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Feds Seek to Join St. Jude Whistleblower Lawsuit

Aug 9, 2010 | Parker Waichman LLP

St. Jude Medical Inc. is facing scrutiny from the US Justice Department over an alleged kickback scheme. According to a Reuters report, the US Attorneys Office in Boston is seeking to intervene in a whistleblower lawsuit brought by a former employee of the heart device maker.

Charles Donigian, who worked as a technical services specialist for St. Jude between 2004 and 2007, filed suit in 2006 accusing St. Jude of paying kickbacks to doctors, hospitals and other health care providers to induce them to prescribe its defibrillators and pacemakers. The providers then submitted reimbursement claims to Medicare and other federal programs.

Donigian’s lawsuit alleged that St. Jude “repeatedly” violated a US anti-kickback law by paying professionals “sham fees” for fake clinical research studies. Donigian also alleged that St. Jude provided entertainment, gifts, travel, vacations, temporary staff, tickets to sporting events, ‘educational’ events at luxury results and other illegal inducements. Donigian claimed he was aware of cases where doctors prescribed St. Jude devices because of the kickbacks.

The government has been investigating such kickbacks in the industry since 2005, but last year the Justice Department declined to intervene in Donigian’s suit. However, according to The Wall Street Journal, the Justice Department filed a motion in federal court last week saying it has since interviewed more witnesses and reviewed more documents, completed its probe and now “has good cause to intervene.” The Justice Department will be filing its own complaint against St. Jude by August 31.

The whistleblower provisions of the False Claims Act allow private citizens to bring lawsuits on behalf of the federal government and share in any recovery.

For its part, St. Jude in June sought to have Donigian’s complaint dismissed, claiming he was a “disgruntled former employee.” The company also said it objects to the government’s motion “and will vigorously defend against the allegations in the lawsuit.”

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