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Medtronic Subsidiary Covidien to Pay More Than $19 Million to Settle Alleged Kickback Case

Covidien will pay millions to the Federal, California and Florida state governments for allegedly providing services to physicians who bought its ClosureFast catheter.

Medtronic Subsidiary Covidien to Pay More Than $19 Million to Settle Alleged Kickback Case

Covidien, a subsidiary of Minneapolis-based health tech manufacturing giant Medtronic, has agreed to pay just under $17.5 million to settle litigation over an alleged kickback scheme.

The Department of Justice (DOJ) pursued a case against Covidien claiming that the medical device maker provided free or discounted support to physicians in California and Florida, in exchange for the physicians purchasing Covidien’s vein ablation products.

“Today’s settlement serves as an important reminder to those in the health care community that unlawful kickbacks come in many forms and are not limited to monetary payments to providers,” said Jody Hunt, Assistant Attorney General of the DOJ’s Civil Division.  “Providing free or discounted services to health care providers to induce the use of certain items or services can lead to excessive and unnecessary treatments, and drives up health care costs for everyone.”

According to a DOJ announcement on Monday, the federal government alleged that Dublin-based Covidien operated its scheme from January 1, 2011 through September 30, 2014.

It’s believed that to induce healthcare providers to purchase its ClosureFAST catheter—which is used in procedures to treat venous reflux disease—Covidien provided support to physicians in the form of customizing marketing plans for specific vein management approaches, and scheduling and conducting events aimed at driving referrals for and enticing patient interest in certain such approaches.

Covidien’s alleged actions violate the federal Anti-Kickback Act and False Claims Act.

Steven J. Ryan, special agent in charge for the U.S. Department of Health and Human Services’ Office of Inspector General says the tactic of offering services instead of just cash as a kickback reward is used partly to help perpetrators evade detection, though participating companies are liable to pay a steep price.

“Patients in federal health care programs deserve medical care that is free from improper financial incentives,” said U.S. Attorney-California Northern District David L. Anderson.  “As this case makes clear, companies must steer clear of violating the Anti-Kickback Statute or risk being pursued.”

This settlement for the kickback case against Covidien comes just months after Covidien—and Medtronic—were involved in other legal matters that resulted in a comprehensive settlement.

In December, Medtronic agreed to pay $50.9 million to resolve three federal cases related to one of its own products, STRATIS, and products made under two companies Medtronic acquired in 2015: Covidien and ev3.

For this latest kickback claim settlement, Covidien will pay exactly $17,477,947 to the federal government, plus nearly $1.5 million to California and $1.05 million to Florida for claims brought by the states’ Medicaid programs, which received the bills for the illicit catheter purchases.

The settlement follows an investigation conducted jointly by the DOJ, U.S. Attorney’s Office or the Northern District of California, the Department of Health and Human Services Office of Inspector General, and the Federal Bureau of Investigation, as well as the California Attorney General’s Office and the Florida Attorney General’s Office.  Covidien was credited for cooperating with the investigation.

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