Medtronic shells out $9.9M to settle physician kickback claims

Heart-rhythm devices giant Medtronic ($MDT) will fork over $9.9 million to settle government claims it paid doctors to implant its pacemakers and defibrillators.

The settlement, announced by the Department of Justice, was part of a whistleblower lawsuit brought by former Medtronic employee, Adolfo Schroeder. He claimed the Minnesota-based company used a variety of kickback schemes to influence physicians that included direct payments, free tickets to sporting events, money to speak at Medtronic referral business events and the production of marketing and business development plans for their practices.

"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 a statement.

A spokeswoman for Medtronic, Cindy Resman, told Bloomberg the settlement wasn't an admission the company engaged in unlawful activities. It does, she said, bring "to close a long-running review of certain sales activities" that date back to 2001.

Under provisions of the False Claims Act, Schroeder is eligible to receive about $1.73 million of the settlement cash.

Earlier this month, Medtronic reported a 54% year-over-year drop in earnings for the fourth-quarter that was attributed to a one-time, pretax charge of $746 million for litigation that covered the now-settled patent dispute with Edwards Lifesciences ($EW) over the company's CoreValve TAVR, and a $22 million settlement of product liability claims linked to its Infuse Bone Graft. Overall earnings for the fourth quarter were $448 million on revenues of $4.6 billion.

- see the DOJ release
- read the Bloomberg take

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