Medtronic, a medical device company, agreed this week to pay $9.9 million to the Department of Justice to resolve allegations that it violated the False Claims Act for paying kickbacks to physicians to use its products.

The settlement resolves a whistleblower complaint, United States ex rel. Schroeder v. Medtronic, filed by Adolfo Schroeder, a former Medtronic employee. Schroeder filed the lawsuit under the FCA's whistleblower provisions, which permit individuals who discover fraud to file claims on behalf of the government and to share in any recovery. Smith will receive $1.73 million for the tips he provided.

“This case demonstrates the Department of Justice's commitment to pursue medical device manufacturers that use improper financial relationships to influence physician decision-making,” Assistant Attorney General Stuart Delery of the Justice Department's Civil Division said in a statement.

According to the complaint, Medtronic caused false claims to be submitted to Medicare and Medicaid by using multiple types of illegal kickbacks to persuade physicians to continue using Medtronic pacemakers and defibrillators, or to convert their business from a competitor's products.

Specifically, Medtronic allegedly induced physicians to use its products by:

Paying physicians to speak at events intended to increase the flow of referral business;

Developing marketing/business development plans for physicians at no cost; and

Providing tickets to sporting events.  

Ivan Negroni, Special Agent in Charge of the Department of Health and Human Services Office of Inspector General's San Francisco Office, said the broader message is that healthcare executives who try to boost profits by paying kickbacks will face the consequences. “We will continue to work with the Department of Justice to root out illegal, wasteful business arrangements,” he said.

Since January 2009, the Justice Department has recovered a total of more than $19.2 billion through False Claims Act cases, with more than $13.7 billion of that amount recovered in cases involving fraud against federal health care programs.