St. Jude Medical Inc. agreed to pay $16 million to settle a U.S. government probe of claims the company paid kickbacks to doctors who implanted its heart devices in patients.
The accord resolves a five-year investigation of St. Jude’s marketing practices for defibrillators and pacemakers. Investigators began probing the St. Paul, Minnesota-based company’s payments to doctors after its employees alerted them about the scheme, federal prosecutors said today.
“When companies pay kickbacks to health-care providers in order to pad their bottom line, it taints the information patients rely on to make informed choices about their health,” Tony West, a U.S. Justice Department lawyer, said in a statement.
St. Jude officials said they weren’t admitting liability. The settlement is the second in eight months over allegations that St. Jude paid kickbacks to health-care providers who used its products. The company, with sales of $4.68 billion in 2009, is the world’s second-biggest maker of heart-rhythm devices, after Medtronic Inc.
“The company entered into a settlement agreement to avoid the potential costs and risks associated with litigation,” Amy Jo Meyer, a St. Jude spokeswoman, said in a statement.
In June, St. Jude agreed to pay the federal government $3.7 million to resolve a separate whistleblower case over claims that it made illegal payments to hospitals in Kentucky and Ohio that used the company’s heart devices.
The $16 million settlement stemmed from a case filed by Charles Donigian, a former St. Jude technician from St. Louis, who accused the company of using kickbacks to market products.
The kickbacks, which ranged as high as $2,000 per patient, came in the form of “sham fees” for phony clinical-research studies on the devices, Donigian said in his suit.
As part of the settlement, Donigian will get $2.64 million for tipping the government to the kickback scheme, prosecutors said.
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