Medtronic to Pay $9.9 Million in Pacemaker-Kickback Lawsuit

June 02, 2014

MINNEAPOLIS, MN — Medtronic agreed to pay the US government $9.9 million to resolve allegations of making illegal kickbacks to physicians to induce them to implant the company's pacemakers and defibrillators in patients, the US Department of Justice announced on May 28, 2014[1].

The lawsuit stemmed from a whistleblower complaint filed by a former Medtronic employee, Adolfo Schroeder, a business development manager.

Under the False Claims Act, Medtronic was alleged to have paid physicians to speak at conferences, developed free marketing and business development plans for them, and provided tickets to sports events.

"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," US Attorney for the Eastern District of California, Benjamin Wagner, in Sacramento, said in a statement.

The accord resolves claims over its marketing practices from 2001 to 2009 and involves no admission of wrongdoing, and the company has adopted new marketing policies, Medtronic said in a statement.

Under the False Claims Act, which permits individuals to bring a lawsuit on behalf of the US government and share in the proceeds, Schroeder will receive approximately $1.73 million.

This latest accord follows on the heels of two earlier ones this month.

Medtronic reached a global patent agreement with Edwards Lifesciences in which it will pay Edwards $750 million now and royalties until 2022 from CoreValve sales. The company also agreed to pay approximately $22 million in product-liability claims related to the use of Infuse bone graft, used in spinal-fusion surgery. These agreements are not admissions of liability, the company said.

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