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Whistleblower collects $1.7 million in Medtronic kickback settlement

Minnesota-based Medtronic Inc. will pay $9.9 million to resolve allegations under the False Claims Act that it paid kickbacks to doctors to implant its pacemakers and defibrillators, the DOJ said Wednesday.  

Medtronic caused false Medicare and Medicaid claims by paying doctors illegally to use its implants or to move from a competitor’s products, the DOJ said.

The case started with a whistleblower complaint by former Medtronic employee Adolfo Schroeder.

He'll collect $1.73 million from the settlement money.

The False Claims Act (31 U.S.C. 3729 et seq.) allows private persons to sue on behalf of the United States. The government then has time to investigate the allegations and decide whether to intervene. Either way, the whistleblower can be awarded a portion of the recovered damages, usually between 10 and 20 percent.

in June 2011, Medtronic paid $23.5 million to resolve separate False Claims Act allegations. It had used kickbacks to doctors characterized as "post-market studies and device registries" to sell more pacemakers and defibrillators, the DOJ said then.

Whisteblowers collected nearly $4 million from the federal share of the 2011 recovery.

In Wednesday's announcement, the DOJ said Medtronic paid doctors to speak at events intended to increase the flow of referral business. It also developed marketing and business plans for doctors at no cost and gave them free tickets to sports events.

"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," said U.S. Attorney Benjamin Wagner of the Eastern District of California.

Last June, the SEC and DOJ said they wouldn't pursue FCPA enforcement actions following a five-year probe of Medtronic's overseas sales practices.

The DOJ's May 28, 2014 release is here.


Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.

Julie DiMauro is the executive editor of FCPA Blog and can be reached here.