Medtronic Settles Charges Over Kickbacks To Doctors

Medical device giant, Medtronic Inc., is settling charges over kickbacks to doctors. The firms just agreed to pay $23.5 million to settle claims it paid physicians kickbacks in exchange for their use of its pacemakers and defibrillators, according to a U.S. Justice Department announcement yesterday.

The company was accused of seeking physicians to be involved in studies and registries, paying doctors fees of $1,000 – $2,000 per patient for information and data they amassed, as long as they utilized Medtronic’s devices in their practices, said the Justice Department, wrote Reuters.

This practice caused Medtronic to submit false claims to federal healthcare programs, including Medicaid, the Justice Department said, according to Reuters, which noted that this settlement resolves two whistleblower lawsuits against Medtronic. “Kickbacks, like those alleged here, distort sound medical judgments with financial incentives paid for by the taxpayers,” said Tony West, assistant attorney general for the Justice Department’s civil division, in a statement.

Previously, Medtronic disclosed the anticipated settlement, recording a $24 million expense in its 2011 fiscal year, said Reuters, citing Medtronic’s securities filings. “We are happy that the investigation is behind us so we can continue to design and execute clinical trials that generate evidence to improve patient care, outcomes and cost effectiveness,” said Medtronic spokesman Chris Garland, according to Reuters.

Meanwhile, Medtronic faces a separate Justice Department and U.S. Senate probe concerning whether physicians paid by Medtronic neglected to report serious side effects of its spinal surgical product and late last year, we wrote that Medtronic payments to a group of spine surgeons at a Louisville, Kentucky hospital raised questions about possible kickbacks. From 2004 through 2008, the group from Norton Hospital performed the third highest number of spinal fusion surgeries on Medicare patients. In the first nine months of the prior year, the surgeons were paid $7 million from Medtronic.

The payments were presented as royalties the surgeons received for helping Medtronic design a spinal fusion product. Medtronic says it does not pay surgeons royalties on devices they use in their patients, thereby removing any financial incentive for them to do more surgeries than necessary, the Wall Street Journal said last year.

Some critics claim that financial incentives caused spinal fusion surgery to become overused. The procedure, which involves using metal plates, rods, and screws to fuse together two or more vertebrae to alleviate back pain, is relatively controversial. Some surgeons argue that a spinal fusion is appropriate only for a very small number of conditions: Spinal instability, spinal fracture, or a severe curvature of the spine known as scoliosis. Some recent studies suggest poor outcomes for spinal fusion, including life-threatening complications.

Over the past several years, Medtronic has been involved in lawsuits that alleged consulting agreements with surgeons were actually kickbacks to induce them to use the company’s products.

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