Medtronic Pays $23.5M to Settle Kickback Allegations

The U.S. Department of Justice accused the Fridley-based medical device giant of using two post-market studies and two device registries to pay physicians fees ranging from $1,000 to $2,000 for each patient that they implanted with one of the company's pacemakers or defibrillators.

Medtronic, Inc., has agreed to pay $23.5 million to resolve allegations that it violated federal law by paying kickbacks to induce doctors to implant the company's pacemakers and defibrillators.

The settlement was reached with the U.S. Department of Justice (DOJ)-which contends that the Fridley-based medical device maker used two post-market studies and two device registries to pay the illegal kickbacks to physicians.

Medtronic announced the settlement agreement but said that it “makes no admission that any studies were improper or unlawful.” The company said that earlier this year, it established a reserve for the full payment.

“Medtronic is happy to have this investigation behind us, so we can continue designing and executing clinical trials that generate evidence to improve patient care, outcomes, and cost effectiveness,” Marshall Stanton, vice president of clinical research and reimbursement for Medtronic's cardiac and vascular group, said in a statement.

Post-market studies are intended to assess the clinical performance of a medical device or drug after it has been approved by the U.S. Food and Drug Administration. Registries, meanwhile, are collections of data that are maintained by a device manufacturer and that concern products that have been sold and implanted in patients.

The DOJ said that Medtronic did collect data and information from physicians who participated in the studies and registries, but each one required implants of Medtronic's devices-and Medtronic paid participating doctors fees ranging from $1,000 to $2,000 per patient.

According to the DOJ, Medtronic solicited physicians for the studies and registries in order to win their business from a competitor and/or persuade the doctors to continue to use Medtronic products.

As a result of the kickbacks, false claims were submitted to Medicare and Medicaid, the DOJ said.

“Medicare and Medicaid beneficiaries depend on their physicians to make decisions based on sound medical judgment, especially when they are choosing which pacemaker or defibrillator to implant,” B. Todd Jones, U.S. Attorney for the District of Minnesota, said in a statement.”Medical device manufacturers must not be permitted to use improper payments to cloud that judgment.”

The DOJ said that the settlement resolves allegations brought forth in two whistleblower lawsuits filed in Minnesota and California. As part of the resolution, the whistleblowers will receive payments totaling more than $3.96 million.

Medtronic isn't the only local company to have been accused of providing illegal kickbacks to doctors. In January, the DOJ reached a $16 million settlement with Little Canada-based St. Jude Medical, Inc., regarding kickback allegations involving its pacemakers and defibrillators. And in December 2009, Natick, Massachusetts-based Boston Scientific Corporation-which has a major Minnesota presence-paid $22 million to resolve allegations that its Guidant Corporation subsidiary used post-market studies to pay kickbacks to doctors to implant its pacemakers and defibrillators. Guidant's cardiac rhythm management division is headquartered in Arden Hills.

Medtronic-the world's largest medical device company-is among Minnesota's 10 largest public companies based on revenue, which totaled $15.9 billion in the most recently completed fiscal year.