Shareholders in St. Jude Medical Inc. (NYSE:STJ) filed a derivative lawsuit against the company, its management and board of directors over a pair of federal cases alleging a long-running kickbacks scheme.
The follow-on suit, brought by the Louisiana Municipal Police Employees’ Retirement System in the U.S. District Court for Minnesota, seeks to "prevent corporate insiders from shifting all responsibility for the Company’s misconduct onto the backs of the innocent public shareholder, while they themselves walk away while paying nothing, and even voting themselves increased salaries and benefits," according to court documents.
The case stems from a pair of federal beefs against St. Jude. The first, which the company settled for $3.7 million earlier this year without admitting any wrongdoing, accused the device maker of providing illegal rebates to a pair of hospitals in Ohio and Kentucky. The second, which is still pending, alleges that the company’s corporate accounts division offered special deals to hospitals that purchased minimum amounts of STJ products, according to court documents.
The derivative lawsuit "seeks redress against those officers, directors and others personally responsible for causing harm to the Company, and also seeks an injunction barring St. Jude’s fiduciaries from failing to enforce professional disciplinary policies against executives who directed or acquiesced in any type of unlawful act," according to court documents. "St. Jude’s corporate compliance department, office of the general counsel, and compliance hotline had multiple opportunities to address the serious wrongdoing alleged, yet no one at St. Jude, including the Company’s officers or the Board of Directors took any action to either investigate, or stop the conduct alleged. The fact that St. Jude’s management refused to even investigate the wrongdoing strongly suggests that not only did the Company’s management have knowledge of the schemes, but that they in fact ratified the underlying conduct."
The lawsuit names chairman, president and CEO Daniel Starks; Paul Bae, former vice president of human resources, compliance officer and general counsel; presiding director John Brown; directors Richard Devenuti, Stuart Essig, Thomas Garrett III, Barbara Hill, Michael Rocca and Wendy Yarno; and former directors Stefan Widensohler and Frank Yin.
Leave a Reply
You must be logged in to post a comment.