Medtronic Inc. To Pay $9.9 Million To Resolve Claims That Company Paid Kickbacks To Physicians

SACRAMENTO, Calif. — Medtronic Inc. of Fridley, Minn., has agreed to pay the United States $9.9 million to resolve allegations under the False Claims Act that the company used various types of payments to induce physicians to implant pacemakers and defibrillators manufactured and sold by Medtronic, United States Attorney Benjamin B. Wagner announced today.

“Improper financial incentives have the potential to compromise physician medical judgment,” said Stuart F. Delery, Assistant Attorney General for the Civil Division of the Department of Justice. “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 United States alleges that Medtronic caused false claims to be submitted to Medicare and Medicaid by using multiple types of illegal kickbacks to induce physicians to implant Medtronic pacemakers and defibrillators. Specifically, Medtronic allegedly induced physicians to use its products by: 1) paying implanting physicians to speak at events intended to increase the flow of referral business; 2) developing marketing and business development plans for physicians at no cost; and 3) providing tickets to sporting events. The United States alleges that Medtronic paid the remuneration to persuade the physicians to continue using Medtronic products or to convert their business from a competitor’s products.

“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,” said U.S. Attorney Wagner. “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.”

“As this settlement indicates, health care executives who try to boost profits by paying kickbacks to doctors will instead pay the government for their improper conduct,” said Ivan Negroni, Special Agent in Charge for the U.S. Department of Health and Human Services Office of Inspector General’s San Francisco Office. “We will continue to work with the Department of Justice to root out illegal, wasteful business arrangements.”

The settlement announced today stems from a whistleblower complaint filed by a former employee of Medtronic, Adolfo Schroeder, according to the qui tam provisions of the False Claims Act that permits private persons to bring a lawsuit on behalf of the United States and to share in the proceeds of the suit. Mr. Schroeder will receive approximately $1.73 million.

The settlement with Medtronic Inc. was the result of a coordinated effort among the Department of Justice’s Civil Division, Commercial Litigation Branch; 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. Assistant United States Attorney Catherine Swann handled the investigation for the Eastern District of California.

The claims settled by this agreement are allegations only, and there has been no determination of liability.