Medtronic (NYSE:MDT) agreed to pay $9.9 million, but admitted no wrongdoing, to settle a whistleblower’s lawsuit alleging that it ran a years-long kickbacks scheme to induce physicians to use its cardiac rhythm management devices.
The lawsuit, filed by former Medtronic business development manager Adolfo Schroeder, alleged that the Fridley, Minn.-based medical device company paid doctors to speak at conferences, created free marketing and business plans and gave them free tickets to sporting events, restaurants and even strip clubs.
"Medtronic rewarded doctors with kickbacks for implanting large quantities of Medtronic devices. Some doctors, who implanted a large number of Medtronic devices, were given gifts including outdoor sports activities, gift cards, expensive meals, and tickets to professional sports games," the qui tam lawsuit, unsealed this week, alleged. "Medtronic also expected sales representatives to supply some doctors with gifts of wine and alcohol, and to take them to strip clubs. Adolfo Schroeder had personal knowledge of gifts of alcohol for physicians, and of paid visit to strip clubs for physicians."
Medtronic said in a statement that the settlement resolves claims over its marketing practices from 2001 to 2009, reiterating that it involves no admission of wrongdoing. The company also said it’s put new physician gift and payment policies in place, according to Reuters.
"Decisions about devices used to treat cardiac rhythmic disease should be based on the best interests of the patient, not on whether the manufacturer is going to pay a kickback," U.S. District Attorney Benjamin Wagner said in prepared remarks. "These sorts of improper financial incentives not only undermine the integrity of medical decisions, they also waste taxpayer funds and are unfair to competitors who are trying to play by the rules."
Schroeder will receive roughly $1.7 million from the settlement, according to the U.S. Justice Dept.