbacks undermine the integrity of federal healthcare programs and increase costs borne by taxpayers,” DOJ Civil Division Acting Assistant Attorney General Jeffrey Bossert Clark said in a news release. “This case demonstrates [DOJ’s] commitment to ensure that medical device manufacturers do not use improper financial relationships to influence physician decision-making.”
The settlement resolves the allegations that Medtronic agreed to the requests of South Dakota neurosurgeon Dr. Wilson Asfora for the company to pay for social events at the Carnaval Brazilian Grill, a restaurant the company knew Asfora owned, in payments which included many expensive meals.
DOJ alleges that Medtronic made payments to benefit Asfora and induce him to use Medtronic’s SynchroMed II implantable intrathecal infusion pumps for delivering medication to patients. DOJ said the sponsored events at Asfora’s restaurant represented social gatherings for which the surgeon selected and invited social acquaintances, business partners, favored colleagues and potential and existing referral sources, for all of whom Medtronic allegedly paid.
According to the DOJ release, Medtronic allegedly paid for more than 100 events at Asfora’s restaurant over a nine-year period.
The settlement resolves Medtronic’s liability under CMS’ Open Payments Program as part of the Affordable Care Act, requiring medical device manufacturers to disclose certain payments to physicians like Asfora to CMS. DOJ alleged that the company made payments to Asfora’s restaurant at his request, knowing he owned it, but underreported the payments to CMS.
Asfora and two of his other companies are defendants in a separate FCA lawsuit in which the U.S. alleges that he received kickbacks to use certain implants in his spinal surgeries. That case is still pending.
As part of the settlement, Medtronic agreed to cooperate with DOJ’s investigations of and litigation against other partners. The company also took remedial action once it learned of wrongdoing, including terminating a sales representative and sales manager and disciplining 12 other employees involved in the alleged misconduct, DOJ said.
Given that the claims resolved by the settlement remain allegations only, there was no determination of liability.
“Medtronic has reached an agreement to settle civil claims with the Department of Justice in connection with the actions of a small number of sales personnel,” a Medtronic spokesperson told MassDevice via email. “The company will make a payment of $9.2 million to resolve the matter. Outside of a small number of sales employees, DOJ’s investigation did not find that Medtronic was aware of this alleged misconduct at the time it occurred. Upon investigation of this conduct, which violated the company’s policies, Medtronic took various remedial steps, including termination and other disciplinary action against employees directly or peripherally involved, and enhancing relevant training. The settlement agreement contains no admission of liability. Medtronic remains committed to maintaining the highest standards of ethical conduct and compliance with all applicable regulatory guidelines.”
