Medtronic to Pay $9.2M Settlement for Kickbacks, False Reports

Deborah Brauser

October 29, 2020

Medtronic USA Inc. has agreed to pay more than $9 million to resolve allegations of kickbacks and failure to fully report payments made to a neurosurgeon, the US Department of Justice (DOJ) has announced.  

The settlement will include $8.1 million because of violations to the False Claims Act for allegedly paying kickbacks to Wilson Asfora, MD, a neurosurgeon in South Dakota, in an effort to persuade him to use its products, the DOJ reported in a press release.

The additional $1.1 million settlement is because of violations to the Open Payments Program for sending inaccurate reports to the US Centers for Medicare & Medicaid Services (CMS) regarding the payments to Asfora.

"We expect doctors to make medical decisions based on what is best for their patients, not what is best for their bank accounts," Ron Parsons, US attorney for the District of South Dakota, said in a statement.

"The quality of medical care is eroded — and patients and their families suffer — when companies and physicians enter into these sorts of under-the-table schemes to create illegal financial incentives to increase the use of medical devices," Parsons added.

Free Meals, Free Drinks

The settlement resolves allegations that over a 9-year period Medtronic knowingly paid for more than 100 sponsored events, including expensive meals and drinks, at a restaurant Asfora owned. This was done in an effort to convince Asfora to use implantable SynchroMed II infusion pumps in his patients, the DOJ reports.

Prosecutors noted that Asfora requested the location and guest list for these events, which included his business partners, colleagues, and social acquaintances.

Directly or indirectly "paying anything of value to induce the referral of items or services covered by Medicare, Medicaid, TRICARE, and other federal healthcare programs," is a violation of the Anti-Kickback Statute, the statement notes.

The settlement also resolves violations to CMS' Open Payments Program. The allegations state that Medtronic not only made payments to Asfora's restaurant for the social events but also underreported these payments to CMS.

The Open Payments Program is supposed to "promote transparency and accountability" within the field, Brenna E. Jenny, deputy general counsel for the US Department of Health and Human Services and chief legal officer of CMS, said in the release.

"CMS looks forward to continued partnership with the Department of Justice to resolve allegations of manufacturers skirting their Open Payments obligations," Jenny added.

A separate lawsuit filed by the US in November, and not part of today's settlement, alleges that Asfora also received kickbacks to entice him to use specific implants during spinal surgeries.

"The…pursuit of these matters illustrates the government's emphasis on combating healthcare fraud," the DOJ said in its release.

"Kickbacks undermine the integrity of federal healthcare programs and increase costs borne by taxpayers," Jeffrey Bossert Clark, acting assistant attorney general of the DOJ's Civil Division, added in the same release.

He noted that, overall, the settlement shows the Department's "commitment to ensure that medical device manufacturers do not use improper financial relationships to influence physician decision-making."

In addition to the $9.2 million payment, today's settlement also includes Medtronic's agreement to cooperate with further investigations — including lawsuits against other parties. The manufacturer reported having already fired a sales representative and a sales manager and "disciplining" 12 other employees for misconduct.

The company sent the following statement to Medscape:

"Medtronic has reached an agreement to settle civil claims with the Department of Justice in connection with the actions of a small number of sales personnel. The company will make a payment of $9.2 million to resolve the matter. Outside of a small number of sales employees, DOJ’s investigation did not find that Medtronic was aware of this alleged misconduct at the time it occurred," the company said.

"Upon investigation of this conduct, which violated the company’s policies, Medtronic took various remedial steps, including termination and other disciplinary action against employees directly or peripherally involved, and enhancing relevant training. The settlement agreement contains no admission of liability. Medtronic remains committed to maintaining the highest standards of ethical conduct and compliance with all applicable regulatory guidelines."

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