St. Jude, hospitals to pay DOJ almost $4M

St. Jude Medical (NYSE:STJ), Parma Community General Hospital and Norton Healthcare have paid the Justice Department roughly $3.9 million to resolve false claim allegations that the company paid illegal kickbacks to the hospitals to secure heart-device business.

DOJ had alleged the kickbacks led to the submission of claims to federal healthcare programs in violation of the False Claims Act. The kickbacks included alleged rebates that were "retroactive" and paid based on a hospital's previous purchases of St. Jude heart-device equipment and rebates the company paid for purchases of equipment sold by its competitors to induce purchases of similar equipment from St. Jude in the future. In a statement, the company says it doesn't admit liability or wrongdoing, but entered the agreement to avoid the potential costs and risks associated with litigation.

Under the terms of the settlement, St. Jude will pay $3.7 million. Meanwhile, Parma will pay $40,000, and Louisville, KY-based Norton Healthcare will hand over $133,300. The action was initiated by whistleblower Jerry Hudson, who will receive $640,050.

"Hospitals should base their purchasing decisions on what is in the best interests of their patients," says Tony West, assistant attorney general for the Civil Division of the Department of Justice. "We will act aggressively to ensure that choices about health care are not tainted by illegal kickbacks."

- see the St. Jude release
- read the DOJ release

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