Whistleblower Lawsuit Results in $10M Settlement by Medtronic

The medical device manufacturer Medtronic has agreed to pay $10 million to settle a whistleblower lawsuit that alleged gifts and kickbacks were given to doctors who implanted the company’s pacemakers and defibrillators in patients.  

On May 28, the Department of Justice (DOJ) announced that Medtronic Inc. has agreed to pay $9.9 million to settle False Claim Act allegations. The claims were first brought to the government’s attention by a former employee, Adolfo Schroeder, who will receive a portion of the settlement as the whistlblower.

According to the DOJ, Medtronic used multiple types of illegal kickbacks to doctors to make them more likely to use their implants in patients. Specifically, the DOJ says that the company gave doctors who implanted its devices tickets to sporting events, paid them to speak at events and developed business plans and marketing plans for them free of charge. These were done to get the doctors to continue using their products or to convert from using a competitor’s product to theirs, according to the Justice Department.

“Decisions about devices used to treat cardiac rhythmic disease should be based on the best interests of the patient, not on whether the manufacturer is going to pay a kickback,” U.S. Attorney Benjamin Wagner of the Eastern District of California said in the DOJ press release. “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.”

The claims came as the result of a whistleblower lawsuit filed by Schroeder. He will receive about $1.73 million under the qui tam provisions of the whistleblower act.

Under federal law, whistleblowers who expose the fraud against the U.S. government by revealing information not publicly accessible are entitled to a portion of the money recovered. Whistleblowers must be the first to bring the case to the government’s attention and not publicize the lawsuit until the Department of Justice decides whether to join the prosecution of the case.

This settlement comes less than a month after it was announced that the manufacturer is settling Medtronic Infuse lawsuits filed by individuals nationwide who have experienced problems after receiving the bone graft product, alleging that the company illegally promoted the device for users that were not approved as safe and effective by the FDA.

Medtronic Infuse is a newer type of bio-engineered bone graft product that has been promoted as an alternative to traditional spinal fusions, where bone is harvested from another area of the body or used from a cadaver.

The FDA approved Infuse recombinant human bone morphogenetic protein (rhBMP-2) for limited use during spinal fusion procedures where the lumbar spine is approached through the front and the product is applied to an absorbable collagen sponge that is placed within an “LT-Cage” that is implanted to encourage bone growth and fuse the gaps between the vertebrae. However, Medtronic has been accused of illegally promoting the device for non-approved uses, with a vast majority of sales for Infuse involving applications that were never approved by the FDA.