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Medtronic Resolves Whistleblower Case for $9.9 Million

Jun 2, 2014

Medtronic is resolving a whistleblower case for $9.9 million, the Department of Justice announced Wednesday. According to the DOJ news release, the company allegedly paid illegal kickbacks to physicians in order to promote implantation of their pacemakers and defibrillators ().

Assistant Attorney General Stuart F. Delery of the Justice Department’s Civil Division said in the release “Improper financial incentives have the potential to compromise physician medical judgment… This case demonstrates the Department of Justice’s commitment to pursue medical device manufacturers that use improper financial relationships to influence physician decision-making.”

The whistleblower lawsuit was filed by a former Medtronic employee under the qui tam provisions of the False Claims Act, which gives individuals an opportunity to file a lawsuit on behalf of the United States when they have knowledge of companies that defraud government; these whistleblowers are entitled to a portion of the recovered funds. In this settlement, the news release states that the whistleblower will receive approximately $1.73 million.

Medtronic allegedly used multiple types of kickbacks in order to persuade doctors to implant Medtronic pacemakers and defibrillators, causing false claims to be submitted to Medicare and Medicaid. Allegedly, physicians who implanted the devices were paid to speak at events in order to promote business. The United States also alleged that the company paid illegal kickbacks by providing free marketing/business development plans and tickets to sporting events. Medtronic offered these bribes as a way to encourage continued use of their products or convert from a rival product, the US Government alleged.

U.S. Attorney Benjamin Wagner of the Eastern District of California said in the release that these offers are unethical and can bias a medical decision. “Decisions about devices used to treat cardiac rhythmic disease should be based on the best interests of the patient, not on whether the manufacturer is going to pay a kickback,” he stated. “These sorts of improper financial incentives not only undermine the integrity of medical decisions they also waste taxpayer funds and are unfair to competitors who are trying to play by the rules.”

In May 2009, Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius announced the Health Care Fraud Prevention and Enforcement Action Team (HEAT). The Medtronic settlement marks a victory for HEAT, whose mission is to reduce and prevent Medicare and Medicaid financial fraud. Whistleblowers play a crucial role in this effort, with more than $19.2 billion recovered through False Claims Act cases since January 2009 alone. Cases that involved fraud against federal health care programs accounted for more than $13.7 billion of that amount.

The Department of Justice’s Civil Division, the U.S. Attorney’s Office for the Eastern District of California and the Office of Inspector General of the U.S. Department of Health and Human Services collaborated to reach the settlement with Medtronic.

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