Medtronic settles with DOJ over false Medicare claims for neurostimulation devices

Medtronic's Fridley, MN, global headquarters--Courtesy of Bobak Ha'Eri, CC-BY-SA 3.0

Medtronic ($MDT) is shelling out $2.8 million to resolve allegations that it coerced doctors to submit false claims to Medicare for its implantable neurostimulation devices, casting a dark cloud over the company weeks after it finalized its merger with Covidien.

The case stems from allegations filed by a former Medtronic sales representative, which claim that the company marketed its "SubQ stimulation" device for chronic pain even though the FDA had not confirmed the product's safety and efficacy. From 2007 through 2011, the Minnesota-based company knowingly caused dozens of physicians in more than 20 states to submit claims to Medicare and TRICARE for SubQ procedures that were not reimbursable, and promoted the procedure by having doctors attend Medtronic-sponsored "on-site training programs" for the devices, the U.S. Department of Justice said in a statement.

The suit also alleges that Medtronic sales staff was instructed to promote the off-label procedure by selling the SubQ stimulation device at steep discounts to pain management physicians and by promising doctors that they could make more than $10,000 profit on each patient while only adding minutes to neuromodulation procedures, the StarTribune reports.

"Patients should be able to trust that their healthcare providers only use--and bill Medicare for--medical procedures that have been shown to be safe and effective," Scott Lampert, special agent in charge of the Department of Health and Human Services' Office of Inspector General, said in a statement. "Our agency will continue to pursue medical device makers that ignore requirements designed to protect patient health and federal healthcare programs."

Medtronic is not taking the rap, though. The company is "committed to following appropriate marketing and reimbursement practices at all times, and for many years has had in place a comprehensive and robust employee compliance program," Medtronic told FierceMedicalDevices in an emailed statement.

The news comes just weeks after the company finalized its $49.9 billion deal for Dublin-based Covidien, shifting its domicile abroad to enjoy certain tax benefits. Medtronic said upon closing the merger that it planned to broaden its product offerings and work more closely with hospitals to generate immediate and long-term growth.

"We want to show our therapies don't just help people get better, but the return on investment makes sense," Geoff Martha, Medtronic's chief integration officer, said when the deal closed. "We believe the long-term solution is helping hospitals, helping governments, solve their problems, and we want to be compensated and rewarded based on outcomes."

- read the DOJ statement
- here's the StarTribune story

Special Reports: Top 10 med tech R&D budgets - Medtronic | So far, just 4 companies have a shot at winning the neuromodulation race - Medtronic - The neuromodulation leader

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