St. Jude Medical (NYSE:STJ) agreed to pay nearly $3.7 million to settle a civil lawsuit accusing it of failing to rebate the federal government for explanted pacemakers and defibrillators.
The settlement puts to bed a whistleblower lawsuit filed in 2008 alleging that the St. Paul, Minn.-based medical device maker inflated the cost of replacement devices sold to the U.S. Defense Dept. and the U.S. Veterans Affairs Dept. by "knowingly failing to apply pricing credits for devices that were explanted while covered under a product warranty," according to a press release from the U.S. Attorney for Massachusetts.
"The settlement resolves allegations that St. Jude actively promoted the longevity of its pacemakers and defibrillators to physicians in an effort to convince them to implant St. Jude devices over those marketed by a competitor. St. Jude reinforced these claims by touting the generous credits available should a device need to be replaced while covered under warranty," according to the release. "At the same time, St. Jude allegedly knew that it failed to grant appropriate credits to the purchasers of devices in a large number of cases where a product failed while still under warranty."
"As medical device use becomes more prevalent, the Justice Dept. will continue to investigate cases where device manufacturers are actively preventing federal health care programs from receiving the warranty discounts they are entitled to receive," Stuart Delery, acting assistant attorney general, said in prepared remarks. "If medical device manufacturers are actively concealing warranty credits from the government, the department will use all the tools at its disposal to hold them accountable."
“We have reached a settlement agreement with the U.S. Department of Justice (DOJ) that fully resolves our previously disclosed investigation in Boston regarding implantable cardiac rhythm device warranty claims. We are pleased to have resolved this matter. The company maintains that its warranty practices were proper and did not admit liability or wrongdoing by entering into this agreement,” a company spokeswoman told MassDevice.com in an email.
