Medical Device Manufacturer Medtronic to Pay Upwards of $9 Million to Settle Allegations Related to Improper Payments

The Department of Justice (DOJ) announced recently that Medtronic USA Inc., a medical device manufacturer based in Minnesota, will pay $8.1 million in order to resolve allegations that they made improper payments to a South Dakota neurosurgeon. The payments, or kickbacks, were intended to entice the surgeon to use and advocate for various Medtronic brand products, which is a violation of the False Claims Act.

The manufacturer will also pay an extra $1.11 million to resolve a separate allegation that they misreported these payments to the Centers for Medicare and Medicaid Services (CMS). These proceedings come at an inopportune time for Medtronic, who are also currently embroiled in lawsuits regarding defects in their MiniMed insulin pumps. 

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The first settlement came in response to allegations that there was an improper relationship between Medtronic and Wilson Asfora, M.D., a neurosurgeon based in South Dakota. According to the DOJ, Medtronic agreed to pay for over 100 “social events” that took place at Carnaval Brazilian Grill, a restaurant that Medtronic knew was owned by Asfora. These events involved “potential and existing referral sources,” as well as colleagues and business partners–they were essentially paid advertising for Medtronic products and services. The DOJ said that the events took place over a 9-year span. 

The second settlement is in regards to Medtronic’s failure to properly report these payments to the CMS as part of their Open Payments Program. Under this policy, medical manufacturers such as Medtronic are required to report any payments or “transfers of value” to physicians to the CMS, which they did not. 

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Ron Parsons, the U.S Attorney for the District of South Dakota, said afterwards that the quality of medical care suffers when “companies and physicians enter into these sorts of under-the-table schemes to create illegal financial incentives to increase the use of medical devices.” Parsons also said that he “expects doctors to make medical decisions based on what is best for their patients, not what is best for their bank accounts.”

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This situation is an unfortunate example of how manufacturers and physicians can violate the Anti-Kickback Statute, which is a federal statute that prohibits any direct or indirect exchange of value for the referral of products or services that are covered by federal healthcare programs such as Medicaid, Medicare, and TRICARE. 

Neither Medtronic nor Asfora could be reached for comment, and it must be noted that the resolved claims are only allegations, and there has not been a determination of liability at this time. 

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