St. Jude Medical will pay $16 million as part of a settlement with the Justice Department to resolve allegations it used post-market studies and a registry to pay kickbacks to physicians who would then implant the company's pacemakers and defibrillators.
The settlement is the second in eight months over allegations the company paid kickbacks to those who used its products. The company is the world's second-biggest maker of heart-rhythm devices, after Medtronic, Bloomberg notes. St. Jude agreed in June to pay $3.7 million to resolve a separate case over claims it made illegal payments to hospitals in Kentucky and Ohio that used the company's heart devices.
The roughly five-year-old dispute stemmed from lawsuit filed by former employee Charles Donigian. He accused the company of paying kickbacks to doctors, hospitals and other healthcare providers in the form of travel and tickets to sporing events to encourage them to prescribe certain St. Jude products, thus causing the providers to submit requests for payment to government programs. Donigian will receive $2.64 million for his part in the case.
"Medical device and pharmaceutical companies can use post-market studies legitimately to obtain information about how their products work in the field, but they cannot use those studies, and the honoraria associated with them, to induce physicians to select their products," U.S. Attorney Carmen Ortiz says in a statement. "Cardiologists and electrophysiologists should make their decisions on which pacemaker or defibrillator to implant in a patient based on their independent medical judgment, not based on how much the manufacturer is paying them to implant the device."
Last August, U.S. District Judge Douglas Woodlock in Massachusetts granted a government request to join the suit. Although the government had declined to join the suit in December 2009, Ortiz wrote that it had "good cause" to intervene following additional witness interviews and document reviews, according to a Reuters article.
In a statement, the company says its post-market studies and registries are legitimate and designed to gather important scientific data. It also denies any wrongdoing but entered into a settlement agreement to avoid the potential costs and risks associated with litigation.
The company's shares fell 0.2 percent in after-hours trading from Thursday's close of $42.20, Dow Jones reports.