The United States Department of Justice (DOJ) announced on Monday, March 11, 2019, a settlement with Medtronic PLC’s Covidien unit. The settlement resolves claims that Covidien improperly provided doctors with free or discounted marketing services and practice development support in an effort to sway them to purchase its ClosureFAST catheters.
Former Covidien sales managers Erin Hayes and Richard Ponder brought the original qui tam lawsuits, along with a former employee of one of Covidien’s customers, Shawnea Howerton.
The United States government alleged that Covidien violated the Anti-Kickback Statute and thereby the False Claims Act by providing practice and market development support to healthcare providers located in California and Florida from January 1, 2011 through September 30, 2014. As noted above, the support was given in an attempt to induce the involved providers to purchase the ClosureFAST radiofrequency ablation catheters that were billed to Medicare, the California Medicaid program, and the Florida Medicaid program.
The catheters in question are used in procedures that treat venous reflux disease. The practice and market development support Covidien allegedly provided included customized marketing plans for specific practices; scheduling and conducting “lunch and learn” meetings and dinners with other physicians to drive referrals to specific practices; and providing substantial assistance to specific practices in connection with planning, promoting, and conducting vein screening events to cultivate new patients for those practices.
Covidien will pay $17,477,947 to the Federal Government, and an additional $1,474,892 to California and $1,047,160 to Florida. Medtronic, the parent company of Covidien, did not admit liability or wrongdoing as part of the settlement.
December Medtronic/Covidien Settlements
Medtronic officials announced a criminal plea and two civil settlements totaling nearly $51 million last December, resolving three situations in which Covidien officials stood accused of using illegal means to promote sales of medical devices. While the details of the ClosureFAST case were not public at the time, a Medtronic spokesman has confirmed that this Covidien settlement came out of that investigation.
“Medtronic cooperated fully with the Department of Justice during its investigation, and we believe our ongoing, rigorous compliance programs and ethical practices enabled us to reach a fair resolution of these cases,” Medtronic said in a statement in early December 2018.
“Today’s settlement serves as an important reminder to those in the health care community that unlawful kickbacks come in many forms and are not limited to monetary payments to providers,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “Providing free or discounted services to health care providers to induce the use of certain items or services can lead to excessive and unnecessary treatments, and drive up health care costs for everyone.”