Medtronic (NYSE:MDT) said it settled a shareholders’ lawsuit over its infamous Infuse spinal implant for $85 million, but admitted no wrongdoing.
The lawsuit, filed in 2008 by the Minneapolis Firefighter’s Relief Assn., accused the Twin Cities medical device titan of artificially inflating its stock price with an off-label promotion scheme for a bone morphogenetic protein used in the Infuse device.
"Under the settlement, Medtronic explicitly denies that it made any misrepresentations or omissions or that it otherwise engaged in any wrongdoing," according to a press release.
Medtronic said it expects to record the settlement as a 1-time charge in its fiscal 4th-quarter earnings report.
The company is weathering a spate of lawsuits over the Infuse device after a Spine Journal issue last summer revealed serious concerns about its safety. Although the furor ignited by the study eventually died down on Wall Street (where analysts warned of a possible 3-cent-per-share dip in overall profits), Medtronic and Infuse are under intense scrutiny elsewhere. The U.S. Justice Dept. and the U.S. Senate are each conducting probes into the bone morphogenetic compound and its Fridley, Minn.-based maker’s marketing practices. Personal injury lawsuits are also beginning to mount for Medtronic over the implant.
The now-settled shareholders’ suit, filed in the U.S. District Court for Minnesota, alleged 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.
Specifically, the plaintiffs accuse the company, former CEOs Bill Hawkins and Arthur Collins Jr., and CFO Gary Ellis of making “materially false and misleading statements and omissions concerning the sale, promotion, and marketing” of Infuse, according to the documents.
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