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$2.8 Million False Claims Act Settlement in Case Brought Against Medtronic

Jul 8, 2014

Kathleen Kane, Pennsylvania’s Attorney General (AG), has announced that her office joined in a $2.8 million multi-state and federal settlement that involves Medicaid fraud allegations involving Medtronic.

The AG’s office indicated that it joined in the multi-million-dollar settlement to resolve allegations concerning Medtronic insulin infusion pumps. Pennsylvania joined 35 other states and the federal government so that allegations accusing Medtronic Inc. and its subsidiary, Medtronic Minimed Inc. (doing business as Medtronic Diabetes), of submitting claims to Pennsylvania's Medicaid program for replacement insulin infusion pumps would be settled. The claims were allegedly initiated through the improper solicitation of Medicaid recipients, the release indicated.

According to the release, the settlement resolves a federal and state False Claims Act lawsuit filed in 2011 by former Medtronic employees in the U.S. District Court for the Northern District of Texas. The allegations also indicate that Medtronic directly solicited Medicaid recipients to replace their insulin infusion pumps, a federal Anti-Solicitation Rule violation, as well as violations of other, similar state laws.

Some $327,000 will settle Medicaid-based claims nationwide and Pennsylvania will receive more than $13,000, according to the AG’s release. The AG’s release did not indicate the whistleblowers share of the settlement, nor the settlements to be received by the other states.

On behalf of the states, a team from the National Association of Medicaid Fraud Control Units (NAMFCU) conducted the settlement negotiations with Medtronic. The team included representatives from AG offices around the country, including for the states of California, Indiana, Ohio, Oregon, Texas, and Virginia, according to the AG’s release.

In similar news, in June 2014, Medtronic Inc. agreed to a $9.9 million settlement with the United States government to resolve allegations it had paid kickbacks to physicians. The settlement was intended to resolve allegations made under the False Claims Act, including that Medtronic engaged in kickback schemes for the purpose of increasing its pacemaker and defibrillator sales. Specifically, allegations included that Medtronic engaged in activities that caused false claims to be submitted to Medicare and Medicaid by use of illegal kickback schemes. These schemes utilized various payment types meant to encourage physicians to implant Medtronic pacemakers and defibrillators in patients and were intended to prompt physicians to implant Medtronic pacemakers and defibrillators into patients, according to the U.S. Department of Justice.

For example, Medtronic allegedly induced physicians to use its products by paying physicians who implanted the devices to speak at events scheduled for the purpose of driving referral business, by creating marketing and business plans for doctors at no cost to those doctors, and by providing physicians with sporting event tickets. The government also alleged that Medtronic made these payments so physicians would either continue to use Medtronic products or would convert their business to Medtronic and away from Medtronic competition. The settlement originated with a whistleblower complaint filed by a former Medtronic employee.

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