Medtronic Pays $50.9M to Settle Three Federal Cases
Medical device maker Medtronic this week resolved three separate cases with the United States Department of Justice — two of which were cases against companies it acquired.
In total, Medtronic will pay $50.9 million in settlements, for problems with a Medtronic product and separate issues against ev3 and Covidien. Medtronic acquired ev3 as part of its $43 billion Covidien acquisition in 2015.
Approximately $13 million of the settlement total will cover Medtronic’s STRATIS (Systematic Evaluation of Patients Treated with Stroke Devices for Acute Ischemic Stroke) Registry for claims the Registry was unlawful. Despite settling, Medtronic denies any issue with this product.
Secondly, under Medtronic, the device manufacturer ev3 agreed to plead guilty to a misdemeanor charge and pay $17.9 million – including $11.9 million for a criminal fine and $6 million in forfeitures – for the distribution of an adulterated neuromedical device, Onyx Liquid Embolic System.
Onyx was approved by the U.S. Food and Drug Administration (FDA) as a liquid embolization device meant to be surgically injected into blood vessels to block dangerous formations in the brain — but only in the brain, according to facts in the plea agreement. However, between 2005 and 2009, ev3 sales representatives encouraged surgeons to use Onyx outside the approved means, for other surgical applications as well, court documents said. These sales activities continued even after the FDA warned ev3 executives of safety concerns for using Onyx outside of the brain.
“Unnecessarily putting patients at risk to increase profits, as the government alleged in this case, will not be tolerated,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services, in prepared remarks. “We will continue to work with our federal partners and hold accountable companies that use deceptive practices to increase their bottom line.”
Covidien was the original owner of ev3, which it acquired in 2010.
Included in the roughly $51 million settlement, Covidien has paid $13 million to resolve False Claim allegations. Claims had been made against the company suggesting it had paid kickbacks to get medical professionals to use Solitaire, a device designed to restore blood flow and retrieve blood clots in some stroke patients.
Although the settlements fall under the responsibility of Medtronic, the government does not consider Medtronic at fault for the ev3 and Covidien actions, as the crimes occurred prior to Medtronic’s acquisition of the companies.
Medtronic also does not regard its settlement as an admission that its subsidiaries’ activities were indeed unlawful, according to a Medtronic statement.
Still, the company has agreed to implement new compensation structures and compliance monitoring to ensure that Onyx does not continue to be marketed against FDA recommendations.