In an announcement last week, the U.S. Department of Justice said it had reached an agreement with medical device maker Medtronic for violations of the False Claims Act. The announced settlement is $4.4 million.
The Justice Department brought action against Medtronic for false statements about medical equipment to sold to the Department of Defense and the Department of Veteran Affairs from January 2007 until September 2014. Medtronic claimed the equipment sold to the government agencies was manufactured in the U.S., as per its contract, when the products actually originated in China and Malaysia, Investing.com reports.
Under the Trade Agreement Act of 1979, a company with a government contract must supply products manufactured in the U.S. or in approved countries. Products from China and Malaysia are in violation of the agreement. The Medtronic products at issue in this case include anchoring sleeves sold with cardiac leads to secure the leads to patients, 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.
Benjamin C. Mizer, Acting Assistant Attorney General with the Justice Department’s Civil Division said the 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. Investing.com reports that Medtronic became the largest company in Ireland in January 2015, following its $49.9 billion acquisition of Dublin-based surgical supplies group Covidien.
From January 2007 to September 2014, Medtronic sold products to the VA and defense department that the company certified would be made in the United States or designated countries.
The settlement resolves allegations brought in a lawsuit by three whistleblowers under the qui tam provisions of the False Claims Act. These provisions allow private parties to bring suit on behalf of the government and to share in any funds recovered. The whistleblowers will receive a total of $749,700.
According to the news release, since January 2009, the Justice Department has recovered more than $23.9 billion through False Claims Act cases. More than $15.2 billion was recovered in cases involving fraud against federal health care programs. The Medtronic settlement was achieved through the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which 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,” Justice Department officials say.