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Medtronic Agrees to Pay $2.8 Million to Settle False Claims

Feb 10, 2015

Medtronic has agreed to pay $2.8 million to settle allegations under the False Claims Act. According to a news release from the Department of Justice (DOJ), the company allegedly caused some doctors to submit false claims to federal health care programs for SubQ stimulation.

SubQ stimulation is a medical procedure used to alleviate chronic pain; spinal cord stimulation devices are placed just beneath the skin near the area of pain, frequently the lower back, and the device sends out electrical pulses to create a "tingling' sensation. The United States alleged that Medtronic caused dozens of physicians from more than 20 states to submit false claims to federal health care programs, including Medicare and TRICARE, from 2007 and 2013. The company allegedly marketed SubQ stimulation even though its safety and efficacy had not yet been established by the U.S. Food and Drug Administration (FDA). Among other things, Medtronic is accused of having physicians-customers attend "on-site training programs" for the procedure.

"Today’s settlement demonstrates our commitment to ensure that beneficiaries of federal health care plans, including Medicare recipients and military families, receive medical treatments that have been proven safe and effective," said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division in the release. "Targeting chronic pain patients with a medical procedure that lacks evidence of clinical efficacy wastes the country’s health care resources."

According to the release, Special Agent in Charge Scott J. Lampert of the Department of Health and Human Services’ Office of Inspector General (HHS–OIG) said "Patients should be able to trust that their health care providers only use – and bill Medicare for – medical procedures that have been shown to be safe and effective,"

The settlement resolves a whistleblower lawsuit filed by a former Medtronic sales representative. When private citizens have knowledge of false claims, they can file a lawsuit on behalf of the government through the whistleblower provision of the False Claims Act. These individuals are entitled to a portion of the funds recovered. In this case, the whistleblower will receive $602,000.

Whistleblowers have been instrumental to stopping fraud. The law also states that retaliatory action cannot be taken against such individuals for speaking up about wrongdoing. In some cases, whistleblowers can remain anonymous.

Medtronic has reached settlements with the DOJ in the past. The company's Sofamor Danek division (MSD) agreed to place $40 million in escrow to resolve allegations that it paid illegal kickacks to doctors in order to promote the use of its spinal products and other illegal practices.

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