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Medtronic Agrees to $4.4 Million Settlement in False Claims Act Case

Apr 7, 2015

The U.S. Department of Justice announced last week that it reached an agreement for a $4.4 million settlement with medical device maker Medtronic, Inc. for violations of the False Claims Act.

The violation stems from false statements Medtronic made about the sale of medical equipment to the U.S. Department of Defense and the U.S. Department of Veteran Affairs during an eight-year period from January 2007 until September 2014. During that time, Medtronic claimed the equipment sold to the government agencies was manufactured in the U.S. when the products actually originated in China and Malaysia, reports.

Under the Trade Agreement Act of 1979, a company with a contract with the government must supply products manufactured in the U.S. or certain designated countries. Products from China and Malaysia are in violation of the agreement. The Medtronic products at issue included anchoring sleeves sold with cardiac leads used to secure the leads to patients, certain instruments and devices used in spine surgeries, and a handheld patient assistant used with a wireless cardiac device, according to the Justice Department news release.

Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department's Civil Division said, "Today's settlement demonstrates our commitment to ensure that our service members and our veterans receive medical products that are manufactured in the United States and other countries that trade fairly with us," according to the news release. "The Justice Department will take action to hold medical device companies to the terms of their government contracts."

Medtronic is the world's third largest medical device maker and it became the largest company in Ireland in January 2015, after its $49.9 billion acquisition of Dublin-based surgical supplies group Covidien, reports.

According to the settlement agreement, between 2007 and 2014, Medtronic sold products to the VA and DoD that the company certified would be made in the United States or designated countries. The agreement covers the period from Jan. 1, 2007, to Dec. 31, 2013, and for the handheld patient assistant, the period from Jan. 1, 2014, to Sept. 30, 2014.

The settlement resolves allegations originally brought in a lawsuit filed by three whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and share in any funds recovered. The three whistleblowers will receive a total of $749,700. Since January 2009, the Justice Department has recovered a total of more than $23.9 billion through False Claims Act cases. More than $15.2 billion of that amount was recovered in cases involving fraud against federal health care programs, according to the Justice Department news release. This settlement was achieved through the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009. HEAT involves a partnership between the Attorney General and the Secretary of Health and Human Services to reduce and prevent Medicare and Medicaid financial fraud through "enhanced cooperation." The False Claims Act is "one of the most powerful tools in this effort," according to the Justice Department.

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